Spaans voorzitterschap schrapt debat EU wetgeving hedge funds (en)
EUOBSERVER / BRUSSELS - The Spanish EU presidency decided to pull the issue of hedge fund regulation off the agenda of a meeting of EU finance ministers on Tuesday (16 March), as member states struggle to reach a common position.
However Spanish finance minister Elena Salgado said she was determined to reach a deal on the controversial topic before the end of June when Spain hands over the rotating EU presidency to Belgium, leaving the possibility of a qualified majority vote against UK wishes still hanging in the air.
"We think there is room to get more agreement than we currently have," Ms Salgado told journalists after the meeting of 27 EU finance ministers in Brussels. "The obsession of unanimity is not the issue here," she added when questioned on the subject.
Ms Salgado indicated she would continue to follow G20 guidelines in the coming weeks, "adapted for the EU's needs," in a bid to reach a common member state position on the Alternative Investment Fund Managers (AIFM) directive, which also includes private equity, before negotiations with the European Parliament can start.
The decision to postpone the debate until either May or June follows UK concerns over so-called 'third country' measures contained in the current Spanish text, under which non-EU domiciled funds will need individual member-state permission before they can market their products to investors in that country.
The UK and Czech Republic favour a European 'passport' system, an idea contained in the original legislative proposals put forward by the European Commission last April, but subsequently removed.
Under the 'Schengen-type' concept, permission from one national regulator, for example the Financial Services Authority in London, would be sufficient to give foreign-domiciled funds access to Europe's 500 million citizens, without the need to apply in each separate EU capital.
Downing Street concerns stem from the fact that, while many of the country's alternative investment fund managers operate from the City of London, a majority of the businesses are actually domiciled overseas, in particular in the Cayman Islands.
Despite its European isolation on the subject, as home to roughly 70 percent of the EU's hedge fund and 80 percent of the private equity industry, the UK administration has managed to punch above its numerical voting weight on the subject.
In a letter to Brussels this month, US treasury secretary Tim Geithner also expressed concerns that the third-country measures could disadvantage American firms.
Privately officials on Tuesday admitted that a breakthrough in the coming weeks is far from certain. "It's hard to see how we are going to get any movement on this," one diplomat from a large member state told this website.
Industry representatives welcomed the Spanish attempt to bring the UK on board, however. "It is better to get the directive right than to rush it through and risk botching it," Andrew Baker, CEO of the Alternative Investment Management Association Limited, said in a statement.
EU internal market and financial services commissioner Michel Barnier said he supported the Spanish move. "I am going to work hard to help the Spanish presidency reach a deal," he said.
Mr Barnier also indicated his intention to come forward with a draft directive on financial derivative products this June, another area that has come in for increased scrutiny in the wake of the financial crisis.
Despite the postponement of the hedge fund debate, EU finance ministers did reach agreement on other topics, including the adoption of a EU directive to clamp down on tax evasion by strengthening mutual assistance between national capitals.
Member states also reached a common position on a draft directive aimed at simplifying VAT invoicing requirements, in particular as regards electronic invoicing. The commission estimates electronic invoicing could save European businesses up to €18 billion each year.
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