Eurocommissaris Barnier roept lidstaten op tot sluiten compromis over reguleren hedge funds (en)
EUOBSERVER / BRUSSELS - The EU internal market and financial services commissioner, Michel Barnier i, has called on member states to reach a compromise agreement ahead of a likely vote on controversial rules to regulate the bloc's hedge fund and private equity sectors.
The draft legislation that aims to increase the transparency of Europe's "shadow banking" sector has drawn strong criticism from London in particular, with both the outgoing Labour and recently installed Conservative-Liberal-Democrat governments concerned the new rules could have a negative impact on the country's economy.
Detailing his 2010 legislative priorities in the Brussels on Monday (17 May), Mr Barnier urged EU finance ministers to iron out any outstanding discrepancies.
"I shall be participating at the Ecofin council [of EU finance ministers on Tuesday] ... there are going to be differences," Mr Barnier told journalists. "I shall be working on trying to find a dynamic compromise."
"We are by no means out of the woods yet," he added.
The Spanish EU presidency pulled a discussion on the proposed Alternative Investment Fund Managers (AIFM) directive off the agenda of a finance ministers' meeting in March, after former UK Prime Minister Gordon Brown i asked his Spanish counterpart, José Luis Rodríguez Zapatero, to delay the debate.
At the same time, Madrid indicated it would seek a solution before their time at the EU's helm expires at the end of June, raising the prospect of the UK being outvoted when the 27 ministers sit down this Tuesday.
George Osborne will become the first Conservative UK cabinet minister to visit Brussels in 13 years, and has already sought to frame the impending hedge-fund defeat as a poisoned pill left over from the Labour.
On Monday, he said the AIFM directive was "a hospital pass" from Mr Brown and a good example of why the British treasury must be fully involved in the early stages of drafting new EU financial legislation.
No further delay
Despite pleas from London, French President Nicolas Sarkozy i and German Chancellor Angela Merkel i have refused to delay the new regulation any further, claiming the firms were partly to blame for the financial crash.
Analysts say a vote would be dangerous, however.
"It would be a serious mistake for EU leaders and MEPs to impose a high-profile defeat on a new British government only one week after it assumes office, by forcing through this directive by a majority vote," said Mats Persson, director of eurosceptic pressure group Open Europe.
"Europe is already a very complicated issue for the UK's coalition government, and landing such an early blow on a matter of UK national interest certainly won't help this government's relationship with the EU," he added.
Home to the vast majority of the EU's hedge fund and private equity industries, the UK fears it will lose out disproportionately from stricter rules that include reduced leverage and greater disclosure of portfolios.
Rules to restrict "third country" fund managers have also proven highly contentious, with the United States concerned they could disadvantage American firms.
After a whirlwind visit to the US last week, taking in the country's principle economic actors, Mr Barnier said regulatory positions on both sides of the Atlantic were showing considerable signs of convergence.
Under the EU's co-decision process, MEPs will also decide on the fate of European plans to increase oversight of the bloc's alternative investment funds, with parliament's economy committee set to vote on Monday evening on a report on the subject.
Member states and MEPs will then enter into negotiations to seek a final agreement.
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