Worried that the draft Alternative Investment Fund Managers Directive (AIFMD) could take another two years before it gets the nod from all EU legislators, finance ministers will take the opportunity today to talk about possible concessions to the Parliament's view.
The European Parliament and EU finance ministers have been at loggerheads over whether national regulators should be allowed to grant an EU "passport" to non-EU funds that want to reach investors inside the bloc.
But pressure is now building for both sides to reach a compromise as the G20 prepares to meet in Toronto at the end of the month.
"We cannot delay this into second reading," a diplomat from a large EU country said ahead of the talks.
"We cannot wait. The crisis was in 2008. Now we are in 2010, so we need to go fast," he added.
After a vote in May, the European Parliament watered down its initial proposal for an EU passport for third-country funds drawn up when the idea first arose in the European Commission's original proposal in March 2009.
The crux of the issue comes down to whether foreign funds can gain access to all EU countries once they have won the approval of one member state, gaining some sort of 'passport', or whether these funds would have to establish themselves in each individual member state, via so-called 'private placement regimes'.
The European Parliament is in favour of an EU passport, while the EU's finance ministers are against it and allocate some of the blame for systemic risk in the financial crisis to hedge funds and other such vehicles.
Diplomats say getting agreement on the AIFMD has become an obsession for EU Internal Market Commissioner Michel Barnier, whose job it is to reconcile the two sides in trilogue talks.
"We are going to work on trying to find a dynamic compromise which ensures the equal treatment of third-country fund managers," Barnier said ahead of the May vote in the European Parliament (EurActiv 18/05/10).
"The Ecofin's main subject will be to ensure that all member states are prepared to engage into a real dialogue with Parliament," an EU diplomat predicted ahead of the talks, adding that the compromise that was found between member states in the Council would have to be tweaked.
"The Council's text will have to be modified on certain points to make concessions to Parliament. Where it is less clear is what concessions to bring to the Parliament," the diplomat added.
The two institutions also seem to disagree on whether they will be able to establish any common ground in the coming weeks.
Commission officials are under the impression that agreement is close, a view the European Parliament finds "surprising," according to a spokesperson for the EU assembly's economic affairs committee (ECON).
Talks last week gave no indication of a compromise on third-country funds, the same spokesperson, who was at a meeting with representatives from the EU's member states last week, told EurActiv.
"I would warn against thinking an agreement is close," he continued.
