Sweden has called for discussion over a number of "key issues" in the European alternative investment fund managers (AIFM) directive. Holding the six-monthly rotating presidency of the European Union (EU), Sweden is keen to try to sort out some of the bigger problems with the draft before handing over to Spain in January 2010.

As the European parliament's committee for economic and monetary affairs began legislative work on the directive, there were signs the regulation would not come into force as quickly as initially projected.

Among the proposals in an issues note released by Sweden was a suggestion that the proposed minimum threshold for portfolio values could be deleted.

The Swedish document did not cover authorisation, 'passporting' procedures or the differentiation of requirements. It said these were "deemed to concern mainly technical drafting and possible alignment with other directives".

Sweden did go through other issues under debate including the scope of the directive, the use of and limits for leverage and position of non-EU country alternative investment funds.

Owen Watkins, a consultant at law firm Kaye Scholer, said the paper was "open-ended".

"I think that they're genuinely seeking a consensus to move forward," Watkins said.

Watkins thought Sweden was attempting to stamp its mark on the process now it had become clear the directive would not go through the whole legislative process before the end of its presidency.

"My guess is that the whole thing's going to take a little longer to get through than what was envisaged when the draft was set out," he said.

Sweden's note said an alternative investment fund needed to be clearly defined to clarify the scope of the directive.

Sweden has suggested including the definition in the directive's introduction. It said the definition of alternative investment funds should be "confined to the management of collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy on the principle of risk spreading for the benefit of those investors".

More detailed criteria from the European commission should be added to the definition said Sweden.

EU delegations have queried possible exceptions to the scope of the directive, including the possibility of an opt-out for private equity and a specific directive for those funds. It also proposed possible exclusions including closed-ended funds or self-managed funds.

The Swedish note said member states had expressed concerns about the application of minimum portfolio thresholds. A way forward could be either to clarify the treatment of funds with fluctuating portfolio values or delete the threshold altogether, suggested Sweden.

On leverage Sweden said the "potential systemic risk from leverage and concentration of leverage needs to be addressed".

It argued against pre-setting a leverage level while allowing authorities to limit leverage "should there be a possible threat to financial stability".

Many critics of the draft directive have pointed out that the level of leverage used by banks is far higher than what is seen as the rather modest leverage used by funds.

Many of the points suggested by Sweden would align the AIFM directive more closely with the Ucits directive. For example in a section on depositaries, Sweden proposed putting issues of limiting depositary eligibility on hold until the consultation on Ucits depositaries finished.

"Given the global character of the activities of many market players, the current draft does not seem workable as it in many cases will not be possible to hold the assets in the EU without incurring considerable costs for investors," Sweden said.

The AIFM directive is due to be debated for the first time in the European council in November.