EU member states divided over AIFM directive

EU member states are arguing over three main sticking points in the alternative investment fund managers (AIFM) directive.

Three outstanding issues were identified with the directive. At the latest meeting on February 25 of the working party on financial services of the European council, delegations disagreed over the directive's scope, issues relating to depositaries and how to handle fund managers domiciled outside the European Union (EU).

The proposal has already been discussed several times by the working party. It is currently looking at compromise proposals suggested by the Spanish government which currently holds the rotating six-month council presidency.

A working party report said a large number of delegations agreed with the Spanish compromise proposal to make the directive applicable to all alternative managers while leaving the option open for member states to exclude those with assets of less than €100 million. However, a blocking minority (at least four member states) want the directive to be applied to all alternative fund managers.

Delegations disagreed over who should be able to act as a fund's depositary. A vast majority want a wide variety of institutions to be eligible, including credit institutions, authorised investment companies and central securities depositaries.

A large number of 27 member states support the Spanish proposal to allow managers based outside the EU to market their funds in the union if they comply with minimum rules.

Another group remains strongly against this, arguing the directive is protectionist.

Following the February meeting another version of the Spanish compromise was published. This adds little to the overall debate.

A significant addition, however, is the proposal that EU member state supervisory authorities and regulators in third countries should put in place appropriate co-operation arrangements "in line with international standards".

Spain said the Committee of European Securities Regulators (CESR) should develop guidelines to ensure co-operation.

The working party has now asked the permanent representatives committee II (known as Coreper) to agree a general approach to the directive. Once that has been achieved, the council presidency will begin negotiations with the European parliament "with a view to reaching an agreement at first reading" according to the report.

The parliament's economic and monetary affairs committee is to debate the directive for a second time in mid-March