A deal on pan-European rules for hedge funds and private equity funds moved closer after France dropped its outright opposition to draft legislation that would give non-EU fund managers pan-EU marketing rights, the so called passport rule.
French officials now say that they are prepared to accept the principle of a passport for third-country funds, subject to strict conditions. In particular, Paris insists that it should be the new European Securities and Markets Authority which issues a passport to a third-country fund and then supervises that fund.
The French move came just 24 hours after Tim Geithner, US Treasury secretary, sent a letter to Christine Lagarde, French finance minister, protesting at France??s hostility to a passport for third-country fund managers.
??A proposal that limits or delays the access of third country firms to a passport ?? while granting EU domiciled managers and funds access to the EU market ?? would be discriminatory and contrary to G20 commitments,? he warned.
Under its concession, France would be prepared to support a compromise where the current rules remain in place for years. Officials envisage that, in perhaps 2014-16, ESMA would recommend introducing a passport regime and Brussels would pass regulations giving the authority the powers to run it.
