France Seeks ‘European’ Passport, Barnier To Push For Deal

Sep 30 2010 | 1:49pm ET

As if speaking past one another, two French officials on opposite sides of the battle over the “passport” provision of the European Union’s proposed hedge fund rules offered their takes on the growing rift.

French Finance Minister Christine Lagarde said that her country was “keen” to pass the strict new alternative investments directive, despite the fact that France’s opposition to the passport, which could give foreign hedge funds who meet EU standards access across the bloc, is the main impediment to their approval.

“France is very, very keen to see regulation and proper supervision of hedge funds,” she said at today’s meeting of EU finance ministers, which is expected to include discussion of the rules. “We seek a good European passport for European funds, and for the rest an appropriate level of supervision.”

French President Nicolas Sarkozy wants individual national regulators to retain the right to approve foreign hedge funds and private equity funds. The British, the European Parliament and the European Commission—backed by pressure from the United States—want foreign hedge funds included in the scheme.

The rules were thought to be nearing a final compromise before Sarkozy’s intervention threw their future in doubt. Despite that monkey-wrench, Michel Barnier, the EC financial services commissioner, said he would push for a quick compromise that included the passport.

Barnier, whose appointment to the post was championed by Sarkozy, said at the same Brussels meeting of EU finance ministers that the passport would have to be in the final hedge funds “one way or another.”


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