After months of bickering and battling, a final agreement has been reached on the European Union's controversial proposed alternative investment regulations.
A week after France and the U.K. struck a deal of their own on the directive, paving the way for its approval by the EU's 27 member states, those states and the European Parliament have reached a deal that assures its passage by the latter. Approval by both bodies is required for the proposal to become law, which it is now expected to do early next year.
The European Commission's agreement with the parliament contains a few changes from the draft approved by EU governments. But those are relatively minor; the real heavy-lifting on the compromise was accomplished last week by EU finance ministers after an increasingly isolated France agreed to drop its opposition to granting access to all EU markets to foreign hedge funds.
The directive will impose strict new reporting and custody requirements on hedge funds and private equity funds, as well as placing them under the authority of the new European Securities and Markets Authority. Private equity funds will also face new asset-stripping rules.
The controversial passport will not come into effect for EU firms until 2013, and foreign funds will not be eligible until 2015. Until then, the current regime that allows each EU country to decide which funds will have access to their markets remains in place.
The European Parliament is set to vote on the directive on Nov. 11.