EU deal among states on table over non-EU funds

By Huw Jones

LONDON, Nov 10 (Reuters) - European Union plans for a single market in alternative investment funds will likely to exclude third country funds that have no national marketing agreements, a British government minister said on Tuesday.

The EU's executive European Commission proposed a measure earlier this year to regulate managers of alternative investment funds such as private equity and hedge funds as part of wider efforts to supervise financial markets more widely and closely after the credit crunch.

Managers would be required to register and disclose information on short selling and main categories of assets.

But France, Denmark and other member states have rejected a provision that would allow funds based outside the EU to have a "passport" or permission to be marketed to EU investors three years after the new rules take effect if they meet "equivalent" standards back home.

British financial services minister, Paul Myners, signalled the UK would accept a deal that would allow individual states to keep their national market open to non-EU alternative funds.

It would avoid the risk of seeing UK investors having less choice because the "equivalence" test for third country standards may be "hard if not impossible" to pass, Myners said.

"I think that's a deal which is on the table. In my view it would meet the requirements of most of the people who have written to me who have been investors, major pension funds, charities and endowments, who do not wish to see their choice of investment constrained," Myners told Reuters.

"I do not feel it would be a good outcome for Europe, but I recognise there are quite deeply held views on this subject in a number of member states which we do need to respect," added Myners, himself a former alternative funds manager.