(FT) -- A deal on pan-European rules for hedge funds and private equity funds moved closer after France dropped its outright opposition to a key element of the European Union's proposals.
But the French concession was made subject to strict conditions, ensuring that there will be more lengthy negotiations ahead.
"This is progress but not yet a breakthrough," said one diplomat.
Until Wednesday, Paris had been adamantly opposed to draft legislation that would give non-EU fund managers pan-EU marketing rights, or a so-called passport, provided certain conditions were met.
This proposal is backed by the European Commission, European parliament, and some countries, including the UK. But it would be a significant shift from the current system, whereby funds outside the EU seek approval from member states individually if they wish to sell into EU markets.
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.
CNN
