A stand-off between France and the UK has dashed hopes that an agreement on European rules for hedge funds and private equity funds could be reached this week, forcing diplomats to suspend a final negotiating session.
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The core issue remains how to treat fund managers from outside the EU bloc. The UK, along with the European Commission and a clutch of other countries, wants them to have pan-EU marketing rights, or a so-called "passport", provided they meet certain standards. The US has also weighed in, arguing that it would be discriminatory if fund managers within the bloc enjoyed a passport while those outside it did not.

France, having initially opposed a passport for non-EU managers, has conceded that it will now accept this in principle but insists passport rights must be tightly controlled by the European Securities and Markets Authority, the new pan-EU securities regulator. However, the UK and its supporters are wary about handing too much power to ESMA.
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But EU officials are also concerned that attention needs to be paid to some of the outstanding issues which MEPs have with the proposed rules, including provisions dealing with "asset-stripping".