Cautious optimism is breaking out that the European Commission’s draft directive on alternative investment fund managers will be substantially amended. It would be premature to break out the champagne just yet. But given the avalanche of objections to many of the provisions, and the perceived sympathies of the current Swedish presidency of the European Union, expectations are high of a compromise that will allow victory to be claimed by both the alternative investment industry and the French and German phalanx that want to rein in hedge funds and private equity.

If anyone can claim to have made the difference in the debate it is probably the investors. Various pension funds and representative bodies have called for less stringent requirements, on the grounds that the increased costs and reduced choice the directive would bring with it would damage returns. This is a difficult argument for politicians to ignore: how can they insist on regulation that makes it harder for institutional investors to make money for Europe’s savers?