EUROPE - Progress on the Alternative Investment Fund Management (AIFM) directive, the contentious package of legislation set to regulate hedge funds, private equity and commodity funds, could at last be entering the home straight, if agreement can be reached later today.

A 'trialogue' meeting — involving teams from the EU's Council of Ministers, the Commission and the European Parliament — is set to attempt a final accord on the subject at an evening meeting.

According to a Commission spokesperson, the meeting follows work by a task force set to resolve outstanding issues, such as asset stripping.

Assuming success at the three-way meeting, the final version of the package is likely to be cleared by the Council in a formal assembly in the near future, and by the Parliament, in plenary session, at Strasbourg, during the week starting 18 October.

The Parliament's Economic and Monetary Affairs Committee (Ecofin) is also scheduled to cover the subject at an informal meeting late next week.

Discord on the AIFM directive - which was proposed by the Commission back in April 2009 and had been scheduled to clear through the Brussels machinery before the recent summer break - has tended to centre on relations with 'third countries' (jurisdictions outside the EU) and the internal 'passport system'.

One source says the main issue to be dealt with this evening will still revolve around the rights of fund managers outside the EU to internal EU markets.

When the heat of the debate was reaching a crescendo earlier this year, the Alternative Investment Management Association warned that one provision in the legislation was "protectionist".

The word was largely interpreted as meaning 'biased against non-EU interests'.

As another indication of the complex issues involved in negotiations, a group called the Private Equity Forum, which describes itself as "a new professional resource", now writes that, according to sources close to the talks, the French recently reversed their position on preserving a passport system for use by traders working across the EU.

Jean-Paul Gauzès MEP, who as parliamentary rapporteur has played a key role in the negotiations, has expressed confidence of clearance through the parliament in October.