The European Union's draft directive on alternative investment fund managers is causing concern among hedge fund managers, as reported by AsianInvestor. The workings of the European machine are now irrevocably committed to resolving what is to be done with that industry.

The issue is spawning an industry of its own in Brussels and Strasbourg that is sponsored by Europe's taxpayers, who didn't even know that they had to be saved from hedge funds.

"Asian hedge fund managers should stay aware and encourage investors to have a voice," says Josephine Orgill, director of the Alternative Investment Management Association's (Aima) Hong Kong chapter. "Investors should be speaking out, as well as the hedge fund managers, who might be perceived as being self-serving.

"The directive was originated to protect investors as well as provide financial stability," she adds. "We agree with those objectives, though the directive as it stands today doesn't best serve them."

The initial directive was released in April. Within the European Parliament, the Economic and Monetary Affairs Committee has the job of developing consensus on this, and it has drafted a set of amendments. The European Council and Parliament now need to agree on it.

In the second half of 2009, Sweden -- at the time holding the Council presidency -- wrote a set of amendments, and a week later revised it with another set of amendments.

The Spaniards took over the presidency at the start of this year and have written a document summarising the amendments and setting out the position of Council versus Parliament. There aren't many hedge funds in Spain, and yet their summary is perceived as one of the better-written documents in terms of simplicity.

Two weeks ago, Members of European Parliament (MEPs) had to send in their amendments, and that is expected to generate another thousand or so amendments (with some duplications).

Aima has already written its own set of amendments, after conducting numerous one-to-one meetings with parliamentarians to help inform them about the industry.

Neither the Council, the Commission nor Parliament has agreed to anything yet, but in the proposed amendments from the Swedes, the position is apparently becoming more sensible.

In April this year, the EU Parliament has to get down to work as a collective body to vote on what it wants to do. The original draft from the Commission is becoming a bit of an outlier, but the Commission has the right to withdraw any legislation it put forward.

"The press has a role to play in raising awareness of the potential impact of the directive," adds Orgill. "Much of the process is politically driven, and it is important that the politicians know their constituents' views on what has been proposed on their behalf."

So why are many hedge fund managers coy about talking to the trade press, if doing so is in their long-term interest? Perhaps we should ask the hedge fund manager who refused point blank to attend one of last autumn's capital-introductions events in Hong Kong when he heard that the trade press had been invited to the buffet lunch.

And that was just the lunch. The press was also excluded from every single panel session -- sessions that might have shown newspaper-reading Joe Public that hedge fund managers are not unreasonable men.

That's just one example from potentially dozens we could cite, and yet we're on your side. No wonder politicians in Brussels are none the wiser.