New hedge fund regulations proposed by the European Union are expected to affect managers around the globe, but they could have a particularly big impact in Asia, where funds are smaller, younger, and often heavily reliant on European investors.

European bodies are in negotiations to agree a common text from the varying versions of the Alternative Investment Fund Managers directive proposed by the European Parliament and European Council. The heart of the issue is what new regulations will be applied to European managers, and how non-EU managers will be able to access EU investors.

The “third country” rules governing non-EU funds and managers have been among the most contentious issues. The draft directives address the issue in different ways.