Hedge funds managed from Switzerland could be put on a level playing field with European-based funds if the country’s government has its way.Switzerland is to actively pursue efforts to have Swiss-based funds and management companies recognised by the European Union's (EU) proposed alternative investment fund managers (AIFM) directive as well as securing European passporting for funds.

The report noted that a "purely bilateral" solution with EU member states would not be sustainable and instead Switzerland needed to negotiate with the Union and align itself with EU legislation.In a report released by Switzerland's Federal Council on future financial market policy, it was noted that the directive in its current form if passed, would discriminate against non-EU managers.The report also expressed concerns that increasing European regulation would force managers currently based in Switzerland to leave, noting that the value added to the Swiss economy by managers was "substantially greater" than that of individual funds.The report noted that a "purely bilateral" solution with EU member states would not be sustainable and instead Switzerland needed to negotiate with the Union and align itself with EU legislation.Another issue discussed in the report concerned supervision of the sector.

It proposed revising Switzerland's Collective Investment Schemes Act "so as to cover all asset managers of collective investment schemes managing so-called offshore funds from Switzerland".The report said the financial industry saw potential for growth in both alternative assets and qualifying investor funds, similar to those permitted in Luxembourg.It also said Switzerland should focus on encouraging fund administration to take place in the country.The Swiss Funds Association welcomed the report. CEO Matthäus den Otter said: "For us the focus here is on strengthening international competitiveness by improving the general, regulatory and tax frameworks. We welcome the ongoing dialog between the authorities and the financial sector and we will continue to play an active role in making the ambitious targets a reality."The Federal Council said it would create a state secretariat focusing on affairs relating to international financial matters and fiscal policy to further strengthen bilateral and multilateral efforts to reform Switzerland's financial markets.