Swedish government proposed that EU rules, which prevent excessive risk-taking, should also cover hedge funds and private equity firms.

Sweden said plans that aimed at enhancing banks’ capital and limiting bonuses should include unregulated parts of the financial sector.

Sweden, which holds the rolling presidency of the 27-member union, said the proposal was backed by another member states.

But, hedge funds and private equity firms alterations in the proposals, which could compel them to reschedule up to sixty per cent of their annual pay.

Simon Walker, CEO of the British Private Equity & Venture Capital Association said the Sweden’s suggestion would affect private equity fund and investors adversely.

But, AIMA said that it would be wrong to compare bankers with fund managers.

The European parliamentary will have the final say on the issue.