After two years of discussing the Undertaking for Collective Investment in Transferable Securities (UCITS), the EU Commission has released a new publication to improve efficiency and cost-effectiveness in the European investment fund industry.
“White Paper on Enhancing the Single Market Framework for Investment Funds,” proposes changes to simplify the regulatory overheads for UCITS investment funds and ensure the relevance of the UCITS model in the changing market.
The paper says cost savings and new market openings should translate into tangible improvements in the form of lower charges or higher returns.
The paper states that actions on two levels must be taken to ensure that market dynamics work to the advantage of the end investor. The Commission’s regulations put the interest of the end investor first when recommending and selling investment funds. Also, the Commission will create a standardised disclosure document helping investors understand the key features of the proposed fund investment.
“The White Paper is very clear that professional investors should be allowed to operate without undue hindrance and that the EC will work to sweep away any such red-tape that impedes professional investment business,” says Florence Lombard, AIMA’s executive director. “We certainly welcome this as a means of retaining and growing such business in Europe and this move may well benefit investors in some nation states that currently suffer from outdated regulatory practices.
“We are happy to see standardisation of definitions for private placements but less so on the prospect of any new regulations. This is an on-going exercise and the Commission has promised further research on non-harmonised funds, including hedge funds and the need to develop a single private placement framework.”
“We are very pleased that the Commission has understood the need to support the European fund industry as it restructures to meet new competitive challenges and the changing needs of European investors,” says Sheila Nicoll, deputy chief executive of the IMA. “It has clearly understood the role of investment fund managers in pension provision as well as the need to keep European-based funds in the global vanguard. There has been a great deal of consultation and discussion over the last few years. Now it is a question of making it happen.”