European Commission Outlines Steps to Improve Fund Market Operations in Europe

Washington, DC, November 16, 2006 – A European Commission white paper finds a need for significant improvement in the legislative and regulatory framework for investment funds in Europe. In its paper, the Commission outlines potential reforms to address new competitive challenges and the changing needs of European investors.

Background
The investment fund market in Europe is governed by the UCITS Directive, which provides a framework for cross-border sales of funds throughout the European Union. UCITS funds, or Undertakings for Collective Investment in Transferable Securities, are European mutual funds that can be marketed in all EU countries.

In July 2005, the European Commission issued a Green Paper analyzing the fund market and regulatory framework in the EU and suggesting possible ways in the short and medium term to improve EU regulations to facilitate the development of the fund industry in Europe. In its comments on the green paper, the Institute expressed support for the Commissions’ efforts to foster an integrated and efficient marketplace for investment funds in Europe and suggested several steps to improve the European cross-border market for funds.

The Commission’s white paper concludes that “the UCITS Directive is no longer sufficient to support the European fund industry.” As a result, the Commission intends to propose a number of legislative and non-legislative actions in the coming years to improve the efficiency of the fund industry in Europe, including:

• improving the notification process that allows funds to be "passported" and sold on a cross-border basis in Europe;
• improving funds’ ability to merge; and
• strengthening supervisory cooperation in Europe.

Related Links
A section of this website is devoted to European and other global and international developments affecting funds and their investors.