On June 2, the European Commission (EC) published a consultation document (Consultation) on barriers to cross-border distribution of investment funds in the European Union. The Consultation aims to build on issues identified in responses received to the EC’s call for evidence on the European Union’s regulatory framework for financial services (Call for Evidence), and forms part of the EC’s ongoing work towards the Capital Markets Union (CMU).
The Consultation sets out various questions aimed at asset managers, distributors, consumer representatives and investors and seeks feedback and evidence on:
- marketing restrictions (including if and where EU member states impose stricter requirements than the Undertakings for Collective Investment in Transferable Securities (UCITS) directive);
- distribution costs and regulatory fees;
- administrative arrangements (for funds marketed and distributed to retail investors);
- distribution networks (such as hindrances to online platforms for distribution);
- notification processes; and
- tax issues.
The Consultation also notes interesting statistics from the EC, including that approximately 80 percent of UCITS funds are marketed on a cross-border basis. Also, since the introduction of the Alternative Investment Fund (AIF) Managers Directive in 2013, which provides passport arrangements for non-UCITS funds, 40 percent of EU-domiciled alternative investment funds with EU managers are marketed cross border, and in total, 57 percent of UCITS and AIFs that are domiciled in the EU are marketed cross border.
The Consultation is open for comment and responses must be submitted to the EC by October 2.
A copy of the Consultation can be found here.
The EC’s accompanying press release can be found here.