The Irish Funds Industry Association (“IFIA”) has made a detailed submission in response to the European Commission’s consultation paper on UCITS titled “Product Rules, Liquidity Management, Depositary, Money Market Funds, Long Term Investments” (the “UCITS VI Consultation”).

Partners Shay Lydon and Anne-Marie Bohan of the Asset Management Group at Matheson Ormsby Prentice were closely involved in developing the IFIA response. Shay Lydon co-chaired the IFIA UCITS Working Group which prepared the response and Anne-Marie Bohan was also an active member of the Working Group.  On a pan-European industry level, Shay Lydon also contributed to the formal submission of the European Fund and Asset Management Association (“EFAMA”) to the UCITS VI Consultation, which adopted positions consistent with the IFIA in addressing many of the questions raised by the Commission.   Mr Lydon is the IFIA representative on the UCITS Standing Working Group established by EFAMA.

In responding to the Commission’s broad-ranging queries, the IFIA highlighted the success of UCITS III in introducing a level of flexibility in terms of eligible assets for UCITS, embraced by promoters and investors alike, which works within an investor-protection driven regulatory framework.  This balance has been achieved through the robust control and risk monitoring systems applied by UCITS to monitor risk exposure (including market risk, counterparty risk and issuer concentration risk) and to maintain diversification and liquidity.  The IFIA advocated that retail investors should continue to benefit from developments in investment management techniques and product innovation, subject always to the existing controls built into UCITS, and that there should be no retrenchment in respect of the product enhancements introduced through the UCITS III Directive. 

Comment

While the UCITS VI Consultation process is at a relatively early stage, the extensive terrain covered by the Commission suggests a very broad exploratory mandate with potential long-term implications for the direction of the UCITS product.  It is therefore essential that stakeholders engage fully with the consultation process during this embryonic phase.

The partners of the Asset Management Group at Matheson Ormsby Prentice are committed to constructive European engagement on the issues prompted by the UCITS VI review, and to continue to robustly articulate and advocate the position of our clients and the Irish funds industry. Please get in touch with us directly at the contact details provided should you wish to discuss any of the matters raised in this briefing.