UCITS IV adopted by European Council of Ministers
23/06/2009

We are pleased to report that yesterday the European Council of Ministers adopted without debate, the UCITS IV Directive. The Directive will now be published in the Official Journal (OJ) which usually takes between 4 and 12 weeks and on the twentieth day following its publication in the OJ, the Directive will enter into force.

The Directive, which has been under consideration for a number of years, seeks to update the regulatory framework applicable to European investment funds – undertakings for collective investment in transferable securities (UCITS) – which represent a market of around EUR 5,000 billion.

The aim of the Directive is to modernise the regulatory framework applicable to these financial products in order to:

– offer investors a greater choice of product at lower cost through better integration of the internal market;
– provide investors with suitable protection through high-quality information and more efficient supervision;
– maintain the competitiveness of European industry by adjusting the regulatory framework to    developments in the market.

Against this background, the text is aimed at fulfilling the following objectives:

– improve investor information by creating a standardised summary information document
– create a genuine European passport for UCITS management companies
– facilitate crossborder marketing of UCITS by simplifying administrative procedures: there will be    immediate market access once the authorisation has been granted by the country of origin of the    UCITS; the host country will be able to monitor the commercial documents but not to block access to    the market;
– facilitate crossborder mergers of UCITS, which will make it possible to increase the average size of    European funds
– facilitate asset pooling by creating a framework for the system of "master-feeder" arrangements    whereby a fund invests more than 85 % of its assets in another fund;
– strengthen the supervision of UCITS and of the companies that manage them, by means of enhanced    cooperation between supervisors: the Directive encourages the exchange of information between    supervisors, harmonises the powers of supervisors, and allows for the possibility of on-the-spot    investigation, consultation mechanisms and mutual-aid mechanisms for the imposition of penalties, in    particular.

CESR, the Committee of European Securities Regulators, intends to issue a number of consultation papers over to the summer to provide guidance/advice with regards to the implementation and application of a number of the UCITS IV provisions. IFIA will be monitoring and engaging on this process.

View adopted UCITS IV Directive