World Library  
Flag as Inappropriate
Email this Article

Undertakings for Collective Investment in Transferable Securities Directives

Article Id: WHEBN0003371504
Reproduction Date:

Title: Undertakings for Collective Investment in Transferable Securities Directives  
Author: World Heritage Encyclopedia
Language: English
Subject: Investment fund, Open-ended investment company, Investment management, Alternative Investment Fund Managers Directive, Shock absorber fee (SAFe)
Collection: European Union Directives, European Union Law, Investment, Systemic Risk
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Undertakings for Collective Investment in Transferable Securities Directives

The Undertakings for Collective Investment in Transferable Securities Directive 2009/65/EC is a consolidated EU Directive,[1] that allows collective investment schemes to operate freely throughout the EU on the basis of a single authorisation from one member state. EU member states are entitled to have additional regulatory requirements for the benefit of investors.

Contents

  • Evolution 1
    • Management Directive 1.1
    • Product Directive 1.2
    • UCITS IV 1.3
    • UCITS V 1.4
  • Contents 2
  • See also 3
  • Notes 4
  • References 5

Evolution

The objective of the original UCITS Directive 85/611/EEC, adopted in 1985, was to allow for open-ended funds investing in transferable securities to be subject to the same regulation in every Member State. It was hoped that once such legislative uniformity was established throughout Europe, funds authorised in one Member State could be sold to the public in each Member State without further authorisation, thereby furthering the EU’s goal of a single market for financial services in Europe.[2]

The reality differed somewhat from the expectation due primarily to individual marketing rules in each Member State that created obstacles to cross-border marketing of UCITS. In addition, the limited definition of permitted investments for UCITS weakened the marketing possibilities of a UCITS. Accordingly, in the early 1990s proposals were developed to amend the 1985 Directive and more successfully harmonise laws throughout Europe. These discussions, although leading to a draft UCITS II directive, were subsequently abandoned as being too ambitious when the Council of Ministers could not reach a common position.

In July 1998 the EU Commission published a new proposal which was drafted in two parts (a product proposal and a service provider proposal), which sought to amend the 1985 Directive. These proposals were finally adopted in December 2001, and are known as "UCITS III", which are now in force. Interestingly, LuxAlpha, an alleged "feeder fund" to Bernard Madoff's firm,[3] was a UCITS-regulated fund.[4]

Management Directive

The Management Directive 2001/107/EC, seeks to give management companies a “European passport” to operate throughout the EU, and widens the activities which they are allowed to undertake. It also introduces the concept of a simplified prospectus, which is intended to provide more accessible and comprehensive information in a simplified format to assist the cross-border marketing of UCITS throughout Europe.

Product Directive

The primary aim of the Product Directive 2001/108/EC is to remove barriers to the cross-border marketing of units of collective investment funds by allowing funds to invest in a wider range of financial instruments (including derivatives), which subject the same regulation in every Member state. All UCITS funds must comply with the same investment limits.

A collective investment fund may apply for UCITS status in order to allow EU-wide marketing. The concept is to create a single funds market across the EU. The aim is that with a larger market the economies of scale will reduce costs for investment managers which can be passed on to consumers.

Throughout Europe approximately €6.8 trillion are invested in collective investments. Of these funds about 76% are UCITS.[5]

UCITS IV

The proposal of UCITS IV Directive [6] was approved by the European Parliament on 13 January 2009 and also by the Council of the European Union as the Directive 2009/65/EC,[7] to be implemented on 1 July 2011. This updated the UCITS III Directives by introducing the following changes,

UCITS V

On 23 July 2014 the European Union adopted directive 2014/91/EU ("UCITS V") on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities as regards depositary functions, remuneration policies and sanctions.

UCITS V can be compared with the Alternative Investment Fund Managers Directive ("AIFMD") (European Union Directive 2011/61/EU), which is a parallel regulation for hedge funds and alternative investments.

UCITS V introduces new rules on UCITS depositaries, such as the entities eligible to assume this role, their tasks, delegation arrangements and the depositaries’ liability as well as general remuneration principles that apply to fund managers.

The depositary as a specific function under UCITS legislation (rather as it does under AIFMD). The depositary may delegate its safekeeping functions (but not other depositary functions to a third party custodian.

Contents

  • Ch I, Subject matter, scope and definitions
  • Ch II, Authorisation of UCITS
  • Ch III, Obligations regarding management companies
    • Sect 1, Conditions for taking up business; Sect 2, Relations with third countries; Sect 3, Operating conditions; Sect 4, Freedom of establishment and freedom to provide services
  • Ch IV, Obligations regarding the depositary
  • Ch V, Obligations regarding investment companies
    • Sect 1, Conditions for taking up business; Sect 2, Operating conditions; Sect 3, Obligations regarding the depositary
  • Ch VI, Mergers of UCITS
    • Sect 1, Principle, authorisation and approval; Sect 2, Third party control, information of unit-holders and other rights of unit-holders; Sect 3, Costs and entry into effect
  • Ch VII, Obligations concerning the investment policies of UCITS
  • Ch VIII, Master-Feeder Structures
    • Sect 1, Scope and approval; Sect 2, Common provisions for feeder UCITS and master UCITS; Sect 3 Depositaries and auditors; Sect 4, Compulsory information and marketing communications by the feeder UCITS; Sect 5, Conversion of existing UCITS into feeder UCITS and change of master UCITS; Sect 6, Obligations and competent authorities
  • Ch IX, Obligations concerning information to be provided to investors
    • Sect 1, Publication of a prospectus and periodical reports; Sect 2, Publication of other information; Sect 3, Key investor information
  • Ch X, General obligations of UCITS
  • Ch XI Special provisions applicable to UCITS which market their units in other member states
  • Ch XII, Provisions concerning the authorities responsible for authorisation and supervision
  • Ch XIII, Delegated acts and powers of execution
  • Ch XI, Derogations, transitional and final provisions

See also

Notes

  1. ^ Last amended by Directive 2014/91/EU
  2. ^ nb at the time the EU was still the European Economic Community. The term European Union did not come about until 1992
  3. ^ Sandler, Linda (12 July 2011). "LuxAlpha Seeks to Move Madoff Suit to U.S. District Court". Bloomberg. Retrieved 12 December 2011. 
  4. ^ Sender, Sam (27 March 2011). "Action Needed to Shield Investors from Ucits Risk". FT.com FM (Financial Times). Retrieved 12 December 2011. 
  5. ^ See EFAMA – Q3 2008
  6. ^ "EUR-Lex – 52008PC0458 – EN". Eur-lex.europa.eu. Retrieved 19 January 2013. 
  7. ^ "EUR-Lex – 32009L0065 – EN". Eur-lex.europa.eu. Retrieved 19 January 2013. 

References

  • "EUROPEAN COMMUNITIES (UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES) REGULATIONS 2003 (SI 211 OF 2003)(AS AMENDED)"
  • "CESR’s guidelines concerning eligible assets for investment," July 2007
  • "UCITS IV good news for the industry but lack of passport a serious concern," April 2008
  • "UCITS IV directive", February 2009
  • UCITS 2001/107/EC
  • UCITS 2001/108/EC
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 



Copyright © World Library Foundation. All rights reserved. eBooks from World eBook Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.