The European Commission has adopted two Recommendations to facilitate the common implementation of some crucial EU rules on collective investment funds (UCITS), such as unit trusts, common funds and SICAVs.
The first recommendation on UCITS' investment in derivatives contains clear rules and principles to underpin robust risk-management standards for derivatives. Those standards aim to protect investors by ensuring that UCITS will at any time be able to meet liabilities incurred through dealing in derivatives. They must be calibrated to the real risk-profile of an individual UCITS' investments in derivatives.
The second recommendation on the simplified prospectus for UCITS introduces standardised ratios to make sure that retail investors can compare information on funds' operating costs. It is expected that the industry's own standard-setters will further develop their own detailed guidebooks for fund-managers, based on the Commission Recommendation.
Member States' competent authorities are expected to inform the Commission services by the end of September 2004 of the implementing measures they have taken further to each of the recommendations as well as to provide feedback on the early impact of that implementation by the end of February 2005.
Draft Recommendation on the use of financial derivate instruments for UCITS
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Draft Recommendation on contents of the simplified prospectus (Read)
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