25 June 2007

EFAMA comments on possible adjustments to UCITS

EFAMA issued its comments on the Commission’s initial orientations on possible adjustments to the UCITS Directive underlining the proposed notification procedure can only work if the current problems with the simplified prospectus are solved in such a way that information of investors is fully harmonised and host country authorities cannot intervene whether it be to add new information or to change information already included.

EFAMA is also of the opinion that the management company passport must not be weakened by leaving various back-office activities in the Member State where the fund is authorised, under the pretext that having no such activities in the “host” country would undermine oversight by local regulators or endanger the fund’s tax domicile.

With regard to pooling and master feeder structures the Commission should consider a less stringent approach to the use of derivatives in the feeder. This should not be limited to currency hedging but should be more open to other purposes as is already the case under the current French master-feeder regime.

On the simplified prospectus, the Commission is proposing a set of “key investor information” not necessarily included in a specific document. EFAMA warns the Commission of the risk that, in the absence of an agreement on the same basic investor requirements for all funds, each distributor could request a modification of the key investor disclosure according to its own set of requirements. This would increase costs for the industry and reduce comparability at the point of sale.

EFAMA members are therefore in favour of one document and against the possibility to “tailor” information. Furthermore, should the disclosure information be used in marketing materials, it would become subject to scrutiny by regulators in host Member States during the notification procedure, possibly leading to requests of modification or additions, also to the expense of simplicity and comparability.

Full response

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