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Asset Management: a step forward in the cross-border marketing of investment funds and in the implementation of the Capital Markets Union

SÉRVULO PUBLICATIONS 15 Mar 2019

On February 5th of 2019, the European Parliament and the Member States of the European Union reached an agreement with the purpose of promoting the market of investment funds in the European Union.

According to data made available by the European Commission, the European Union's investment fund market is far from reaching its full potential, despite a total turnover of around 14.3 billion euros. It is striking that only 37% of the undertakings for the collective investment in transferable securities (UCITS) and 3% of the alternative investment funds (AIF) bear a European passport that allows for its distribution in more than 3 Member States. The vast majority of the assets under management are held by collective investment undertakings which are only authorized for distribution in their home Member State.

This is due to the imposition of overly complex and costly regulatory barriers in obtaining the necessary European passport, which severely constrains the options that are offered to investors.

The agreement that was reached is thus part of a broader strategic plan for the implementationof the Capital Markets Union and includes a set of tangible measures aimed at eliminating regulatory barriers to the cross-border marketing of investment funds and offering European citizens a wider array of investment alternatives.

In short, it seeks to allow European asset managers to easily distribute funds throughout the whole EU area.

Amongst the main purposes targeted by the measures contemplated in this agreement, the following standout:

a)      To allow alternative European Union funds managers to develop pre-marketing activities in order to probe the willingness of new potential investors in new markets.

b)     To clarify the obligations incumbent upon asset managers in the host Member State in the provision of customer services, without the need to maintain a physical presence or local facilities in all of the host states.

c)      To align the procedures and conditions under which fund managers may withdraw from national markets when they decide to stop placing their funds thereto (the so-called “de-notification procedure”).

d)     To establish a single online access point for obtaining information on national regulation relating to marketing requirements and the applicable rates.

The political agreement should now be followed by additional technical work before the European Parliament and the Council can formally adopt the final texts, and will culminate in the amendment of the UCITS and AIFMD directives.

Verónica Fernández

vf@servulo.com

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Verónica Fernández