Improving fund market across EU
Investors will have access to a much larger choice of products at better valueEuropost
A political agreement was reached on Tuesday by the European Parliament and Member States on new rules to make it easier, quicker and cheaper for EU asset managers to sell funds to a wider range of investors, the EU press service reported. With it investors across the EU will have access to a much larger choice of fund products at better value.
“This agreement will cut red tape and improve clarity for fund managers who want to market their products across the EU. This will lead to more choice for investors, at lower costs - an important milestone for the Capital Markets Union. To give an example, fund managers based in Milan to be able to easily offer their funds in Riga, without compromising on investor protection,” VP Valdis Dombrovskis said.
Investment funds are an important tool to channel private savings into the economy and increase funding possibilities for companies. The EU investment funds market amounts to a total of €14.3 trillion. However, this market has not yet achieved its full potential. 70% of the total assets under management are held by investment funds authorised or registered for distribution only in their domestic market.
The agreement will remove some barriers for all kinds of investment funds, making cross-border distribution more transparent, while removing overly complex and burdensome requirements and harmonising diverging national rules. Increased competition will give investors more choice and better value, while safeguarding a high level of investor protection.
More specifically, the main changes introduced by the new rules will make it easier for EU alternative investment fund managers to test the appetite of potential professional investors in new markets (so-called ‘pre-marketing'). This will help them to take more informed commercial decisions before entering a new market. Furthermore, they will clarify customer service obligations for asset managers in their host Member State. This should ensure that investors have access to a uniform, high level of customer service across the EU without imposing on asset managers the cost of maintaining a physical presence or local facilities in all host markets.
Procedures and conditions for managers of collective investment funds will be aligned to exit national markets when they decide to terminate the offering or placement of their funds (so-called de-notification procedure). And last but not least, transparency will be increased and a single online access point for information on national rules related to marketing requirements and applicable fees will be created.
This political agreement will be followed by further technical work before the European Parliament and the Council can formally adopt the final texts.