The European Union proposed a new set of rules Thursday to make Undertakings for Collective Investment in Transferable Securities (UCITS) even more efficient by eliminating additional regulatory hurdles. Most notably, the rules- which will replace 10 directives with just one and go into effect in 2011-will allow cross-border mergers of funds, making Europe's mutual fund industry more efficient. They will also permit master-feeder structures and eliminate much of the administrative paperwork currently required to market funds to other markets in the European Union of 27 member states.
The revised regulations will also call for a two-page, plain English summary as opposed to the average 60-page prospectus.
"The expected benefits of this package to the EU industry are estimated to be more than 6 billion euros [$9.5 billion]," said EU Internal Market Commissioner Charlie McCreevy. "We expect these benefits to lead to lower costs for investors."
McCreevy added that the EU has conducted careful cost-benefit analysis of the mutual fund industry in recent years, particularly with an eye to how the rules affect their sales in Asia and Latin America, not just in Europe.
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