European Union Internal Market Commissioner Charlie McCreevy is expected to propose uniform new rules regarding depositories for undertakings in collective investments in transferable securities (UCITs), the European Commissions version of mutual funds.
Besides leveling the playing field for requirements among all European nations, the new rules would disallow investment firms from permitting a sub-custodian bank to hold assets, rather than a depository, since sub-custodians obligation to return assets is not as stringent.
McCreevys action is in line with previous calls to action by French Economy Minister Christine Lagarde. Both officials cited the need to avoid a scandal similar to the Bernard Madoff ponzi scheme.
The outcome is an unlevel playing field, the Commission said. This means that some EU investors in UCITS are better protected than others.
