European Parliament Proposes Amending UCITS Directive

Washington, DC, March 10, 2000 - The European Parliament adopted a proposed UCITS Directive on February 18, 2000. The Parliament’s version of the proposal, which will now be forwarded to the Council of Ministers for its consideration, differs slightly from the version recommended by the Committee on Economic and Monetary Affairs of the European Parliament. The Parliament’s text would continue to allow fund-of-funds arrangements and permit investments by UCITS in other UCITS and non-UCITS funds subject to certain qualitative and quantitative conditions. The Parliament’s text, however, amends one of the conditions for investment.

Under both the Parliament and Committee versions relating to fund-of-funds, the Directive would require that investors in non-UCITS funds be afforded protection equivalent to that provided to investors in UCITS. The Committee text noted in particular that the rules on "borrowing, lending and uncovered sales of transferable securities satisfy the requirements of this Directive," while the Parliament text notes that the rules on "borrowing, lending, uncovered sales of transferable securities and on the role and the liability of the depositary laid down by this Directive are respected."