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European Commission Seeks Ways to Develop Fund Industry in Europe
Washington, DC, August 1, 2005 - The European Commission recently issued a Green Paper that analyzes the fund market and regulatory framework in the European Union (EU) and suggests possible ways to improve EU regulations to facilitate the development of the fund industry.
The Commission’s paper does not recommend a legislative overhaul but rather suggests a targeted approach over the next two years to:
- resolve outstanding UCITS implementation-related issues,
- consider the need to provide a true management company passport, and
- analyze a number of issues related to the distribution, sale, and promotion of funds.
The Commission also suggests giving thought to long-term challenges such as fund mergers and pooling, whether to permit cross-border depository services, the effect on the fund market and investor protection of competition from substitute products, and how to regulate alternative products such as hedge funds and private equity funds.
The paper also addresses two problem areas of interest to the U.S. mutual fund industry: difficulties in using the UCITS passport and the lack of standardized fund performance information.
Comments on the Green Paper are due by November 15, 2005. Based on the comments, the Commission expects to develop recommendations in early 2006 to enhance the UCITS framework.