ICI Supports Efforts to Improve Cross-Border Fund Market in Europe, November 2005

Washington, DC, November 15, 2005 - The Institute supports efforts by the European Commission to foster an integrated and efficient marketplace for investment funds in Europe and, in a recent letter to the Commission, suggests several steps to improve the European cross-border market for funds.

Background
The Institute's recent letter is in response to the European Commission's green paper on enhancing the UCITS Directive, which provides a framework for cross-border sales of investment funds throughout the European Union. The Directive allows a fund to be sold throughout the EU subject to regulation by its home country regulator. UCITS funds - or Undertakings for Collective Investment in Transferable Securities - are European mutual funds that can be marketed in all EU countries.

Funds domiciled in Europe - which include UCITS and non-UCITS funds targeting only investors in specific EU nations - represent approximately $4.6 trillion, or 33 percent of the total worldwide mutual fund market as of year-end 2003.

ICI Position
The Institute strongly supports the Commission's efforts to foster an integrated and efficient market for investment funds in Europe in its recent letter. Toward that end, ICI suggests five ways in which the cross-border market for funds in Europe could be improved:

streamline and simplify the "fund passport" - the notification procedure that enables a fund to be sold outside of its home market;
enhance the usefulness of disclosure available at the point of sale, particularly by allowing funds and intermediaries to rely principally on the Internet for purposes of communicating the required information to investors;
enhance the usefulness and comparability of fund advertising materials through the establishment of standardized performance methodologies;
streamline the process by which Member States approve marketing plans; and
improve the infrastructure for processing subscription and redemption orders by encouraging industry to develop pan-European standards for order processing.

ICI also recommends that the Commission establish a working group to consider adopting a common understanding or definition of "private placement" across the EU, arguing that a common definition could significantly streamline the sale of cross-border investment funds to pension plans.