AIMA

UCITS introduces a harmonised framework of investment protection and product regulation that enabled UCITS (Undertakings in Collective Investment in Transferable Securities) funds registered in one Member State to be marketed freely across the Union.

UCITS are passportable open-ended vehicles with the sole objective of raising capital from the public and collectively investing in various financial instruments.

Significant developments in financial markets have necessitated several alterations to the UCITS regulatory framework.  The current iteration of the Directive, UCITS IV, introduced a number of improvements such as a management company passport, master-feeder structures, mergers and improved investor disclosure.

On 14 December 2010, the European Commission issued a consultation on the latest planned amendments, UCITS V, and now intends to publish a legislative proposal in 2012. It is planned that UCITS V will update the framework for UCITS depositaries, harmonise the catalogue of sanctions available to regulators and create new provisions for the remuneration of UCITS managers. UCITS V may also re-open the discussion on eligible assets and investment limits due to ESMA’s and the Commission’s growing concerns about exchange traded funds and structured UCITS.

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Key legislative documents

Level 1

DIRECTIVE 2009/65/EC of The European Parliament And Of The Council of 13 July 2009 (UCITS IV)

Level 2

Commission Regulation (EU) No 583/2010 (key investor information)

Commission Regulation (EU) No 584/2010 (the standard notification letter, on-the-spot verifications, investigations and the exchange of information between competent authorities)

Commission Directive 2010/42/EU (fund mergers, master-feeder structures and notification procedure)

Commission Directive 2010/43/EU (organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company)

Commission Directive 2007/16/EC (Eligible Assets Directive)

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Consultation documents

Joint HMT/FSA Consultation on UCITS IV Transposition (December 2010)

European Commission Consultation on the UCITS Depositary Function and on the UCITS Managers’ Remuneration (December 2010)

CESR consultation on Guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS (April 2010)

European Commission Consultation on the UCITS Depositary Function (2009)

CESR consultation on Clarification of the Definitions concerning eligible assets for investments by UCITS: can hedge fund indices be classified as financial indices for the purpose of UCITS? (February 2007)

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AIMA documents

Response to HMT/FSA consultation on UCITS IV Transposition (March 2011)

Response to Commission Consultation on UCITS Depositary Function and on the UCITS Managers’ Remuneration (January 2011)

Response to CESR consultation on Guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS (May 2010)

Response to European Commission Consultation on UCITS Depositary Function (September 2009)

Response to CESR consultation on Clarification of the Definitions concerning eligible assets for investments by UCITS: can hedge fund indices be classified as financial indices for the purposes of UCITS?(April 2007)

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Other relevant documents

CESR’s guide to clear language and layout for the Key Investor Information document (December 2010)

CESR Guidelines - Transition from the Simplified Prospectus to the Key Investor Information document (December 2010)

CESR Guidelines on the Selection and presentation of performance scenarios in the Key Investor Information document (KII) for structured UCITS (December 2010)

CESR Guidelines - Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS (July 2010)

CESR Guidelines on the methodology for the calculation of the synthetic risk and reward indicator in the Key Investor Information Document (July 2010)

CESR Guidelines on the methodology for calculation of the ongoing charges figure in the Key Investor Information Document(July 2010)

CESR Guidelines - Common definition of European money market funds (May 2010)

CESR Guidelines - Risk management principles for UCITS (February 2009)

CESR Guidelines on the classification of hedge fund indices as financial indices (July 2007)

CESR Guidelines concerning eligible assets for investment by UCITS (March 2007)