AIMA

The UCITS Directive 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 European 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 UCITS Directive, UCITS IV, introduced a number of improvements such as a management company passport, master-feeder structures, mergers and improved investor disclosure.

On 3 July 2012 the European Commission published a proposal for a draft UCITS V Directive. The draft UCITS V Directive covers five issues: eligibility to act as a depositary, criteria for delegating custody, liability for the loss of financial instruments held in custody, the remuneration of UCITS managers, and sanctions for breaches of the UCITS Directive. The draft also includes amendments to the UCITS Directive provisions which relate to access to telephone and data records and will empower the European Commission to adopt Level 2 measures specifying matters such as the circumstances in which financial instruments held in custody should be considered as lost.

The publication of the draft UCITS V Directive was closely followed by the publication of a further consultation document on UCITS issues, on 26 July 2012, which is widely known as ‘UCITS VI’. The consultation paper invites responses to questions which relate to 8 different elements of the UCITS framework: the eligible assets in which a UCITS fund can invest, efficient portfolio management techniques, OTC derivatives, extraordinary liquidity management tools, the possibility of introducing a depositary passport, money market funds, long-term investments and improvements that could be made to the UCITS IV Directive.

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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

European Commission UCITS: Product Rules, Liquidity Management, Depositary, Money Market Funds, Long-term Investments (July 2012)

European Commission UCITS V Proposal (July 2012)

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 European Commission consultation paper on UCITS: Product Rules, Liquidity Management, Depositary, Money Market Funds, Long-term Investments (October 2012)

UCITS V Position Paper (September 2012)

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

Informal questionnaire on private long term investment funds – issued by the Asset Management Unit of the Directorate General Internal Market and Services (DG MARKT) of the European Commission (January 2013)

Presidency of the Council of the EU compromise text on UCITS V (November 2012)

ESMA opinion on Article 50(2)(a) of the UCITS Directive (November 2012)

ESMA's Q&A: Key Investor Information Document (KIID) for UCITS (September 2012)

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)