Press Release

IMA CONCERNED ABOUT FLAWED EU COMMISSION PROPOSALS FOR UCITS MANAGEMENT COMPANY PASSPORT

19 June 2007

In responding to the EU Commission's Exposure Draft on removing the major barriers to pan-European investment fund business, the Investment Management Association has welcomed the Commission's proposals, with one exception: it believes that the proposal to offer a "partial passport" for the cross-border operation of investment funds is flawed. 

IMA's response to the Exposure Draft urges the Commission to follow the spirit of the single market and support the development of cross-border business by providing for a full passport for the UCITS management company.  It notes that the Commission proposal for a "partial passport", under which the functions of calculating the net asset value of the fund and maintaining unitholder registers would have to take place in the Member State in which the fund is domiciled, would impose unnecessary artificial restraints and does not reflect modern reality. 

IMA points out that such activities do not know physical boundaries and can take place and be overseen anywhere since they are undertaken electronically.  An important oversight function remains with the depositary or trustee who will continue to be required to be in the same Member State as the fund.  In IMA's view, therefore, the Commission's proposals are unjustified and illogical. 

Sheila Nicoll, Deputy Chief Executive of the IMA, commented:
 
"It is very disappointing that an otherwise excellent piece of work falls down on one important issue. A number of UK funds are already administered in another EU Member State so this would be a significant backward step from the present position and would prevent the development of European centres of excellence in fund administration." 

A copy of IMA's response to the UCITS Exposure Draft is attached.