On 21 June 2017, the European Commission launched a four-week public consultation on the inception impact assessment of its initiative to reduce barriers to the cross-border distribution of investment funds.

The consultation provides an opportunity for stakeholders to comment upon the Commission’s understanding of the issue and the intended process to rectify it. In its Communication on the Mid-Term Review of the Capital Markets Union (CMU) Action Plan the Commission identified this initiative as a priority action to be taken by 2019 and committed to completing an impact assessment with a view to considering a legislative proposal by Q1 2018.

The effort to increase the cross-border distribution of funds is not an novel initiative. It has long been recognised that while the marketing “passports” provided for in the UCITS Directive and the Alternative Investment Fund Managers Directive (AIFMD) facilitate cross-border distribution to an extent, on the whole markets are still fragmented along national lines. The Commission’s original 2015 Communication on the CMU Action Plan committed to identifying and addressing the reasons for the fragmentation. Subsequently, the Commission sought stakeholders’ input on barriers they face through several public consultations, including the Commission’s Call for Evidence on the EU Regulatory Framework for Financial Services and a targeted public consultation on the distribution of funds. Based upon this input, as well as the work of the Commission’s expert group on barriers to free movement of capital, the Commission has identified the five following policy targets:

  • harmonise marketing requirements and practices across Member States;
  • reduce the administrative burdens cross-border distribution entails, including the possible prohibition of a local agents requirement;
  • increase the transparency and improve the proportionality of regulatory fees;
  • simplify the notification procedures; and
  • address barriers to online distribution including by clarifying the marketing rules applicable to online distribution.

Notably, this initiative does not address the barriers which result from national taxation systems.

The consultation will remain open until 20 July 2017.

Separately, Norton Rose Fulbright has two guides concerning the AIFMD. The first guide considers whether the AIFMD marketing passport is working in practice. The second guide looks at the requirements that non-EEA managers face when marketing non-EEA alternative investment funds to professional EEA investors. Both guides cover 15 EU jurisdictions – Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden and the UK. For further information please contact Imogen Garner.

View Reducing barriers to cross-border distribution of investment funds, 21 June 2017