On 5 February 2019, the Council of the EU announced that political agreement on simpler and quicker cross-border distribution of investment funds had been reached between the Council of the EU and the European Parliament.

The proposal, which consists of a draft Regulation and draft Directive, is designed to improve transparency and harmonises diverging national rules:

  • the draft Regulation improves transparency by aligning national marketing requirements and regulatory fees. It introduces more consistency in the way the regulatory fees are determined. It also harmonises the process and requirements for the verification of marketing material by national competent authorities. The draft Regulation enables the European Securities and Markets Authority to better monitor investment funds; and
  • the draft Directive harmonises the conditions under which investment funds may exit a national market. It creates the possibility for asset managers to stop marketing an investment fund in defined cases in one or several host Member State. It also allows European asset managers to test the appetite of potential professional investors for new investment strategies through pre-marketing activities.

The Council has also announced proposals that take the form of a draft Directive and draft Regulation that aim to foster the development of covered bonds across the EU particularly in those Member States where no market currently exits. Among other things the draft Directive provides for a common definition of covered bonds and defines the structural features of the instrument. The draft Regulation amends the Capital Requirements Regulation with the aim of strengthening the conditions for granting preferential capital treatment by adding further requirements.

The texts will now be submitted to EU ambassadors for endorsement before the European Parliament and Council are called upon to adopt them at first reading.