Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CHALLENGES & OPPORTUNITIES

CHALLENGES & OPPORTUNITIES

3.

The 1985 UCITS Directive, also known as UCITS I, introduced the European fund passport con- cept, which allows a fund domiciled in one European jurisdiction to be marketed in all other EU jurisdictions, provided that the notification requirements mentioned in the Directive are fulfilled. However, the drive toward a UCITS single market in Europe is not yet over and while a signifi- cant journey has been completed, notably with the simplified notification procedure introduced by UCITS IV, further work needs to be done to remove all the remaining barriers in a growing cross-border fund distribution environment, in particular in terms of taxation. The following table sums up the major challenges faced by management companies to market their funds beyond borders:

Table 4: Major issues faced by asset managers distributing their funds cross-border

Country approval requirements Maintaining registration Taxation of funds and investors Various fiscal requirements

Administrative and regulatory requirements

Taxation issues

Difficulties to access information on a cross-border basis Difficulties to access updated and reliable information

Information referencing issue

Manual processes Lack of standardisation

Operational workflow

Lack of standardisation of distribution agreements Increasing complexity of distribution networks

Distribution agreements and trailer fee management

3.1

Source: CACEIS, 2011

3.1

Administrative and regulatory requirements

3.1.1

Registration requirements for foreign funds

Today when an asset manager seeks to market funds to investors in other countries, each fund or sub-fund must be registered for sale with the national regulator of that country, except for private placement. So far, this process could be extremely time-consuming, costly and difficult, as asset man- agers had to comply with a range of requirements such as transmission of numerous docu- ments (original and/or self-certified) often translated to the local language, appointment of local agents and payment of fees, etc., differing from one country to another. In Italy for example, two parallel registrations had to be carried out: One addressed to the CONSOB and the other to the Banca d’Italia. The significant differences in time and cost of registration between countries made it difficult for management companies to launch funds simultaneously across different markets. Table 5 provides a comparison of these various local distribution requirements, lead times and fees as at January 2011 for the initial registration of a foreign fund in the top 7 target markets, namely Germany, Austria, Switzerland, the Netherlands, Spain, the United Kingdom and France (please refer to graph 15).

Notice

Through its registration and post-registration services, CACEIS can assist you in meeting all the administrative and regulatory requirements faced when distributing internationally.

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