12 Financial services: undertakings
for collective investments in transferable securities
| (34086)
12397/12
+ ADDs 1-2
COM (12) 350
| Draft Directive amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions
|
| Legal base | Article 53(1) TFEU; co-decision; QMV
|
| Department | HM Treasury
|
| Basis of consideration | Minister's letter of 3 October 2012
|
| Previous Committee Report | HC 86-xii (2012-13), chapter 8 (12 September 2012)
|
| Discussion in Council | Not known
|
| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
|
BACKGROUND
12.1 The Undertakings for Collective Investments in Transferable
Securities (UCITS) Directive was originally adopted in 1985 and
allows open-ended investment funds investing in transferable securities
to be subject to the same standards of regulation in each Member
State and to be marketed to investors in other Member States without
the need for additional authorisation. The Directive was recast
in 2009 as Directive 2009/65/EC.[54]
12.2 When the Alternative Investment Fund Managers Directive
is transposed into the national laws of Member States in July
2013, funds aimed at professional investors, such as hedge funds
and private equity funds, will have substantially greater investor
protection requirements than UCITS funds which are aimed at retail
investors.
12.3 In July the Commission presented this draft Directive
in order to help address the anomaly of professional investors
having better protection than retail investors by introducing
new requirements in key areas. It is a narrow update, only introducing
new requirements in respect of depositaries, remuneration and
sanctions.
12.4 The draft Directive was presented as part of the Commission's
retail package that also includes the draft Regulation on key
information documents for investment products[55]
and the draft recast Directive on insurance mediation.[56]
It is expected that a further legislative proposal will follow
shortly to address the remaining imbalances in investor protection
as well as bringing wider reforms to UCITS funds.
12.5 When we considered this proposal in September we heard
that the Government supports the Commission's consideration of
amendments to the UCITS Directive, holding that retail investors
should be able to expect a consistent and suitable level of protection
regardless of where a fund is located in the EU. We said that,
whilst we recognised the utility of this proposal for improving
protection for retail investors, we noted the Government's intention
to seek improvements to the text of the draft Directive in regard
to a number of issues. So we asked to hear, before considering
this matter further, about developments in Council consideration
of these matters. Meanwhile the document remained under scrutiny.[57]
THE MINISTER'S
LETTER
12.6 The Economic Secretary to the Treasury (Sajid Javid)
writes now about a brief Council working group on 7 September
in which Member States were given the opportunity to provide their
initial views on the draft Directive. He reports that:
- there was a very broad consensus on the Government's position
on sanctions - that the provisions should be aligned with the
Council texts of other dossiers, notably the Market Abuse Regulation
and the Transparency Directive;
- the Presidency indicated that it would copy across
the relevant sanctions provisions once those texts were finalised;
- on remuneration provisions, there was a reasonably
even split of Member States ¯
a number supported the Governmet's position
that it would be most efficient for managers to copy the provisions
of the Alternative Investment Fund Managers Directive, a number
argued that a bespoke regime should be devised and some indicated
that they could support either approach;
- the other Member States with national depositary
regimes joined the Government's opposition to the new restrictions
on depositary eligibility ¯
only one Member State strongly supported the
new restrictions;
- there were also a small number of Member States
that echoed the Government's concern at the lack of a mechanism
to allow a contractual discharge of liability in third countries
where use a sub-custodian is required ¯
none spoke to support the exclusion of such
an arrangement; and
- no Member States raised any further significant
issues in the course of the discussion.
The Minister adds that the Presidency said that it
would hold a further meeting in October, although the date of
this meeting has yet to be announced ¯
it did not indicate that it would be releasing any compromise
text ahead of this meeting.
CONCLUSION
12.7 We are grateful to the Minister for this
interim report and look forward to hearing about further substantive
developments in due course. Meanwhile the document continues under
scrutiny.
54 See http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:302:0032:0096:EN:PDF. Back
55
(34087) 12402/12 + ADDs 1-2, see chapter 13 in this Report. Back
56
(34089) 12407/12 + ADDs 1-2, see chapter 14 of this Report. Back
57
See headnote. Back
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