Comment by Joy Dunbar, Editor of Absolute UCITS
UCITS V was published earlier this week. Even though in an
ideal world this would probably be the last Directive for a
decade – at least – I suspect that UCITS VI
will be proposed before the ink dries on the latest version
which is expected to be enforced by 2014.
This is because increased global regulation will affect all
areas of the financial services industry and this is likely to
continue for the next few years.
UCITS V focuses on the clarification of the depositary's
functions, the introduction of rules on remuneration policies
and the harmonisation of the minimum administrative sanctions
that are to be available to supervisors in case of key
violations of the UCITS rules.
Ever since UCITS were first introduced in 1985 the overarching
objective was to allow investment schemes to operate freely
within European member states.
The next directive, I suspect, will happen sooner rather than
later because of the instability in the sector – not
least due to changing public opinion against the financial
services sector as a whole.
The public outrage surrounding the manipulation of Libor, even
though doesn’t affect the asset management sector
directly, is just the latest scandal to hit financial services,
increasing the chances that the industry will change forever
–with its damaged reputation seemingly certain to lead
to tougher regulation.
The next directive will attempt to iron out the unwitting
problems arising from earlier directives and will resolve
ongoing issues like whether certain UCITS should be classed as
complex products. Or it will be realigned to reflect the mood
of public opinion.
Legislators may also change certain rules to allow the
directive to become friendlier to longer term investors
especially if they become the investment building blocks for a
European-wide pensions’ scheme.
So a wider investment universe could be included for UCITS
– including more esoteric investments like loans or
less liquid investment strategies – though I suspect
this is unlikely.
More regulation is definitely on its way, the financial
services industry is changing as a result of the amount of
billions of taxpayers’ money that have been pumped
into some institutions, most notably banks, and the content of
UCITS VI is likely to be the inevitable consequence of
What do you think is going to be in UCITS VI? Please comment
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