Finance: Most member states have not fully implemented the new EU-wide mutual fund directive, according to a PwC survey.
Two-thirds of European countries have yet to transpose the UCITS IV directive into national law and issue marketing guidelines to investment firms, as required by European law. “This prevents large players from using the full range of possibilities offered by UCITS IV,” Thierry Blondeau, UCITS IV European leader at PwC, said at a press conference held on the sidelines of the ALFI Global Distribution Conference on Tuesday.
The new regime allows investment funds to be run by managers, marketed and merged across European borders for the first time. UCITS IV provisions were once thought to be a competitive threat to Luxembourg as managers could consolidate operations. However, for the sake of diversification, most fund companies still plan to maintain two fund hubs, typically in their home market and an international financial centre, Blondeau explained. He said the Grand Duchy remains an attractive base for the latter.
The consulting firm reported that it has already worked with two fund managers to rationalise their product ranges, including a €200 million fund that resulted from the merger of an Irish fund into its Luxembourg sister fund. Blondeau expects between 200 and 300 new cross-border sub-funds will be created in the Grand Duchy over the next year, as European member states put the rules into place.
The directive went into effect on July 1, but fund managers have a one-year grace period before most of the rules become mandatory. Luxembourg, Austria, Ireland, Malta and the UK have implemented all the required rules. Countries including Belgium, Finland, the Netherlands and Portugal have partially introduced the mandatory measures. Greece, Hungary, Lithuania and Poland have made no progress, the PwC study indicates.
The slow pace means that while, for example, Danish and German funds can take advantage of the newly flexible rules--since both countries implemented the directive--Spanish and Italian funds are frozen out pending their governments’ action.