Luxembourg fires warning over UCITS IV
LUXEMBOURG - Claude Kremer, chairman of the Association of Luxembourg Fund Industry (ALFI), has condemned the plans for management company passports under a proposed new Undertakings in Collective Investments and Securities (UCITS) directive.
Speaking during his organisation's spring conference in Luxembourg today, Kremer, said the quality of the "UCITS brand" would be affected by the passport, which was proposed by the European Commission last year.
The issue of a management company passport remains one of the key issues to be dealt with by the European Commission in the drafting of the fourth UCITS framework, initially intended to protect retail investors in Europe, though now expanded to institutions since many funds are owned by institutional investors for reasons of cost, logistics, transparency or governance.
The strategic objective of the management company passport is to allow fund managers to manage funds domiciled in another member state, without generating fiscal or supervisory uncertainty which might undermine the effective oversight or tax efficiency of the management company or fund chain.
Though arguing the passport is "fundamentally a good thing", Kremer said it will not benefit investors, pointing at his country's emphasis on investors protection.
"It is yet another efficiency measure, but it is different from the other measures under UCITS IV, such as cross-border mergers and pooling of assets, in that it is far more complex," he said, questioning who will benefit from the measure.
He added: "We must make sure that the rules are the right ones, because our funds will suffer from any inefficiencies."
Instead of holding off UCITS IV, Kremer proposed the EC begin with the introduction of other elements which are part of the directive, while leaving the discussion of management company passports until "the time is right".