The European Fund and Asset Management Association (EFAMA) has given its approval to the European Parliament voting to adopt the European Commission's newest initiative to remove cross-border barriers to the distribution of investment funds.
The investment body believes the decision recognises the perceived need to postpone the application of the PRIIPs disclosure regime for UCITS by two years, a position EFAMA supports.
The legislation has never been popular, rejected by the European Parliament in 2016 due its regulatory technical standards being seemingly oddly constructed. Rather than allowing access to past performance of a fund, the key investor document (KID) based future scenarios on them. One problem is that being in the midst of a prolonged bull run, these all tended to lead to favourable outcomes.
PRIIPs did come into force for investment companies this year and the Association of Investment Companies spoke out immediately as it members worried about giving investors unrealistic goals.
However EFAMA welcomed that the initiative will come with pre-existing AIFs being "pre-marketed" into new EU host jurisdictions, alongside not-yet-established AIFs, potentially widening the range of funds available to prospective investors.
The initiative also includes the removal of requirements for asset management companies to establish a mandatory physical presence in a host jurisdiction as a condition for marketing funds and for the introduction of a new centralised and updated information database, which will be held by ESMA.
Tanguy van de Werve, EFAMA Director General, said: “The increase in cross-border fund ownership in Europe over the past decade is a welcome development. We expect this trend to continue in the future, driven by technology-enabled access to a larger pool of foreign fund providers. The European Commission’s proposal on facilitating the cross-border distribution of funds will enable consumers to benefit from greater choice at a lower cost, thereby further unlocking the benefits of the CMU.”
