More uniform protection of cross border investors adopted by the Economic and monetary affairs committee with Monday’s vote on collective investment funds.

The new provisions concern cross border distribution of the EU-regulated alternative investment funds (AIFs) and undertakings for collective investment in transferable securities (UCITS), which gather assets from small investors and pool them to buy bonds, shares or other financial products.


Marketing and pre-marketing


In order to protect small investors in AIFs and UCITS, marketing communication targeted at them should be identified as such. Additionally ECON MEPS want it to present a detailed account of risks, summary of investors’ rights and information about national collective redress mechanisms in case of litigation. The European Securities and Markets Authority should also devise clear guidelines on marketing communication. [this is all fine though not a controversial part]

Pre-marketing which is to be used by a fund to test the waters in a new country before it starts its marketing activities should not lead to any sales of investment units or shares. Moreover, prior to such activities, a company manager should notify ”the competent authorities of its home Member State with a copy to the competent authorities of the Member State or Member States in which it will undertake pre-marketing activities”.


Exiting national market (de-notification)


An investment fund should be able to cease its activities in a host member state under certain conditions. The fund should make an offer to repurchase all its UCITS unit held by investors in this Member State, additionally ECON MEPs want it to make clear the consequences for investors if they choose to continue to hold the units.


Exemption from Key Information Document (KID) to be prolonged.


Additionally, MEPs acknowledged the need for a comprehensive review based on retail investors’ experiences and approved amendments to the PRIIPs (Packaged retail investment and insurance products) rules concerning the Key Information Document for UCITS management companies, investment companies and persons advising on, or selling, units of UCITS. They agreed that UCITS would be exempted from KID for a further two years.


The new provisions concern cross border distribution of the EU-regulated alternative investment funds (AIFs) and undertakings for collective investment in transferable securities (UCITS), which gather assets from small investors and pool them to buy bonds, shares or other financial products.


Marketing and pre-marketing


In order to protect small investors in AIFs and UCITS, marketing communication targeted at them should be identified as such. Additionally ECON MEPS want it to present a detailed account of risks, summary of investors’ rights and information about national collective redress mechanisms in case of litigation. The European Securities and Markets Authority should also devise clear guidelines on marketing communication. [this is all fine though not a controversial part]

Pre-marketing which is to be used by a fund to test the waters in a new country before it starts its marketing activities should not lead to any sales of investment units or shares. Moreover, prior to such activities, a company manager should notify ”the competent authorities of its home Member State with a copy to the competent authorities of the Member State or Member States in which it will undertake pre-marketing activities”.


Exiting national market (de-notification)


An investment fund should be able to cease its activities in a host member state under certain conditions. The fund should make an offer to repurchase all its UCITS unit held by investors in this Member State, additionally ECON MEPs want it to make clear the consequences for investors if they choose to continue to hold the units.


Exemption from Key Information Document (KID) to be prolonged.


Additionally, MEPs acknowledged the need for a comprehensive review based on retail investors’ experiences and approved amendments to the PRIIPs (Packaged retail investment and insurance products) rules concerning the Key Information Document for UCITS management companies, investment companies and persons advising on, or selling, units of UCITS. They agreed that UCITS would be exempted from KID for a further two years.