European Commission (EC) proposals to "boost" the cross-border market for investment funds, published on 12 March, will "add yet a new layer of rules" for asset managers to follow, director general of the European Fund and Asset Management Association Peter De Proft has said.
The proposals, which will affect all asset managers regulated in Europe, are part of the EU's capital markets union (CMU) initiative to promote alternative sources of financing and remove barriers to cross-border investments within the bloc.
Specifically, the EC is proposing to improve transparency by "aligning national marketing requirements and regulatory fees", and introduce "more consistency in the way these regulatory fees are determined".
The EC said this policy "harmonises the process and requirements for the verification of marketing material by national competent authorities", and enables pan-European regulator ESMA "to better monitor investment funds".
In addition, the EC is proposing a directive which "harmonises the conditions under which investment funds may exit a national market", allowing firms to stop marketing a fund in certain states.
"It also allows European asset managers to test the appetite of potential professional investors for new investment strategies through pre-marketing activities," the EC added.
However, commenting on the proposals, EFAMA's De Proft said: "The main barriers to the cross-border distribution of funds, as identified by asset managers and investors, are the lack of clarity and transparency of existing rules, along with additional layers of regulatory requirements imposed at national level.
"[Today's] proposal unfortunately adds yet a new layer of rules.
He added EFAMA would "strongly support practical solutions", enhancing "supervisory convergence and legal certainty on the basis of a common understanding among national regulators and can be developed and implemented within a much shorter period of time than a legislative proposal".
EFAMA also said it does not believe that adding further regulatory requirements via a legislative review at this stage is the most appropriate means to address existing hurdles to the cross-border distribution of funds.
It added: "Instead of adding new rules to the existing complex structure, EFAMA considers that the main priority should be to further consolidate and clarify the existing rules and processes.
"This would also be in line with the CMU goal of allowing professional and retail investors having access to a larger and more diversified choice of investment opportunities."
"EFAMA looks forward to continuing the discussion during the legislative phase."
For its part, the EC said the proposals would "remove inefficiencies in the functioning of the single market for investment funds, reducing the costs for cross-border distribution and making it simpler, quicker and cheaper".
"This will accelerate the growth of cross-border distribution in the EU and will ultimately provide for more investment opportunities in the EU," it added.
According to the EC, its proposals - which will be considered by the European parliament - would save up to €440m per year in costs for existing cross-border distribution.
Currently, just 37% of UCITS products and around 3% of AIFs in the €14.3trn EU investment funds market are registered for sale in more than three member states.
The EC said "quick adoption" of its proposals by the European Parliament and the Council will "enable businesses and investors to benefit more fully from single market opportunities".
It added: "Investment funds are an important tool to channel private savings into the economy and increase funding possibilities for companies."
The outperformance of emerging markets that began in January 2016 and extended through the rest of that year and 2017 has continued in the first months of 2018. Perhaps the most important driver behind this sustained strength - the first consecutive years...
Threat of trade war escalating
Following investor ‘criticism’
A question of selectivity
'Impress on senior management the importance of diversity’