As part of the Capital Markets Union initiative, the European Commission have proposed a Regulation and a Directive on the cross border distribution of investment funds.  This will have an impact on funds which are regulated under both UCITS and AIFMD.

Why is this being proposed?

The idea behind the Capital Markets Union is to get money flowing across the EU so that it can benefit investors and companies.  It aims to break down barriers to cross border investments to make it easier to raise funds regardless of where you are located.  As part of this initiative, the European Commission would like to increase the number of funds which are marketed and sold across the EU.

They have identified various factors which they believe are hindering the ability of investment funds to be distributed throughout the EU.  The Regulation and Directive therefore focus on addressing the complexities surrounding the marketing of funds and smoothing out different local approaches.  The proposals currently include:

  • Removing regulatory barriers to the cross border distribution of funds;
  • Improving transparency by harmonising national marketing requirements;
  • Ensuring regulatory fees are consistent;
  • Harmonising the process and requirements for the verification of marketing materials;
  • Allowing managers to test the appetite of potential investors for new investment strategies; and
  • Enabling ESMA to better monitor investment funds.


The intention is that the proposals will be adopted before the European Parliament elections in May 2019.  There will then be a two year transition period which means the earliest this would come into effect would be 2021.  Most recently the compromise proposals have been agreed by all delegations and negotiations will start between the European Council and the European Parliament.   The UK is also keeping an eye on developments through the House of Commons European Scrutiny Committee.

Updates from February:

Political agreement reached on Regulation and Directive Press release 05.02.19

Previous updates:

ECON draft reports on the legislative proposals Report 18.09.18
Share this