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Brussels, 14 July 2005

Financial services: Commission proposes improvements to the European market for investment funds

The European Commission has published a Green Paper on the enhancement of the EU framework for investment funds. The Paper invites consideration and comment on a range of proposals aimed at boosting the efficiency of the single market for investment funds. An efficient European investment fund market - where some €5 trillion of funds are currently under management - is of key importance in the context of enhancing investment and in contributing to better provisioning for old age. Stakeholders are invited to comment by 15 November 2005 on the Green Paper, which is available at:

Internal Market and Services Commissioner Charlie McCreevy said: "The European investment fund market is of key importance to the citizens of Europe, affecting as it does their future welfare. In some Member States 20% of the adult population invest in funds. The EU framework for investment funds has made a significant contribution to the success of this market. But it still needs improving. The proposals we are outlining today are intended to form the basis for a discussion on how the efficiency of the European investment fund industry might be enhanced while underpinning a high level of investor protection. In time, this should offer the potential to reduce costs, add billions to the value of investments, enhance investor confidence, boost economic growth and play a significant role in tackling Europe’s looming pension crisis.”

The Green Paper reviews the functioning of the legislative framework for investment funds provided for by the UCITS[1] Directive, which seeks to enable a fund authorised in one Member State to be sold across the EU while assuring a high level of investor protection. The Green Paper analysis, based on extensive research, draws on wide-ranging consultation with market participants and national authorities.

Today, some 28,000 UCITS amounting to some € 4 trillion represent more than 70% of the assets under management by the European fund industry. Despite these achievements, there is scope for improvement. However, a central message of this Green Paper is that there is no compelling case at this stage for fundamental legislative overhaul. Instead the Paper identifies concrete short-term measures to ensure consistent implementation and more efficient operation of existing rules.

In the longer term, the EU fund industry is facing unprecedented structural challenges. There is also promise of new opportunities. The growth of other types of collective investments and the need for a cost-effective organisation of the EU industry may call for new answers. The Green Paper seeks to stimulate debate on whether an EU-level response is required and, if so, on the form of possible measures.

The Commission invites comments on this Green Paper. Contributions should be sent by 15 November 2005 to:

In addition, an open hearing will be held in Brussels on 13 October 2005. Following analysis of the contributions, the Commission will publish a definitive statement of future action. In the meantime, with the help of the Committee of European Securities Regulators (CESR), efforts will continue to improve the implementation of existing UCITS law. In line with Better Regulation, possible legislative proposals will be subjected to extensive ex-ante consultation, impact assessment and cost-effectiveness analysis.

[1] Undertakings for Collective Investment in Transferable Securities

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