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Brussels, 4 July 2006

Financial services: industry reports recommend improvements to EU investment fund framework

The European Commission has published three industry reports that analyse the main challenges facing different segments of the EU investment fund industry, focusing respectively on retail investment funds (UCITS), hedge funds and private equity. The reports were prepared by the expert groups on investment fund market efficiency and alternative investments (see IP/06/96), and are a follow-up action to the Green Paper on the enhancement of the EU framework for investment funds and long-term savings vehicles (see IP/05/927). While they do not necessarily represent the views of the Commission, the reports and stakeholders' reactions to them will contribute significantly to the policy debate on improving the operating environment for Europe's asset management industry. In particular, they constitute an important input to the forthcoming White Paper on strengthening the single market framework for investment funds, scheduled for publication in November 2006. The reports will be debated at an open hearing in Brussels on 19 July 2006.

Internal Market and Services Commissioner Charlie McCreevy said: "As individual savers and as members of collective pension schemes, we all need an efficient, innovative and responsible asset management industry. So I am pleased to present these expert group reports, which give us a coal-face perspective on the issues at EU level that could be holding the industry back. We will look carefully at the recommendations so that we can respond in a way that will keep the fund industry growing. Now we need to hear other stakeholders' views."

Summary of report recommendations

The report on investment fund market efficiency provides fresh ideas and operational suggestions on how efficiency improvements can be delivered. Several of these would require carefully targeted amendments to the UCITS Directive. The report calls on the EU to deliver these improvements within three years.

Meanwhile, the report on hedge funds identifies a number of alternative approaches - which do not call for new EU legislation - to make hedge funds available to different categories of investor. It stresses the need to remove barriers to investment in hedge funds by institutional investors and to cross-border provision of essential support services to hedge fund managers.

Finally, the report on private equity funds describes the unique role of private equity in nurturing new enterprises and re-energising existing companies. Member States control most of the tax and regulatory levers needed to provide a private-equity friendly environment, and the report urges them to make effective use of these powers. The report highlights a number of cross-cutting EU initiatives that have had unintended consequences for the private equity industry and identifies useful EU-level improvements that could facilitate cross-border investment and capital-raising by private equity funds.

Next steps

The reports will be discussed with Member States and regulatory bodies, and will be debated at an open hearing in Brussels on 19 July 2006, which will give other stakeholders, such as regulators, institutional and retail investors and corporate issuers, the opportunity to react.
The Commission also welcomes any written reactions to the reports, which can be e-mailed to:
The expert group reports, plus registration details for the open hearing, are available at:

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