In June 2016 the European Commission published a consultation paper on the cross-border distribution of funds, as part of its September 2015 action plan for a Capital Markets Union (CMU).
The aim of the CMU is to create a deeper single market for capital in order to strengthen Europe’s economy and encourage investment. Investment funds are acknowledged as playing a role in achieving this aim. However, the Commission noted several barriers to cross-border distribution of these funds, including the impact of concentrated fund distribution channels in individual Member States, cultural preferences for funds managed in investors’ home states and a lack of incentives for managers to compete cross-border.
Regulatory barriers are cited in the Commission’s consultation as being particularly significant, with the potential to affect small managers more adversely than the other barriers. Types of regulatory barriers include burdensome registration procedures, costly and diverse marketing requirements, inconsistent administrative arrangements and tax obstacles.
The consultation seeks feedback in the following areas:
- marketing restrictions;
- distribution costs and regulatory fees;
- administrative arrangements;
- distribution networks;
- notification processes; and
The deadline for responses was recently extended to 9 October 2016.