E-Folder - Finance

The Single Market for Investment Funds

When the original Undertakings for Collective Investment in Transferable Securities (UCITS) Directive was adopted in December 1985, Jacques Delors’ idea of a “single market” had only just emerged and the “Single European Act” with the now all too familiar “1992 objectives” had y

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

et to be endorsed. This is why, from today’s perspective, the Directive’s fairly unambitious aim to approximate conditions of competition and to ensure more effective and more uniform investor protection was easily attained. Also, when the discussion on a modernisation of the Directive started in late 1991, nobody con

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

sidered achieving a single market for investment funds – the intention simply being to modernise the Directive and to include as yet nonharmonised products. Only when the Commission published its “Strategic Programme” in 1993 did the discussion on a single market for financial services really get off the ground. A fur

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ther significant step forward came in 1999, when the modification of the UCITS Directive became part of the Financial Services Action Plan. This in turn “forced” the Council to advance its discussions over UCITS, which had been locked in stalemate for several years because of very different opinions on issues such as

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

he use of derivatives, funds of funds, index funds or the passport for the depositary. Nevertheless, the basic elements of the Directive are today as undisputed and modern as they were some 20 years ago:

• Comprehensive information for investors;

• Effective supervision of the fund and its manager;

• Meaningful div

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ersification in tradable and liquid instruments;

• Separation of management and segregation of assets

These principles have made UCITS as we know them, that is an efficient savings instrument combined with a high level of investor protection. The new Directive has left these principles untouched and has even gone so

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

far as to reinforce them. While broadening investment opportunities, for example through a wider use of derivatives, the new Directive strengthened risk-spreading rules and improved investor protection with the introduction of a simplified prospectus. While allowing new activities such as discretionary asset manageme

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

nt, regulation of the management company too was strengthened, for example through capital requirements and rules on delegation. Despite all this, ten months after its final application date the Directive does not yet really work. A number of transitional issues are only now being solved by the Committee of European S

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

curities Regulators (CESR) (to wit the recently closed public consultation by CESR), the two Commission Recommendations on the use of derivatives and on some contents of the simplified prospectus have yet to be implemented in many countries. Also, a number of definition problems, in particular with respect to eligible

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

investment instruments for UCITS, are only now starting to be considered by CESR and a public consultation as well as a public hearing are planned for April/May 2005.

The final “Level 2” regulation will surely not be on the table before late 2005. Other issues are bound to come up once the new Directive is really wo

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

rking. Even when this happens, the single retail market for investment funds will not have been achieved. This is made clear in the recent report of the Commission’s Experts Group on asset management. CESR’s working programme on investment management already draws some conclusions. While other markets, such as insuran

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ce and banking, seem to be undergoing further development, the Commission and CESR both agree that future regulation is needed to achieve the final goal of a single market for investment funds. What such legislation might look like will be the key discussion point between legislators, regulators and the industry in th

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

years to come. The main obstacles to the single market for investment funds have been more or less identified

• Cross-border registration of passported funds is still far too complicated, time consuming and expensive;

• Merging funds or pooling funds’ assets across borders is nearly impossible because of regulatory

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

and tax barriers;

• The passport for the management company is not what it should be: managing funds across borders is impossible;

• A significant number of funds (such as real estate funds) are not covered by the Directive;

• As the Directive is not a Lamfalussy-style directive, any modification and/or modernisat

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ion requires a new directive, which we all know is burdensome and very time consuming.

Competition Challenges

Another problem is that the current Directive is mainly a so-called “product directive” – unlike the more modern Investment Services Directive/Markets in Financial Instruments Directive (ISD/MiFiD) and other

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

financial services directives. UCITS are increasingly competing with new products, such as structured notes, which though less regulated and less transparent are nonetheless, in the case of retail investors, difficult to distinguish from the highly regulated investment funds. Retail investors are increasingly keen on

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

these absolute return products. Should it prove impossible to provide them with similar products under the UCITS Directive because of a restrictive interpretation of allowed investments – for example, What are transferable securities? What about investment in structured notes or in listed closed ended funds? – they wi

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ll, in fact, be the losers.

They will be driven towards products which might look cheaper, but which in reality provide a lower level of investor protection. The discussion on how to achieve a balanced regulation for UCITS in this respect will be one of the core issues on the regulatory agenda in the months ahead. Ho

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

wever, a really convincing and consistent solution to the problem will probably not be achievable under the current Directive simply by “including” new products. The shape of the current Directive needs to be reconsidered. Nobody today will argue that investor protection can also be achieved through other means such a

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

s a certain level of distribution regulation, as currently being undertaken through Level 2 regulation within the MiFiD. These are all points which the Commission will have to take into account when drafting its Green Paper on UCITS, the answer on the review clause included in the UCITS Directive, planned for mid-2005

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.e-folder.org.ua/article/90466/e-folder-UCITS--1985--2004.html">UCITS - 1985 - 2004</a>

BB link (for phorums):
[url=http://www.e-folder.org.ua/article/90466/e-folder-UCITS--1985--2004.html]UCITS - 1985 - 2004[/url]

Making the decision to participate as a vendor in a trade show is a commitment. You are pledging your time, money, energy, and other resources. You involve your staff. You put much effort into the planning process.

Since ebay was started in 1995, it has helped ordinary people with no business skills to start an online business especially those who want to find a lucrative way of earning a living. A lot of people contend that it is only with eBay that they were able to make a full-time living working at home.

The internet and world wide web are the wonders of the century, and eBay is one of the marvels to spring from it. However, like all good things there is a downside, and that is it provides a fertile ground for fraud and deceit.

Tags

Links

E-Folder - UCITS - 1985 - 2004

Related Articles: