Cheat sheet: What is UCITS V?

20 February 2013

Factsheet

UCITS stands for Undertakings for Collective Investment in Transferable Securities, a popular category of regulated investment vehicle that accounts for around 85% of all European investment fund assets. UCITS are popular as they provide a European-wide standard for cross-border sales of investment products with a certain level of consumer protection.

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Notes:

UCITS V Key Issues

UCITS V is the latest update to the EU’s regulatory framework for UCITS, which originally dates from 1985. In the UCITS V package presented on 3 July 2012, the Commission proposes to tighten rules on depositaries, setting out their duties and holding them liable if assets go missing. This follows shortcomings in the depositary rules revealed by the Lehman Brothers bankruptcy and the Madoff fraud.

In addition, the Commission issued a consultation on 26 July 2012 focussing on questions about Product Rules, Liquidity Management, Depositary, Money Market Funds and Long-term Investments. This was done out of a concern that earlier revisions to the UCITS framework had opened up UCITS funds to a very broad range of investments and strategies, raising concerns about the use of derivatives or the interaction with shadow banking, for example.