The European Commission is to launch a consultation into fund passporting next month after small fund managers raised a number of issues on marketing their products abroad.
In a speech in Amsterdam, European Union commissioner Jonathan Hill said asset managers had told them the existing EU passporting system “isn’t working properly”.
Hill says: “For me, a passporting system that works for investment funds is fundamental to a single market for capital. But smaller fund managers tell us they still struggle to offer their products in different countries.”
In particular he said that fund managers had complained that gold plating by national supervisors, additional fees and requirements for marketing material are the main barriers.
“They find that unacceptable. And if it’s true, so do I. That’s why we’ll launch a consultation in May to identify the main barriers to funds operating in other countries. Then, we’ll improve passporting so that investors can get hold of the right information; where they have more choice and enjoy lower charges; and where investment funds can genuinely compete across borders,” he says.
Hill says the commission will also look into simplifying and so reducing the differences between national insolvency regimes. This will mean creating a simpler system to reclaim withholding tax when these are subject to double taxation.
The EU commission is also planning to address the decline in bond market liquidity, and will start a comprehensive review of liquidity in corporate bond markets.
Hill says: “When it comes to new [legislative] measures, we’ll be careful to avoid anything that could make the situation more difficult.”
Previously the commission wrote to the European Securities and Markets Authority to ask for a “more cautious” approach on Mifid II liquidity calibrations.