Challenges and regulatory prospects in EU cross-border UCITS/AIF registration

Abstract

The European investment fund market remains strongly nationally fragmented. Most of the asset managers in Europe distribute their funds only within their own country. They abstain from cross-border funds distribution due to very varying and complex regulation within European countries. Entering new European markets to distribute funds still proves to be time-and resource-intensive, despite European Union’s (EU) efforts to harmonise the relevant legislation across Europe and allow free exchange and flow of capital. The investor shall therefore come into the benefit of more choice, better value and greater protection. This paper takes a closer look at the current situation of the fund’s distribution in Europe in light of the recent legislation updates, pointing out potential challenges and possible outlook on the future of cross-border fund distribution. It outlines the findings from the practical experience of the Global Fund Registration Team of ACOLIN Group, based on its daily practice of assisting clients in entering new markets and maintaining funds under multiple jurisdictions. Some examples illustrate concrete hurdles asset managers face on a regular basis when distributing funds cross-border in EU.