European Union finance ministers yesterday endorsed a new law setting out rules for investment fund managers seeking to do business throughout the 15-state bloc.
The draft law opens the way for investment fund managers to sell their products throughout the EU using slimmed-down prospectuses and to manage other forms of assets, such as pension funds.
But funds wishing to exploit the law would also have to meet tougher capital adequacy requirements - a controversial point during negotiations among EU governments. The draft law is expected to be formally adopted later this year following a second reading in the European Parliament.
At present, asset managers in the EU must set aside around 13 weeks operating costs in the form of regulatory capital. The new law will impose a minimum capital requirement of #120,000 (£94,508) plus an additional charge equivalent to 0.02 per cent of all funds in excess of #250 million under management, up to a maximum of #10 million.
"I am pleased that the Council has managed to reach agreement on this important proposal to give a single European passport to fund management companies," European Financial Services Commissioner Frits Bolkestein said in a statement.
The proposal on so-called undertakings for the collective investment in transferable securities (UCITS) has been linked to a separate proposal updating the list of types of UCITS that can be sold across borders.
The revised version of the product directive, which also requires a second reading in the parliament, provides for money market funds to be sold across borders and sets new limits on the amount of assets index tracker funds can hold in any one issue.
Separately, EU finance ministers yesterday formally adopted a new law on the reorganisation and winding up of credit institutions.
The law, which determines which country's bankruptcy laws apply to banks, was proposed more than 15 years ago but lay dormant for years because of a dispute between Britain and Spain over how EU laws apply in the disputed territory of Gibraltar.
