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FSA/PN/108/2007
5 October 2007

The Financial Services Authority (FSA) today set out proposals to implement the EU Eligible Assets Directive (EAD) and the related Committee of European Securities Regulators (CESR) guidelines for operators of Undertakings for Collective Investments In Transferable Securities (UCITS) schemes. The EAD helps with the definition of which assets are eligible for UCITS schemes to invest in.

FSA Retail Policy Director Dan Waters said:

"Our proposals implement the EAD and the guidelines in a practical way which will help UK scheme operators promote their products freely into Europe. This European work, involving the European Commission, CESR and national regulators shows how common standards can be achieved across the EU in a practical and flexible way, working with the grain of the markets."

The principal benefits from implementation of the EAD are expected to be:

• an increase in the quality of UCITS products, resulting from an improvement in risk management within the funds;
• innovation through the launch of new products e.g. funds based on hedge fund indices; and
• a possible improvement in the efficiency of competition as a result of a more consistent interpretation of regulations by firms and regulators.
  

Notes for editors

1. The UCITS Directive provides for an EU wide regime for the regulation and production of collective investment schemes (in the UK, authorised unit trusts and open-ended investment companies). The Directive defines what assets UCITS schemes are allowed to invest in. Schemes recognised nationally as UCITS compliant are marketable cross borders in the EU without any re-authorisation by local regulators.
2. The proposed changes to the FSA's Collective Investments Source Book (COLL) are set out in Chapter 7 of CP 07/18 Quarterly Consultation Paper (No 14). Comments on the proposals are sought by 5 December 2007. The proposals will apply from 23 July 2008.
3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
4. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.