The directive aims to harmonise the rules governing UCITS  and to improve the way their distribution functions within the the European Union.
The directive will significantly update the existing Directive 85/611/EEC by modernising the regulatory framework with a view to:
In general, the European Investment fund  industry needs to enhance its competitiveness by improving the quality of its services and reducing costs.
The UCITS  IV Directive deals with the following points:
These measures are applicable since 1 July 2011, insofar as each member state has transposed them by that date.
As regards measures for execution, the European Commission has mandated the ESMA  (European Securities and Markets Authority) to study the content of different measures and to draw up proposals. The member states will then be invited to transpose these execution measures at the same time as the UCITS  IV Directive itself.
The principal measures providing detailed improvements to the UCITS  regulations are as follows:
Management companies may carry out activities in other member states for which they have been authorised in their country of origin either through the free offer of services or by establishing a local branch.
Supervision of such activities will be provided by the regulatory authorities of the country of origin, which will send all required information to the relevant authorities in the host member state. The management company must therefore comply with the regulations of both countries.
This approach implies both a distinct procedure in each country as well as cooperation between the supervisory bodies through a point of contact as provided by the directive.
Establishment of a procedure facilitating domestic and cross-border mergers:
- choice of domiciliation of funds
- production of a shared merger scheme regarding a possible merger,
- asset valuation,
- establishment of a standard method for calculating the exchange ratio,
- assessment of tax implications.
This is a process of optimising forces in order to exploit the advantages of different European financial markets and actors: at least two funds will be concerned > the "feeder", generally domiciled in the investor's country, will invest the majority of its assets (85 %) in the "master", which may be domiciled in another country.
These structures will allow considerable economies of scale and provide greater flexibility in the commercialisation of funds.
This is a simplified procedure between the regulator in the home country and the regulator in the host country of the UCITS. The management company will thus be able to commercialise the UCITS freely, ten days after transmission from the regulator in the country of origin to the host country.
The KII or KID will replace the simplified prospectus, considered to be incomprehensible and indigestible. The KII or KID will be short and non-technical while providing accurate, precise and comprehensible information.
This document will be limited to 2 pages, and will contain the following information:
- description of the investment policy,
- description of the objectives,
- historical performance data,
- costs and charges,
- risk profile and performance profile of the fund,
- place where the investor can find further information.
These measures will reinforce existing regulatory requirements at several levels:
- risk management,
- conflicts of interest,
- rules of conduct.
These measures for implementation are currently being finalised (CESR).
This document was prepared by ALFI's implementation working group for the Key Investor Information document (KID). The working group comprises representatives of asset managers, management companies, securities service firms, audit firms, law firms, and document and information management firms.
This document contains the working group's answers to questions about KID implementation. The answers are not necessarily definitive and they might not be suitable for every circumstance. This document is not meant to be an industry standard or a guide to best practice but it represents the view from a group of market participants. The Q&A has not been validated by any regulator. It does not diminish the management company's or the investment company's responsibility to comply with the EU Regulation 583/2010 on the KID, CESR's related guidelines and technical advice papers and any other European or national law or regulation. This document must not be relied upon as advice and is provided without any warranty of any kind and neither ALFI nor its members who contributed to this document accept any liability whatsoever for any action taken in reliance upon it.
This document may be amended without prior notice to incorporate new material and to amend previously published material where the working group considers it appropriate. ALFI will publish amended copies of this document to its members, showing marked-up changes from the immediately preceding copy.
The titles used in this document are references to the relevant recitals, chapters, sections and articles of the EU Regulation 583/2010 and associated CESR guidelines and consultation papers.
On 26 July 2012, the European Commission published a consultation on UCITS , focusing on product rules, Liquidity  management, depositary, money market funds and long-term investments policies.
The ABBL  has already started working on its contribution, and will actively participate in the debate.
The Commission launched on 26 July 2012 an in-depth consultation on issues arising in the area of investment funds.
The consultation focuses on:
- the issue of money market funds and how such funds should be regulated in future;
- the fund industry's involvement in securities lending and repurchase (repo) arrangements; and
- the fund industry's exposure to certain OTC derivatives that, in future, will be subject to central clearing and the fund industry's approach to investors' redemptions.
The package is composed of three legislative proposals: a proposal for a regulation on key information documents for packaged retail investment products (PRIPs ), a revision of the Insurance Mediation Directive (IMD), and a proposal to boost protection for those who buy investment funds (currently governed by the Directive on Undertakings for Collective Investment in Transferable Securities (UCITS).
The European Banking Federation (EBF) welcomes the opportunity to comment on the draft future guidelines on UCITS Exchange-Traded Funds (UCITS ETFs) and other UCITS-related issues. It recalls the messages of its in September 2011 response to ESMA and is happy to see that the authority has decided to await the outcome of MiFID in relation to the issue of complexity. That said it is now very unclear what the purpose of the proposed guidelines is.
While the overall number of countries with tax issues as a result of the Undertakings for Collective Investment in Transferable Securities (UCITS IV) Directive has decreased since 2010, there still remains a significant portion of EU Member States that have not addressed the challenges. According to Fill the glass to the brim II: have we broken through?, an updated analysis of KMPG International’s 2010 Fill the glass to the brim on the tax implications of UCITS IV, even though the 27 EU Member States should have transposed the UCITS IV Directive into national law by 1 July 2011, 13 Member States have not yet fulfilled their obligations.
The Luxembourg funds industry continued to expand over the last 12 months despite the eurozone crisis and declines in major stock indices. The number of funds in Luxembourg rose by 4.84%1 to 3,833 and net sales amounted to €16.998bn. While total AUM decreased over the period by €101.453bn, mainly as a result of market depreciation, total assets under management were still a steady €2,059.419bn, second globally only to the US.
Finesti , the Luxembourg agency for European funds information, reported strong growth in new clients and in its overall fund coverage in 2011. During the year, the firm pursued a strategy of launching and offering new services that enable the European fund industry to comply with certain requirements of the UCITS  IV Directive.
ESMA  proposes in it's opinion practical arrangements for cross-border operations involving one MS that has not transposed the Directive.
Traditional investment funds and their service providers have experienced some fundamental changes – both challenges and opportunities - in 2011, with the implementation of UCITS  IV in Luxembourg law and regulation. UCITS  IV sees the management company passport implemented, enhanced requirements for UCITS  management companies, key investor information (KII) documents being phased in to replace the simplified prospectus, the notification procedure simplifying the cross-border distribution of UCITS , and the possibility to create master-feeder UCITS  and merge UCITS  cross-border.
The Association of the Luxembourg Fund Industry (ALFI) sets out on 27th September 2011 its ambition for the Luxembourg Fund Centre, to be a global centre of excellence for the asset management industry, thereby creating opportunities for investors, fund professionals and the global community as a whole.