07 July 2005

CESR reviews supervisory convergence in UCITS Recommendations

The Committee of European Securities Regulators (CESR) published the results of a survey which reviews the implementation of two European Commission Recommendations, dealing with the use of financial derivative instruments for UCITS and some of the key contents requirements for the simplified prospectus of UCITS. The report concludes that overall implementation of the Recommendations is generally satisfactory across Member States with a number of Member States having implemented the Recommendations into their national rules almost on a word for word basis. Several Member States can be identified that have not jet implemented the Recommendations. It is expected, that the implementation situation will improve further by the end of 2005.

When analysing the responses the recommendations fall into two types of category:

those aimed to ensure a high level of investor protection in the investment activity of a UCITS and its disclosure and,

those aimed to allow within the limits of the UCITS Directive some flexibility in the activity and investments of a UCITS.

The level of implementation varies considerably between different sections of the Recommendations. For instance, regarding the Recommendation on the simplified prospectus, the key recommendations on the presentation of the objectives and the investment policy of a UCITS have been implemented by the great majority of Member States. In contrast, the level of implementation on disclosure of costs and fees has not been as effectively achieved particularly in relation to the indication of the existence of fee-sharing arrangements and soft commissions.

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