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The Cross-Border Distribution of Investment Funds (CBDF) legislation became applicable across the EU in August 2021 and we owe you our apologies for not celebrating it with the requisite fireworks and champagne. Why? Our preoccupation with its implementation.
The legislation was originally born from long-standing concerns by the European Commission about how the differing marketing requirements, regulatory fees, and notification requirements between Member States could represent a significant barrier to efficient cross-border fund distribution and, as such, to the well-functioning of the capital markets we share a keen interest in.
Back in 2018, EU investment funds representing 70% of the total AuM were registered to be marketed exclusively in their own domestic market, and a paltry 3% of EU AIFs were registered to be marketed in more than three Member States.
So, there were reasons aplenty for addressing cross-border distribution of funds.
But alas (and here comes the reason for us not toasting and firing up just yet), while the CBDF package was initially developed to reduce barriers for investment managers marketing funds across the EU and to harmonise approaches across Member States, over the last few months it has become clear that Member States have not always (or have rarely) been consistent in how they interpret and implement the rules.
As a result, fund managers and investors are faced with a patchwork of national laws, leading to uncertainty and grey areas, in particular in those countries where implementation is delayed and/or further guidance is expected from the national competent authorities.
For that reason, we have developed a new Guide on the national implementation of the CBDF. Prepared in cooperation with the Invest Europe Legal and Regulatory Committee, this Guide aims to provide a pan-European overview of how the CBDF has been transposed into national law across the EU.
The Guide looks at the rules from the perspective of both EU and non-EU fund managers, as well as smaller fund managers below the AIFMD threshold.
We trust that this Guide will help members navigate the myriad of national rules and serve as a tool to manage the impact this will have on their day-to-day operations and marketing activities.