Evidence given on 21 November (5.30 – 6.30 p.m.)
by Mr Jean-Pierre Paelinck, Eurosharholders on
Managed Investments
to the Committee on Economic and Monetary Affairs
(ECON) of the European Parliament
Report on Asset Management, Mr. Wolf KLINZ
INTRODUCTORY REMARKS:
The recommendations of Euroshareholders are fully in line with the idea of
maintaining and enhancing the confidence in the market, also of facilitating
cross-border trading. This confidence has to be maintained also through the
activities of Competent Authorities whose mission is to monitor the market and to
protect the investors.
NOTIFICATION AND FUND REGISTRATION:
To facilitate cross border commercialization of unit trusts the UCITS III directives
should enable notification to take place in an efficient and speedy way in order to
inform clearly and properly competent authorities. The aim is to favour the
integrity of the European capital markets and requires an active participation of
competent authorities as well as a close cooperation between them.
On the basis of the valuable preparatory work done by CESR Euroshareholders
expects this cooperation to happen in a modern and efficient way, without
unnecessary costs and avoidable delay.
Thus, we are aware of the fact that Competent Authorities have to be informed
properly and that translations are expected to be reliable and clearly verified. It is
also difficult to underestimate the importance of providing Competent Authorities
with sufficient time allowing them to go through the documents before they will be
asked questions by investors of their jurisdiction.
Euroshareholders is fully in favor of European Commission’s attitude towards
easy cross-border commercialization of unit trusts but we would like to prevent
possible misuse or so called “transfers” of “single passport” attributions to related
financial instruments that the investors might consider to be “part of the single
passport” attribution, especially when the related unit trusts are of a different
nature.
Thanks to the highly appreciated cooperation between EU Competent Authorities
we expect the notification process to happen swiftly, easily and effectively.
Efficient fund registration and effective communication techniques will decrease
notification costs, increase reliability and should reduce the burden of costs that
finally have to be paid by investors in unit trusts.
LIQUIDITY AND ADMISSION TO LISTING:
It is of substantial importance for Euroshareholders that investment funds and
companies invest in liquid financial instruments. Being listed is an essential factor
of liquidity and favours transparency. Our view is that a financial instrument is not
necessarily liquid as from the moment that it is listed, even if this financial
instrument was listed on the main listing of a stock exchange in the EU
Some workable and reasonable mathematical formula could serve as a
benchmark for having sufficient liquidity. We think of a relative/comparable
degree of listing in relation to the turnover data on a given market.
Also in this respect Euroshareholders presents the view that any unnecessary
bureaucracy and costs must be avoided.
ELIGIBILITY:
The directives indicate which financial instruments are eligible. It is of main
importance to maintain transparency to make sure that a fund management is
respecting its guidelines, that contents of the fund are known to the public.
Transparency on the kinds of financial instruments that are the part of the unit
trusts should be provided without unnecessary and too frequent publications that
would lead to unnecessary bureaucracy and costs.
CONCLUSION:
Euroshareholders trusts that a swift implementation and the integration of EU
enforcement of the UCITS III directives would have a positive influence on
financial markets. On the basis of the directives we believe that thanks to the
very effective work done by CESR many definitions have been clarified and that
the detailed work made by the Commission also will avoid to have later too
frequent misinterpretation that eventually might lead to court cases.
Euroshareholders praises the competent authorities for their valuable work on
implementation and interpretation of terms and principles since this work will
facilitate
harmonization
and
cross
border
securities
business
but
Euroshareholders would also like to emphasize that highly technical and detailed
analysis and work should not shade the main objectives of the unit holders which
are: performance, transparency (regarding contents and – visible and invisible –
costs). We trust that the implementation and acceptance of the UCITS III
directives thanks to the careful work done by CESR and the European
Commission, will indeed lead to more effective control and increased confidence
in the unit trusts market. Euroshareholders wishes this to happen without too
burdensome publications whenever they are avoidable and without hurting the
essential principles of transparency.