June 27, 2025
By: Robert Van Egghen
Europe’s markets watchdog is proposing a clampdown on Ucits funds gaining exposure to a wider range of asset classes, sparking complaints among asset managers that the competitiveness of the EU’s funds industry could be damaged. Luxembourg’s trade body said the plans were “nonsense” and based on an approach adopted in France, rather than being reflective of the innovative global Ucits brand. The European Securities and Markets Authority yesterday published its advice on a potential review of the Ucits eligible assets directive, which lays out what investments the retail-focused products can and cannot make. The feedback to the European Commission comes as policymakers have become concerned over divergences in the application of the eligible assets rules between different EU member states. Asset managers have also pressed for a broadening of the eligibility criteria to enable funds to invest in a wider range of assets…
Michael Pedroni, CEO of Highland Global Advisers, a regulatory consultancy, said Esma was “clearly grappling with the blurring of lines between liquid and alternative investments”.
Pedroni said the markets watchdog was “trying to keep Ucits in the plain vanilla space” by “softly pushing back” on industry demands to widen the eligible assets directive. Esma has also proposed that parts of the eligible assets directive should become directly applicable in national law in EU member states so as to prevent divergent interpretations of the rules in the future.
“That would be a very significant change [and] I expect that national regulators will resist this,” said Pedroni.
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