Allowing UCITS funds to be freely tradable across the EU
An Undertaking for Collective Investment in Transferable Securities (UCITS) is an investment fund based in the EU that invests in liquid assets and can be distributed publicly to retail investors across the EU. The UCITS Directive, originally adopted in 1985, allows these funds to be freely tradable across the EU based on the regulatory authorisation of one member state. As they are regarded to be very safe and well-regulated, UCITS funds are very popular investments, particularly for small retail investors.
While the original legislation did not achieve the intended outcomes, there have been several iterations since, with the latest (UCITS V), being adopted by the EU in 2014. The regulation itself details the responsibilities and obligations a fund must adhere to be ‘UCITS compliant’. In late 2021, the European Commission published proposals viewed as UCITS VI, looking to align delegation and reporting requirements with AIFMD.
As the UCITS regulation was adopted by the UK pre-Brexit, the equivalent standards are applied to UK investment funds, which will be recognised ‘UK UCITS’, retaining their ‘safe and well-regulated’ nature, but without access to the EU markets.
