Institutions licensed to act as UCITS depositaries in one European Union country should be able to carry out that function throughout the EU, argues a hedge fund lobby group.
In a position paper on the proposal for a UCITS V Directive (the latest iteration of the regulated European funds), the Alternative Investment Management Association calls for a so-called 'passport' regime for depositaries, as opposed to the existing regime that limits the provision of depositary services to funds located in the same member state as the depositary institution.
AIMA argues a passport would standardize depositary regulations which currently differ from state to state within the EU.
The paper also calls on the European institutions to align UCITS depositary regimes and remuneration requirements with those of the Alternative Investment Fund Managers Directive, which takes effect in July 2013, among other recommendations.
The European Commission published its proposal for a UCITS V Directive in July. The final text may be adopted during 2013 although there is no formal timetable at present.
Andrew Baker, AIMA CEO, said: “We welcome much that is contained in the Commission’s proposal to amend the UCITS Directive, but as our position paper makes clear, we believe that the time has come for a proper discussion about introducing a depositary passport. Such a passport would bring more competition and more choice for managers and investors and would remove a significant barrier to the single market. Without it, there is a risk of a lack of competition in the depositary space and increased systemic risk as a result.”