National marketing and product distribution rules for UCITS : a critical analysis

Abstract

This article examines the development of the notification procedure for passporting in terms of the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the internal market concerns that emerge from the application of national marketing rules by the host Member State. As a means to resolve the resulting obstacles to passporting in practice, the paper makes recommendations for a soft-law approach based on reflexive governance of financial supervision, supplemented by a mechanism for transparency. The article also reviews the Markets in Financial Instruments Directive (MiFID) conduct of business rules that apply to investment firms with regard to the distribution of financial products, including the selling of UCITS. It examines the amendments to this field of regulation as proposed in the MiFID II legislative initiative. The article argues that the classification of structured UCITS as a complex product for the purpose of MiFID is likely to have a negative impact on the strength of the UCITS brand.