This forward is excerpted from the BNP Paribas Securities Services whitepaper on UCITS IV: The transforming event for European asset managers and distributors.  Click here  to download the report.

I am delighted to introduce BNP Paribas Securities Services’ white paper on the UCITS IV Directive. UCITS is an important piece of legislation that is essential to the integration of the financial markets in Europe and to the benefits of its citizens. European investors need to have access to efficient and reliable savings products, all the more so with our ageing population. The UCITS label has become a great European success story, renowned for its transparency towards the investor, its reliability and performance even beyond Europe.

The objective of the fourth version of UCITS is to provide a tool box to ensure the competitiveness of the European asset management industry and to benefit European investors. It promises more choice, greater efficiencies and greater protection – at less cost. It will also reinforce the competitiveness of the UCITS label around the world.

The general principles of the legislation (Level 1 measures) have already been defined and approved by the European Parliament and the Council of Ministers. The outstanding details of the implementing measures (Level 2) will now be discussed, with an objective to finalise the text by July 2010. The directive will come into force in July 2011 after national transposition.

To make the most of the UCITS IV Directive, the industry will need to continue to work on a number of important issues, in particular to make fund processing simpler and more automated. More generally, both politics and industry have to address pension issues and the future role that UCITS investment funds could play to meet the challenges ahead. These challenges include: how to limit the risk of UCITS investments, how to ensure inflationneutral returns and how to adapt the UCITS tax treatment for old-age pension provisions, in order to foster a savings culture. Industry and politicians will have to deal with these challenges collectively.
 
The path to the single European market may be long and complex but it is well under way and UCITS IV is a great milestone in its advance. I trust you find this paper interesting and enjoyable, and that it helps your understanding and decision-making for the future.

Dr. Wolf Klinz, Member of the European Parliament, Chairman of the Special Committee on the Financial, Economic and Social Crisis (Rapporteur for UCITS IV).