ESMA Regulation - Undertakings for Collective Investment in Transferable Securities

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The Undertakings for Collective Investments in Transferable Securities ("UCITS") is the regulatory framework for investment in traded funds within the European Union. <ref>UCITS. Retrieved on May 3, 2012.</ref>. It has been updated multiple times since its inception in the 1980s.


UCITS were created by a set of EU directives dating back to the 1980s:

  • UCITS I, 1985: The original objectives of UCITS was to unify the regulatory framework for retail fund investment, facilitate the distribution of funds among EU member states, and harmonize investor protections. The original is officially titled Directive 85/611/EEC.
  • UCITS II, early 1990s: The original UCITS did not achieve universal implementation due to an inability to fully harmonize the myriad state and local rules in place. So, plans for a second UCITS directive began. The project was abandoned without agreement.
  • UCITS III, 1998-2001: Beginning in 1998, and culminating in the publication of two directives focusing on regulating the management of fund companies and prospectuses, and on the rules that govern the investments of UCITS. <ref>TechBrief: A brief history of UCITS. Banking Technology. Retrieved on May 3, 2012.</ref> UCITS III enjoyed considerable success in achieving a unified regulatory framework, but more was still required in terms of local harmonization.
  • UCITS IV, 2009-11: The completion of UCITS IV was announced July 1, 2010, and gave member states until July 1, 2011 to implement the two directives and two regulations that comprise UCITS IV. <ref>Financial services: Commission acts to improve investor protection and efficiency in the EU investment fund market. Retrieved on May 3, 2012.</ref> The official title of UCITS IV is Directive 2009/65/EC.
  • UCITS V The European Commission and the European Parliament passed UCITS V on July 23, 2014. The directive instructs national governments to pass corresponding regulations by March 18, 2014. The official title is Directive 2014/91/EU

UCITS IV[edit]

UCITS IV entered into force in 2010. It was passed as a reaction to the regulatory failures of the 2007-2008 financial crisis. It sought better harmonize regulations and provide more framework for cross border activities. For more information click HERE

UCITS V[edit]

UCITS V entered into force on September 17th, 2014. The new directive includes new rules on remuneration, liability, and depositories. The directive also seeks to align UCITS with AIFMD. Over the course of 2015 and 2016, new regulations by national authorities will be imposed under the directive's requirements. To see more information about UCITS V click HERE.


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