Minister trotz Zurückhaltung der Kommission für Fonds-Pass[en] 

EU legislation currently in place stipulates that investment funds can only be managed from the country in which they are based. Introducing a 'passport' would allow managers to work freely throughout Europe, regardless of their place of establishment.

The current system favours countries such as Luxembourg and Ireland, because they offer the industry better fiscal conditions and more highly qualified expertise. This results in a disproportionate percentage of funds choosing those countries as a base considering their small populations. 

Figures from the European Fund and Asset Management Association (EFAMA) show that in 2007, France, Germany, the UK and Italy topped the league in terms of the size of their national investment fund markets, reflecting the importance of their respective domestic savings markets. But Luxembourg leads the way in terms of place of establishment, with 24.4% of the European market share, ahead of France (19.8%), Germany (13.5%), the UK (10%) and Italy (5.1%). Ireland has 9.6% of total European assets established in its territory.

Ministers endorsed  a Commission proposal to reform rules governing the market for UCITS (Undertakings for Collective Investment in Transferable Securities), or European investment funds. Going further, they pushed for a passport for investment fund managers to be added to the draft legislation, which the EU executive avoided including in its text .

The commissioner in charge of the dossier is Irishman Charlie McCreevy, whose country is one of just two member states to oppose the passport (the other is Luxembourg). Both delegations expressed reservations about the Council's political agreement, but there is little the two countries can do to reverse the decision.

The Council will adopt the reviewed UCITS directive by qualified majority rather than unanimity. Moreover, the European Parliament, whose agreement is necessary for the legislation to be passed, is set to approve the new rules quickly. It has already expressed its support for the funds passport.

Yesterday, the Parliament's economic and financial affairs committee, which has the lead on the dossier, adopted its report on UCITS, backing a management company passport. Such a passport would "lead to more efficiency with the same high level of investor protection," according to German liberal MEP Wolf Klinz, the Parliament's rapporteur on the issue.

MEPs are expected to vote on the file in plenary in early 2009, with the Council giving it the final green light afterwards. It is therefore almost certain that the final text will be officially adopted before the end of the current Commission and Parliament's mandates in mid-2009.

This outcome was not immediately obvious just a few months ago, when many began to think that the passport could be postponed until the next Commission. Indeed, at first McCreevy froze the review of the directive, which was originally expected in April 2008 (EurActiv 15/04/08). After this, he presented proposals in July 2008 without including the fund passport, citing potential competence overlaps between supervisors as his main reason for doing so (EurActiv 16/07/08). 

He insisted on hearing the technical opinion of the Committee of European Securities Regulators (CESR) before proceeding further. Despite the short notice and the heavy workload, the CESR presented its opinion  at the end of October, giving the passport the green light (EurActiv 06/11/08). After considering the CESR's advice, the Commission opted not to review its proposal.

French Economy Minister Christine Lagarde, whose country currently holds the rotating EU presidency, announced that a political deal had been reached in the Council, underlining that the European passport for UCITS managers was "the last missing link in the internal market for the management of UCITS".

After the vote in the parliamentary committee, German liberal MEP Wolf Klinz, rapporteur for the UCITS review, commented : "We have set a clear signal today, the same day as the Council of Ministers for Finance and the Economy, by expressing ourselves in favour of introducing this passport. The Parliament has embedded very close cooperation between supervisory authorities. The management company passport will hence lead to more efficiency with the same high level of investor protection."

Industry warmly welcomed the EU institutions' long-awaited move. Mathias Bauer, president of EFAMA  (the European Fund and Asset Management Association), said : "Today's vote is a major step towards an efficient internal market. By including the management company passport into the UCITS Directive, MEPs and member states have demonstrated their strong will to extend to fund management the freedom to provide services across the European Union."