FRANCE: AMF publishes study on European funds distribution barriers

Tuesday September 20 2016

The French financial regulator, the AMF, has published a study on barriers to cross-border distribution of investment funds in Europe.

While the large number of European passports in asset management reflects the success of the mechanism, the AMF study also emphasises that there are still some barriers to the distribution of investment funds and suggests ways to develop the cross-border supply in Europe and improve investor confidence.

As part of its initiative for the development of a financial markets union, the European Commission has set a goal of creating a truly European market for retail services by offering consumers a wider choice of financial investments.

The AMF study entitled “Cross-border distribution of funds in Europe: identifying barriers to entry and improve investor confidence,” provides an overview of issued passports. The number of issued passports (80% of mutual funds and 40% of European transboundary funds in 2016) demonstrates the success of this scheme, which allows European funds to be sold in other countries. The annual costs of obtaining the passport appear very low in relation to the activity of the funds they represent, costing from 0% to 0.0016% of the average amount of assets under management.

Whilst passports are numerous, they are not always synonymous with successfully marketing funds in the countries targeted by the management companies. The study identifies a number of barriers to the cross-border distribution such as the need to adapt to local consumer profiles and national taxation standards.

The AMF offers three ways to develop cross-border supply of investment funds while protecting European consumers:

• Promote an open architecture in distribution and convergence of rules on marketing;
• Strengthen investor confidence by enabling the national competent authority to monitor advertising of financial products sold on its territory; and
• Reviewing the control of marketing performed from abroad

Click on the above link for the full study (French)