The EU Directive and Regulation,  known as the “CBDF package”, or “the EU cross-border distribution of collective investment undertakings legislative package” was officially launched in July 2019. The Directive will impact all UCITS and Alternative Investment Funds (AIFs). It will come into effect on 2nd August 2021. 

The impetus behind the introduction of this new directive was the discovery, by the  European Parliament, that the majority of investment funds were only registered for sale in their local markets. On top of that, only 37% of UCITS funds and 3% of AIFs were registered for distribution in more than three EU member states.

The CBDF will seek to reduce regulatory barriers and facilitate, through various different measures, the selling and distribution of investment funds across different jurisdictions in Europe. 

The CBDF package was originally proposed by the EU Commission about a year ago and has undergone several changes since then. There remain, however, many unanswered questions at policy level. This will make it a potentially problematic directive for many fund groups.

Here’s (briefly) what’s changing:

The Directive will initiate:

  • A new harmonised “pre-marketing” regime for AIFs
  • Pre-marketing will be performed by EU regulated firms 
  • A new process for marketing de-notification under both the UCITS Directive and AIFMD

The Regulation will initiate:

  • Standardisation of marketing communications for AIFs and UCITS
  • Verification of marketing communications
  • Creation of a public central database with all national marketing requirements, fees and charges
  • Changes to information filed for AIF/UCITS marketing passports
  • Greater transparency when calculating fees 
  • A delay to PRIIPs KID application to UCITS