European Parliament legislative resolution on the proposal for a European Parliament and Council directive amending Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (COM(1998) 449 — C4-0464/1998 — 1998/0243(COD))
Date: 2000-02-17
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: approximation of laws, financial legislation, free movement of capital, investment company, securities

C 339/220

Official Journal of the European Communities

EN

29.11.2000

Thursday 17 February 2000

TEXTS ADOPTED

1. UCITS ***I

A5-0025/2000

Proposal for a European Parliament and Council directive amending Council Directive 85/611/EEC
on the coordination of laws, regulations and administrative provisions relating to undertakings for
collective investments in transferable securities (UCITS) (COM(1998) 449 1 C4-0464/1998 1
1998/0243(COD))

I.

The proposal was amended as follows:

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AMENDMENTS
BY PARLIAMENT

(Amendment 1)

Recital 4

(4) Whereas money market instruments cover those classes of
transferable instruments which are normally dealt in on the
money market, for example treasury and local authority bills,
certificates of deposit, commercial paper and bankers’ accep-
tances; whereas Member States should have the option of choosing
the list of eligible money market instruments on the basis of objective
criteria to take account of the existing structural differences in the
money markets of different countries;

(4) Whereas money market instruments cover those transfer-
able instruments which are normally dealt in on the money
market, for example treasury and local authority bills, certifi-
cates of deposit, commercial paper and bankers’ acceptances;
whereas it is necessary to ensure that the concept of regu-
lated markets in this Directive corresponds to that in
Directive 93/22/EEC (1);

(1) OJ L 141, 11.6.1993, p. 27.

(Amendment 2)

Recital 5

(5) Whereas it is desirable to permit a UCITS to invest its
assets in units of other collective investment undertakings of
the open-ended type which also invest in transferable securities
and which operate on the principle of risk-spreading; whereas
the requirement of risk spreading for UCITS investing in other collec-
tive investment undertakings is indirectly respected since such UCITS
can only invest in units issued by collective investment undertakings
complying with the risk spreading criteria of Directive 85/611/EEC;
whereas it is important that such UCITS adequately disclose to
investors the fact that they invest in units of other collective
investment undertakings;

(5) Whereas it is desirable to permit a UCITS to invest its
assets in units of UCITS and other collective investment
undertakings of the open-ended type which also invest in trans-
ferable securities and which operate on the principle of risk-
spreading; whereas UCITS or other collective investment
undertakings in which a UCITS invests should also be sub-
ject to effective supervision; whereas investments in units
of UCITS and other collective investment undertakings
should not result in cascades of funds; whereas it is impor-
tant that such UCITS adequately disclose to investors the fact
that they invest in units of other collective investment under-
takings;

(1) OJ C 280, 9.9.1998, p. 6.

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C 339/221

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AMENDMENTS
BY PARLIAMENT

(Amendment 3)

Recital 6

(6) Whereas to take market developments into account and in
consideration of the completion of the EMU it is desirable to
permit UCITS to invest in bank deposits;

(6) Whereas to take market developments into account and in
consideration of the completion of the EMU it is desirable to
permit UCITS to invest in bank deposits; whereas to ensure
adequate liquidity of
the investments in deposits the
terms of these deposits should include a break clause;
whereas, if the deposits are made with a credit institution
situated in a non-Member State, the credit institution
should be subject to effective supervision;

(Amendment 4)

Recital 10

(10) Whereas new portfolio management techniques for col-
lective investment undertakings investing primarily in shares
are based on the replication of stock-indices; whereas it is
desirable to permit UCITS to replicate well known and recog-
nised stock-indices; whereas therefore it is necessary to intro-
duce more flexible risk-spreading rules for UCITS investing in
shares; whereas in order to ensure transparency of the stock-
indices which the Member States consider to be replicable by
harmonised UCITS and a wide acceptance of such indices, it is
desirable to provide for adequate publication of the list of
replicable stock-indices;

(10) Whereas new portfolio management techniques for col-
lective investment undertakings investing primarily in shares
are based on the replication of stock-indices and/or indices
on debt securities; whereas it is desirable to permit UCITS to
replicate well known and recognised stock-indices; whereas
therefore it is necessary to introduce more flexible risk-spread-
ing rules for UCITS investing in shares and/or debt securities;
whereas in order to ensure transparency of the stock-indices
which the Member States consider to be replicable by harmo-
nised UCITS and a wide acceptance of such indices, it is desir-
able to provide for adequate publication of the list of replicable
stock-indices and an indication about where updated infor-
mation can be obtained, possibly by electronic means;

(Amendment 5)

Recital 13a (new)

(13a) Whereas the development of opportunities for a
UCITS to invest in UCITS and other collective investment
undertakings should be facilitated; whereas it is therefore
essential to ensure that such investment activity does not
reduce investor protection; whereas, taking into account
the nature of investments in sufficiently diversified collec-
tive investment undertakings,
it may be necessary to
restrict the possibility for a UCITS to combine its direct
investments in a liquid financial asset with the invest-
ments made through these other collective investment
undertakings; whereas, because of the enhanced possibili-
ties for UCITS to invest in units of other UCITS and col-
lective investment undertakings,
it is necessary to lay
down certain rules on quantitative limits, disclosure of
information and prevention of the cascade phenomenon;

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AMENDMENTS
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(Amendment 6)
Recital 14a (new)

(14a) Whereas, for prudential reasons, a UCITS should,
whether its chosen investment policy is to invest in a
variety of liquid financial assets or to specialise in a cer-
tain category of such assets, avoid assuming an excessive
concentration in liquid financial assets issued by and/or
made with a single body;

(Amendment 7)
Recital 17a (new)

(17a) Whereas a codification of the Community legisla-
tion relating to UCITS will have to be prepared immedi-
ately after the adoption of the modifications to Directive
85/611/EEC contained in this Directive;

(Amendment 8)
ARTICLE 1(1)
Article 1(2), 1st indent (Directive 85/611/EEC)

@ the sole object of which is the collective investment in
transferable securities and/or in other liquid financial assets
mentioned in Article 19 of this Directive of capital raised
from the public and which operate on the principle of
risk-spreading;

@ the sole object of which is collective investment in trans-
ferable securities and/or in other liquid financial assets
covered by this Directive of capital raised from the public
and which operate on the principle of risk-spreading;

(Amendment 9)
ARTICLE 1(2a) (new)
Article 19(1)(a) (Directive 85/611/EEC)

2a. Article 19(1)(a) shall be replaced by the following:

(a)

transferable securities admitted to or dealt in on a
regulated market within
of
Article 1(13) of Directive 93/22/EEC on invest-
ment services in the securities field in a Member
State; and/or

the meaning

(Amendment 44)
ARTICLE 1(3)
Article 19(1)(e) (Directive 85/611/EEC)

(e) units of other collective investment undertakings within
the meaning of the first and second indent of Article 1(2);
and/or

(e) units of UCITS and other collective investment undertak-
ings within the meaning of the first and second indent of
Article 1(2) provided that:

1 the other collective investment undertaking is
authorised under laws which provide that it is
subject to supervision considered by the UCITS’
competent authorities to be equivalent to that
laid down by Community law, and cooperation
between authorities is sufficiently ensured;

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C 339/223

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AMENDMENTS
BY PARLIAMENT

1 the level of protection for unitholders in the
other collective investment undertaking is equiva-
lent to that provided for unit-holders in a UCITS,
and in particular that the rules on borrowing,
lending, uncovered sales of transferable securities
and the role and the liability of the depositary laid
down by this Directive are respected;

1 the business of the other collective investment
undertaking is reported in half-yearly and annual
reports to enable an assessment to be made of the
assets and liabilities, income and operations over
the reporting period;

1 the other collective investment undertaking is,
according to its fund rules or instruments of
incorporation, not permitted to invest, in aggre-
gate, more than 10 % of its assets in units of
other UCITS or other
collective investment
undertakings; and/or

(f) deposits with credit institutions; and/or

(Amendment 11)

ARTICLE 1(3)
Article 19(1)(f) (Directive 85/611/EEC)

(f) deposits with credit institutions which are repayable on
demand or have the right to be withdrawn and matur-
ing in no more than 12 months, provided that the
credit institution has its registered office in a Member
State or, if the registered office of the credit institu-
tion is situated in a non-Member State, provided that
it is subject to prudential rules considered by the
UCITS competent authorities to be equivalent
to
those laid down by Community law; and/or

(Amendment 37)

ARTICLE 1(3)
Article 19(1)(g) and (h) (Directive 85/611/EEC)

(g)

standardised financial-futures contracts,
including equivalent
cash-settled instruments, dealt in on a regulated market
mentioned in the previous sub-paragraphs (b) and (c);
and/or

(g)

financial derivative instruments,
including equivalent
cash-settled instruments dealt in on a regulated market
mentioned in the previous sub-paragraphs (a), (b) and (c)
or dealt in over-the-counter (OTC), provided that the
counterparties to OTC transactions are institutions
subject to prudential supervision, and belonging to
the categories approved by the UCITS’ competent
authorities, and the instruments with a high rating
based on a recognised rating scale are subject to reli-
able and verifiable valuation and they can be sold or
liquidated on a daily basis; and/or

(h)

standardised options to acquire or dispose of any instruments
falling within this Article,
cash-settled
instruments, dealt in on a regulated market mentioned in the
previous sub-paragraphs (b) and (c). This category includes, in
particular, options on currency and on interest rates; and/or

including equivalent

(h) Deleted

C 339/224

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AMENDMENTS
BY PARLIAMENT

(Amendment 13)
ARTICLE 1(3)
Article 19(1)(i), introduction (Directive 85/611/EEC)

(i) money market instruments which are not dealt in on a regu-
lated market, unless the issue of such instruments is itself
regulated for the purpose of protecting investors and sav-
ings, and provided that they are:

(i) money market instruments other than those dealt in on
a regulated market which fall under Article 1(8)(b),
unless the issue of such instruments is itself regulated for
the purpose of protecting investors and savings, and pro-
vided that they are:

(Amendment 14)
ARTICLE 1(5)
Article 20 (Directive 85/611/EEC)

5. Article 20 shall be deleted.

Deleted

(Amendment 16)
ARTICLE 1(6)
Article 21(4), 1st subparagraph (b) and 2nd subparagraph (Directive 85/611/EEC)

(b)

in relation to each securities lending transaction appropri-
ate collateral shall be given covering the risk of default of
the borrower. The value of collateral must be, during the
entire period of the contract, at least equal to the total
value of the financial instruments lent.

When a UCITS is permitted to conclude securities lending
transactions with the depositary which performs for that
UCITS the duties mentioned in Articles 7 and 14 of this
Directive, the competent authorities shall ensure that the
collateral is entrusted, during the entire period of the con-
tract, with a third party custodian and that measures are
undertaken preventing the depositary from using it.

(b)

in relation to each securities lending transaction, provided
they are not carried out by recognised security clear-
ing houses and exchanges, appropriate collateral shall be
given to the UCITS covering the risk of default of the
borrower. The value of collateral must be, during the
entire period of the contract, at least equal to the total
value of the financial instruments lent.

When a UCITS is permitted to conclude securities lending
transactions with the depositary which performs for that
UCITS the duties mentioned in Articles 7 and 14 of this
Directive, the competent authorities shall ensure that the
collateral is entrusted, during the entire period of the con-
tract, to a blocked account, a security deposit or a
third-party custodian and that measures are undertaken
preventing the depositary from using it.

(Amendments 36 and 45)
ARTICLE 1(6a) (new)
Article 22(1a) (new) (Directive 85/611/EEC)

6a. In Article 22, the following paragraph shall be added:

1a.
A UCITS may invest no more than 5 % of its
assets at any time in transferable securities dealt in,
over-the-counter derivatives and deposits made with
the same body.

In no case may the transferable securities dealt in,
over-the-counter derivatives and deposits made with
bodies belonging to a single group at any time
account for more than 15 % of the assets of UCITS.
For the purposes of this rule, group shall
include
bodies linked by the relationship defined in Article 1
of Directive 83/349/EEC (1).

(1) OJ L 193, 18.7.1983, p. 31.

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C 339/225

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AMENDMENTS
BY PARLIAMENT

(Amendment 42)
ARTICLE 1(6b) (new)
Article 22(3) (Directive 85/611/EEC)

6b. Article 22(3) shall be deleted.

(Amendment 39)
ARTICLE 1(6c) (new)
Article 22(3a) (new) (Directive 85/611/EEC)

6c. In Article 22, the following paragraph shall be added:

A UCITS which has adequate risk management
3a.
controls may invest
in financial derivative instru-
ments, provided that investment in over-the-counter
financial derivatives does not result in an overall
daily exposure measured by its mark to market value
exceeding 30 % of its total assets.

(Amendment 18)
ARTICLE 1(7)
Article 22a (1) to (3) (Directive 85/611/EEC)

1. Without prejudice to the limits laid down in Article 25,
the Member States may raise the limits laid down in Article 22
to a maximum of 35 % for investment in shares issued by the
same body when, according to the fund rules or instruments of
incorporation, the aim of the UCITS’ investment policy is to
replicate the composition of a certain stock-index.

1. Without prejudice to the limits laid down in Article 25,
the Member States may raise the limits laid down in Article 22
to a maximum of 20 % for investment in shares issued by the
same body when, according to the fund rules or instruments of
incorporation, the aim of the UCITS’ investment policy is to
replicate a certain recognised stock or debt securities
index on the following basis:

1 its investment policy seeks to reflect the composition

of that index;

Replicable stock indices shall be indices which Member States

2.
consider to:

8 have a composition which is sufficiently diversified;

8 be easy to replicate;

@ represent an adequate benchmark for the equity market to

1 the index represents an adequate benchmark for the

which they refer;

market to which it refers;

@ be published in an appropriate manner.

1 it is published in an appropriate manner.

Each Member State shall send to the Commission the list
3.
of stock-indices which they consider replicable by UCITS,
together with details of the characteristics of such stock-indices.
A similar communication shall be effected in respect of each
change to the aforementioned list. The Commission shall pub-
lish the complete list of replicable stock-indices and updates
thereto in the Official Journal of the European Communities
at least once a year. This list may be subject to exchanges of
views within the Contact Committee in accordance with the
procedure laid down in Article 53(4).

2.
Each Member State shall send to the Commission the list
of stock-indices which they consider replicable by UCITS,
together with details of the characteristics of such stock-indices
and an indication about where updated information can
be obtained. A similar communication shall be effected in
respect of each change to the aforementioned list. The Commi-
ssion shall publish the complete list of replicable stock-indices
and updates thereto in the Official Journal of the European
Communities at least once a year or make such information
publicly available in an appropriate manner. This list may
be subject to exchanges of views within the Contact Committee
in accordance with the procedure laid down in Article 53(4).

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AMENDMENTS
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(Amendment 19)

ARTICLE 1(8)
Article 24(1), (2) and (3) (Directive 85/611/EEC)

A UCITS may acquire the units of other collective invest-
1.
ment undertakings within the meaning of
the first and second
indent of Article 1(2) provided that it invests no more than 10 %
if its own assets in units of a single UCITS.

A UCITS may acquire the units of UCITS and other col-
1.
lective
investment undertakings mentioned in Article
19(1)(e) provided that no more than 10 % of its assets are
invested in units of a single UCITS or other collective
investment undertaking. The Member States may raise
the limit to a maximum of 20 %.

2.
The Member States may raise the limit laid down in para-
graph 1 to a maximum of 35 %. However, in that case the UCITS
must invest in at least five different collective investment undertakings
mentioned in paragraph 1.

2.
Investments made in units of collective investment
undertakings other than UCITS may not exceed, in aggre-
gate, 30 % of the assets of the UCITS.

The Member States may allow that, when a UCITS has
acquired units of UCITS or other collective investment
undertakings, the assets of the respective UCITS or other
collective investment undertaking do not have to be com-
bined to the limits laid down in Article 22.

3.
A UCITS may not invest in units of a collective investment
undertaking within the meaning of the first and second indent of
its own assets in
Article 1(2), which invests more than 10 % of
units of other collective investment undertakings.

3.
A UCITS may not invest in another UCITS or other
collective investment undertaking that invests itself more
than 10 % in units of other UCITS or other collective
investment undertakings.

3a.
The UCITS’ fund rules or instruments of incorpora-
tion, its prospectuses and any promotional literature shall
include a prominent statement drawing attention to the
fact that the UCITS invests, as a part of its general invest-
ment policy, in units of other UCITS and other collective
investment undertakings.

(Amendment 20)

ARTICLE 1 (9)
Article 24a(1) and (2) (Directive 85/611/EEC)

1.
Notwithstanding the provision laid down in Article 19(4),
a UCITS may invest its assets in deposits with credit institutions fur-
nishing sufficient financial and professional guarantees, provided that
the UCITS places no more than 10 % of its assets in deposits with
the same credit institution or with credit institution within the same
group.

Deleted

2. Member States may raise the limit laid down in paragraph 1
to a maximum of 35 %. However, in that case a UCITS must invest
in deposits with at least five different credit institutions. For the pur-
poses of this rule, credit institutions belonging to the same group are
considered to be one single institution.

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C 339/227

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AMENDMENTS
BY PARLIAMENT

(Amendment 43)
ARTICLE 1(9)
Article 24b(1) (Directive 85/611/EEC)

Notwithstanding the provisions

1.
laid down in Article 21,
a UCITS may invest, as a part of its general investment policy,
in financial-futures
contracts and options mentioned in Article
19(1)(g) and (h), provided that the maximum potential exposure
relating to the conclusion of each such derivative transaction is cov-
ered, during the entire period of the contract, by assets belonging to
the UCITS of the right kind and sufficient in value.

1.
A UCITS may invest, as a part of its general investment
policy, in financial derivatives, provided that the amount
of the commitments entered into by the UCITS is not
greater than the total net value of its assets. In calculating
the value of the commitments, reference must be made to
the current value of underlying activities.

(Amendment 21)
ARTICLE 1(16)
Article 53a, second indent (Directive 85/611/EEC)

8 adaptation of the ceilings referred to in Section V and in Article
36(2) in order to take account of developments on financial
markets, where such adaptations will not lead to stricter require-
ments for the UCITS,

Deleted

European Parliament legislative resolution on the proposal for a European Parliament and Council
directive amending Council Directive 85/611/EEC on the coordination of laws, regulations and
administrative provisions relating to undertakings for collective investment in transferable securi-
ties (UCITS) (COM(1998) 449 1 C4-0464/1998 1 1998/0243(COD))

(Codecision procedure: first reading)

The European Parliament,

@ having regard to the Commission proposal

to the European Parliament and the Council

(COM(1998) 449) (1),

@ having regard to Article 251(2) of the EC Treaty and Article 47(2) of the EC Treaty, pursuant to which

the Commission submitted the proposal to Parliament (C4-0464/1998),

@ having regard to Rule 67 of its Rules of Procedure,

@ having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of

the Committee on Legal Affairs and the Internal Market (A5-0025/2000),

1.

Approves the Commission proposal as amended;

Asks to be consulted again should the Commission intend to amend its proposal substantially or

2.
replace it with another text;

3.

Instructs its President to forward its position to the Council and Commission.

(1) OJ C 280, 9.9.1998, p. 6.