For immediate release: Tuesday 14 June 2005

IMA RESPONDS TO CESR CONSULTATION ON ELIGIBLE ASSETS

IMA has submitted its response to the Committee of European Securities Regulators' consultation paper �Advice on clarification of definitions concerning eligible assets for investment of UCITS��.

The Association welcomes the attempt to resolve a number of differences in the implementation of the UCITS Directive across the individual jurisdictions of the EU. It is hoped that CESR�s efforts will bring about further standardisation of the interpretation of the Directive, thus removing a number of the difficulties which exist for IMA members when passporting their funds into the EU.

In its response, however, IMA has raised concerns over the level of detail included in the consultation. IMA is concerned that, if implemented in its existing state, CESR's advice would add further restrictions and extra layers of prescription.

Points of concern include:

1. In an attempt to define structured financial instruments and listed closed-ended funds, CESR has redefined the term �transferable security�. IMA is concerned that this approach will disallow investment in certain assets which have been considered eligible since the implementation of the first Directive in 1985, including investment trusts investing in property. This advice will also call into question investment in illiquid assets such as smaller companies and emerging markets securities.

2.IMA accepts the need to protect the UCITS brand, especially in light of the extension of powers within UCITS III, but in its consultation CESR�s advice is unnecessarily detailed and prescriptive which would stifle innovation and reduce the attractiveness of UCITS funds compared to other retail products e.g. life funds.

3. The European Commission have tasked CESR with providing advice to managers of UCITS on the eligibility of certain assets within their funds by 31 October 2005, following a second consultation due for issue in July. It is expected that the Commission will issue their recommendations in April 2006. Given the level of complexity involved in some of the issues included in the consultation paper, IMA feels this to be an unrealistic timetable and has requested that CESR urges the Commission to extend the deadline in order to give full consideration to all of the issues, thus reducing the risk of unintended consequences.

 Sheila Nicoll, Deputy Chief Executive of the IMA commented:

�A move to reach a clearer understanding and agreement among regulators as to how the UCITS Directive is implemented across the EU must be welcomed as it will simplify the process of registering funds for sale cross-border. However, IMA considers that the level of detail and prescription in CESR�s advice is a backward step and urges CESR to reconsider its position.� 

A copy of the full response is attached.

-Ends-

For further information, please contact:
Helen Stephenson, Communications Officer, IMA  020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA   07834 089332

Notes to editors:
1. CESR is an independent Committee of European Securities Regulators.