New proposed rules to make it easier to buy and sell investment funds across European Union national borders and encourage the kind of large, unified market that exists in the US were welcomed by one of the main UK lobby groups acting for the UK financial industry.

The European Commission has proposed to overhaul its UCITS (Undertakings for Collective Investment in Transferable Securities) regime for pan-European funds. At present, Europe’s funds industry is fractured by dozens of different tax and regulatory regimes, making it hard for firms to merge funds together into large pools and gain economies of scale, as happens in the US.

The Investment Management Association, the trade group representing the bulk of the UK’s investment managers, said it welcomed the proposals.

"UCITS has been a great European success story for the industry and investors and with increasing global competition these improvements are welcome.  The provisions to improve investor protection, and reduce costs and bureaucracy will benefit the industry and investors alike,” said Jarkko Syyrila, director of International Relations at the IMA.

The commission had four main proposals: 

 -  Scrap administrative red tape that requires fund distributors to spend months getting clearance to market funds across EU borders.

 - Create a framework, including the use of “master-feeder” funds, to allow funds to be merged together.

- Create a simpler fund prospectus for investors.

-  Bring national regulators closer together so that funds that are registered in one nation are similarly recognised in other countries.

The commission estimates that letting funds be merged together could generate $6 billion in savings and economies of scale.