The idea of a passport for investment fund managers is supported by the industry and by the majority of EU member states, but has been so far fiercely opposed by the usually pro-free market Irish Commissioner McCreevy and by the two states which profit the most from the current system: Ireland and Luxembourg (see background).
In what many considered a dilatory tactic, the Commission avoided including the managers' passport in its recent proposals for to reform the main EU funds market, the UCITS (Undertakings for Collective Investment in Transferable Securities). Instead, McCreevy asked for detailed advice from the European group of national regulators in charge of the issue, the Committe of European Securities Regulators (CESR) (EurActiv 16/07/08).
In spite of the relatively short notice (three months including the summer break), the CESR was able to present its opinion by the 1 November deadline. As expected, the regulators recommended going ahead with the passport and proposed a series of measures to overcome the main legal hurdles highlighted by the Commission, notably the supervision of companies based abroad.
The European Parliament has already pushed for the introduction of the passport. In the Council, apart from Luxembourg and Ireland, the other states with a lukewarm approach are Poland, Slovakia and Slovenia, which is not enough to build a blocking minority. The Commission is therefore the last stumbling block.
McCreevy has to negotiate possible amendments to the proposals with the Parliament. But there has not yet been any Commission contact with Wolf Klinz, the liberal MEP in charge of the dossier, his secretariat confirmed.
However, McCreevy's spokesperson admitted that "the CESR's advice was a prerequisite, and now that it has been presented an important hurdle has been removed". In a press release presenting the advice, the CESR underlined: "The Commission has stated that, following receipt of the CESR's advice, it aims to come forward with an appropriate legislative proposal in time for its adoption during the current legislature."
Technically, this means that an agreement between Commission and Parliament should be reached by the end of the year.
