The fourth stage of the pending UCITS directives, which sought to introduce a complete “passport” allowing fund managers based in one European Union member state to run and trade funds in another in a pan-European format, has been temporarily tabled following outcries from Ireland and Luxembourg.The controversy surrounds Version IV of the “Undertakings for Collective Investment in Transferable Securities,” or UCITS — a set of EU directives that allow collective investment schemes to operate freely throughout the EU on the basis of a single authorization from one member state.

A measure in Version IV centered on the location of administrative services — such as accounting — for an investment fund. Under the present UCITS guidelines, all back-office work has to be located in the nation of the investment fund concerned. As many are based in Ireland and Luxembourg — both nations noted for their benign financial regimes — the proposed “passport system” would have allowed those management services to move away and into the control of the jurisdictions of the traders.

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