The EU Council yesterday unanimously approved new rules on Undertakings for Collective Investment in Transferable Securities investment funds despite objections from Luxembourg.

The new rules mean the creation of a "management company passport" which will allow the funds to be managed in any one of the 27 member states. However, Luxembourg, known for its dependency on financial services, raised objections during a meeting of EU Permanent Representatives (Coreper) meeting, saying that the move will undermine certainty on the market and raise costs for the industry.

UCITS, as defined in an EU directive (85/611/EEC), are EU-approved investment funds, which the Commission estimates are worth around €5 trillion. They can be anything from retail funds to pension funds, but are usually long-term investments that are subject to liquidity rules and have to comply with an exhaustive list of eligible assets.

The current UCITS directive has been amended several times and last year the Commission proposed a recast, mainly to enhance investor information and harmonise the way funds are managed across borders.

Other changes to the directive approved by Council include the creation of a standardised "key information" document for customers, giving immediate market access across the EU to funds once they are approved by the home country authority, ensuring cross-border mergers come under the remit of only one member state, encouraging national supervisors (MFSA in Malta's case) to share information, allowing for asset pooling, where one fund can invest up to 85 per cent of its assets in another, giving permission for supervisors to perform on-the-spot investigations and encouraging them to harmonise powers and work together on imposing penalties.

A statement setting out Luxembourg's grievances was attached to the conclusions by the Council on this decision.