EU executive to adopt mutual funds overhaul

BRUSSELS (Reuters) - The European Commission will soon put forward plans to overhaul rules governing mutual funds in the European Union, the bloc's top financial regulator said on Tuesday.

"The Commission will adopt it later this month," EU Internal Market Commissioner Charlie McCreevy told a meeting of the bloc's finance ministers, confirming a Reuters report.

The undertakings in collective investment in transferable securities (UCITS) rules cover assets worth over 6 trillion euros (2.4 trillion pounds) in the 27-nation bloc.

The reform has been long-awaited by the industry, which feared it would be delayed until the autumn or beyond due to a battle among EU states over whether it should allow big cross border funds to centralise management services.

Smaller countries like Ireland and Luxembourg, major venues for registering funds, fear losing out to big mutual funds centres like London, Paris and Frankfurt.

EU president France, Britain and Germany wrote to McCreevy saying a provision for centralised management of funds to allow for economies of scale was essential but McCreevy said he would not include a proposal on this for now.

"It will not include a management company passport, on which we need more work," McCreevy said.

A group of national securities watchdogs in the EU will advise McCreevy on how to supervise funds that operate in one country but administered in another.

Industry officials hope McCreevy could then bolt management company proposals onto the draft reform. The proposals will need approval from EU states and the European Parliament to come into effect.