By Huw Jones
LUXEMBOURG (Reuters) - Centralizing administration of the European Union's 6 trillion euro mutual funds industry needs further study to resolve concerns over supervision, a top market regulator said on Wednesday.
European Commission plans to update the EU's legal framework for cross-border mutual funds are delayed due to clashes over whether funds could cut costs by using a single administrator instead of having one in each state where they operate funds.
Under current law, services such as depositories or safekeeping of assets must be based where the fund is domiciled.
Two top EU centers for cross-border funds, Ireland and Luxembourg, worry that so-called passporting would lead to funds being based there in name only with all functions outsourced, raising supervisory, tax and legal uncertainties.
Britain and Germany, home to many big funds, dispute this.
"It is a highly political decision," said Eddy Wymeersch, chairman of the Committee of European Securities Regulators.
"We understand the UCITS industry has to function more efficiently. There are too many funds, no ability to concentrate assets and this makes it expensive," Wymeersch told Reuters Funds Summit.
UCITS are undertakings in collective investment in transferrable securities, the EU funds framework which has already been reformed twice and now being reviewed by EU Internal Market Commissioner, Charlie McCreevy. Continued...
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