Revised European regulation for fund managers will give greater flexibility for structured product dealers to use derivatives and help to expand the structured products market in Europe, according to Piers Lowson, director at Barrie & Hibbert, a risk management consultant in Edinburgh. The regulation update, know as UCITS III--Undertaking for Collective Investment In Transferable Securities III--has been effective for around a year, but was only implemented in the U.K. in November and in Luxembourg in January. By February it will be implemented across the whole of the E.U.
Several products, including tax efficient guaranteed funds that are structured using options, constant proportion portfolio insurance (CPPI) and high income funds that provide capital guarantees, will be allowed under UCITS III that were banned under the original rules, said Lowson.
