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The UCITS framework has been one of the most regulatory successful stories in the investment fund world and Today the UCITS funds are associated with safety, good governance, and investor protection. The latest UCITS reformulation has been done in 2016, in a moment of political and economical stability. What was considered strong enough 9 years ago, at the time of approval of UCITS V does not always work today, and surely didn’t work during COVID period. UCITS VI is not a revolution, but it is a consequences of the challenges faced over the pandemic as well as a step that brings the UCITS framework closer to the realities of the current fund industry, especially after the market shocks of recent years.

To understand why the UCITS VI is necessary, we need to look back at UCITS V. When UCITS V entered into force in 2016, it focused on three areas: the role of the depositary, remuneration rules, and sanctions. These were important topics and they helped strengthen the structural foundation of the UCITS regime, but they did not deal with the operational side of fund management. They did not address liquidity in any meaningful way, even though liquidity is the core risk of an open-ended fund. They did not address the growing complexity of delegation models. And they did not address the fact that national regulators were applying UCITS rules differently, often leading to gaps and inconsistencies. For a few years this did not seem like a major issue, but then the market changed.