One EU market for funds: what the Council agreed

The Commission presented the package in December 2025 as part of the savings and investments union, the successor of the capital markets union. The recitals of the Council text name the problem directly: each member state writes its own rules of conduct and prudential rules for management companies, which leaves fund managers with diverging national rulebooks.

National options that let a member state add to the core rules or depart from them are to be removed. ESMA may issue guidelines on prudential rules and rules of conduct, so that a management company in Dublin and one in Frankfurt work under the same reading of the directive.

A management company that manages a UCITS in another member state, through a branch or under the freedom to provide services, should face no additional requirements from the host state on matters the directive covers. The home authority has 15 working days to forward a service notification to the host authority, and one month for a branch.

ESMA gets a standing task to watch over these cross-border cases. It is to identify supervisory actions of home or host authorities that hinder management companies in using their EU passport, propose non-binding corrective actions, and bring the case to its Board of Supervisors when an authority does not follow them.

Today a UCITS has to appoint a depositary that is based in its own home member state. Under the Council text, a home member state may allow its funds to appoint a credit institution from another member state as depositary, if that bank may provide services across borders and is supervised as a depositary at home. Alternative investment funds get the same option.

Each member state decides for itself whether it uses the option. States that do inform ESMA and the Commission, and ESMA publishes the list on its website. A depositary appointed this way follows the fund rules of the home state of the fund and faces no additional requirements because of the cross-border appointment.

Asset management groups with entities in several countries get more room. An authority may not refuse to license a management company because it uses the staff and technical resources of other entities in the same EU group. When a management company delegates functions to a group entity, several delegation conditions no longer apply, while the ban on letter-box entities stays.

For license applications, ESMA is to develop standard templates, data standards and IT solutions, so that an authorization file looks the same in every member state. Material changes to an existing license get a review period of one month, which the authority may extend by one more month.

The position agreed by the ministers is the negotiating mandate of the Council and has no legal effect yet. Trilogue talks with the European Parliament follow, and the directive applies 18 months after it enters into force. The full general approach lists every change to the three directives.