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The recent subprime crisis has led policymakers and regulators to analyze the so-called shadow banking sector in more detail. This shadow banking sector is typically organized in off-shore zones and extensively uses sophisticated financial products called derivative and structured products. Recently, the European Commission has proposed new Directives on Investment Funds. The first Directive concerns standard Investment Funds called UCITS, which stands for Undertakings of Collective Investments in Transferrable Securities.
Basically, it is the designation for investment funds that respect a certain number of investment restrictions, notably on the amount of leverage and the use of derivative products. The most recent Directive is the so-called UCITS IV Directive...
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