The regulations currently concerning the registration, promotion and sale of derivatives funds in Europe are covered in other articles of this blog. While these regulations are complex, or alternatively, ill-defined, two generalizations are possible.

The first is that European citizens may buy derivatives funds wherever these funds are registered and in whatever form they take. The second is that it is normally possible to promote derivatives funds to residents of a European country who are not its citizens and who do not naturally speak its language— in other words to the expatriate community of a country—at least as a first option.

Both generalizations require definition. The first, the freedom to purchase, is a European feature, given for virtually all classes of investment, and is in almost diametrical opposition to the regulatory system that exists in the US. Whereas in Europe, particularly in countries such as the UK and Germany, the principal concern of the promoter or salesman is the method by which the derivatives fund is marketed to the potential purchaser, in the US or, more accurately, when dealing with US citizens, it is inevitably illegal to allow the purchase of an unapproved fund.

The second generalization is more important for marketers of offshore funds seeking to sell their products in Europe than for the increasing number of funds registered within one European jurisdiction.

Let us take two examples, one inside and one outside the European Community. In Switzerland, it is usually dangerous, from a regulatory standpoint, to attempt to promote a fund through press relations (a common method in the majority of other countries), particularly when the contact between marketer and journalist takes place in Switzerland and is intended’ to result in coverage in a newspaper or magazine published within the country in one of the four official languages (German, French, Italian and Romanisch).

It is not, however, a problem to use press relations to promote a fund to Swiss residents when the press coverage appears, say, in an English language publication whose circulation is not focused on Switzerland (such as the International Herald Tribune, The Economist, Financial Times, Managed Derivatives and so on).

An equivalent position occurs in Spain particularly with regard to the expatriate community, which is concentrated along the country’s southern coastline. This community has its own publications and is also one of the targets of a series of expatriate and offshore magazines, largely devoted to financial matters and usually produced in the UK. This reflects the fact that most of the expatriates concerned are British.

Within these two groups of publications it is possible to promote derivatives funds not registered in Spain or other EC member states. This promotion can be done using press relations and, often, advertising routes. Furthermore, Gibraltar television, received by residents of Spain and Portugal within a radius of at least one hundred miles from the Rock, could be used as a promotional vehicle.

It is fair to add here that Spanish publications, particularly those serving the financial community, increasingly discuss managed derivatives funds whether registered in the country or not but they may not be used to promote such products in a more direct sense.

The two examples above largely focus on press relations which has historically been and continues to be one of the prime methods conveying information about managed derivatives funds. The examples also specifically relate to the retail marketing of funds unapproved in a particular country—the activity upon which the majority of national regulators are focused. Marketing to institutions in Europe can be characterized by another generalization: it is generally permissible to promote managed derivatives funds, derivatives managers and derivatives management programmes to institutions provided that the methods used do not also impact in any significant way (that breaches regulations) on actual or potential retail investors.

More about: Marketing Issues : Some Generalisations

• Regulation of Managed Futures Funds in Europe Part 1
• Regulation of Managed Futures Funds in Europe Part 13
• Marketing Objectives & Marketing Techniques
• Regulation of Managed Futures Funds in Europe Part 12
• Performance Measurement—The Issues
• Financial Consideration: Fees
• Relating Familiar Marketing Techniques to Managed Derivatives Targets
• RETAIL SALES
• Evaluating Shorter Trader
• CTAS

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