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Ucits IV will generate a greater choice of investment funds operating at lower costs, as well as introduce a full passport that allows a fund manager based in one member state to run and trade funds in another, rather than simply allowing cross-border marketing as permitted under Ucits III.

Jarkko Syyrila, director of international relations at IMA, said: "Ucits has been a great European success story for the industry and investors, and with increasing global competition, these improvements are welcome. The provisions to improve investor protection and reduce costs and bureaucracy will benefit the industry and investors alike.

"We now call on the European institutions to work together to ensure all these crucial improvements to the Ucits framework can be adopted by the 2009 European elections."

A number of fund management companies, including M&G Investments, hailed the improved framework.

Peter Grimmett, head of fund regulatory development at M&G, said the group had a number of funds registered in various places in Europe and that the process of registering those funds was costly and time consuming.

With Ucits IV, however, M&G would be able to bypass this inconvenience and improve its business.

"The Ucits IV proposals aim to remove the current barrier and enable virtually immediate registration, allowing EU investors to enjoy the advantage of investment far more quickly than now," Mr Grimmett said.

"It will also make future registration of funds in the other EU member states that much simpler. This helps the EU achieve its aim of a truly pan-European market for Ucits to the benefit of all EU investors."

Some critics have complained about the length of time it has taken to get Ucits IV up and running, and while Mr Grimmett admitted the proposals had been a long time in coming, he said they were likely to be embraced by the industry.