Asset Management Regulatory Roundup - July 2017 - Issue 1

by Dechert LLP
Contact

Dechert LLP

A compact summary of the most recent regulatory developments relevant to the UK asset management industry. In this issue we look at the extension of the PSC regime to Scottish limited partnerships and AIM listed companies, the findings of the FCA's asset management study, the new EU Prospectus Regulation, MiFID II developments, ESMA's Q&As on PRIIPs and the newly published Money Market Funds Regulation.

The PSC regime will be extended to Scottish limited partnerships and AIM listed companies from 24 July 2017

The UK Persons with Significant Control (PSC) regime will be extended to AIM listed companies and Scottish eligible partnerships (as a result of the implementation of the Fourth Money Laundering Directive (MLD4) in the UK) from 24 July 2017. It should be noted that eligible Scottish partnerships include Scottish Limited Partnerships which are commonly used as carried interest vehicles in tiered UK limited partnerships.

Read Dechert’s OnPoint "AIM companies and Scottish partnerships to be brought within the scope of the PSC register regime".

Read the Regulations, Explanatory Memorandum and Impact Assessment. 

Read the Scottish Regulations. 

Read the draft statutory guidance on the meaning of significant control. 

Read the Investment Association transposition note. 

FCA’s asset management market study contains remedies including an “all-in fee”

The Financial Conduct Authority’s (FCA) final report in its asset management market study, confirms weak price competition in a number of areas. Other findings include lack of clarity around fund objectives and failure to use appropriate benchmarks. One of the proposed remedies is an “all-in fee” intended to help investors understand the total fees payable/deducted from the fund. It remains to be seen how this will fit in with the PRIIPs and MiFID cost disclosures which are much more detailed.

Read the FCA's related webpage.

Read Dechert's Newsflash: "FCA Publishes the Final Version of Its Asset Management Market Study".

The EU Prospectus Regulation has been published in the OJ

The new EU Prospectus Regulation has been published in the Official Journal of the European Union (OJ) and will apply from 21 July 2019 (other than certain exemptions from the prospectus requirement which will apply from 21 July 2017 and 22 July 2018 respectively). The changes are welcome as they are designed to simplify and improve the current EU prospectus regime. The main changes include:

  • a higher threshold for what constitutes a “public offer” (including where the offer has a total consideration in the EU that exceeds EUR 1 million calculated over a 12-month period);
  • issues of less than 20% of existing securities admitted to a regulated market in any 12-month period will not require a prospectus (the current limit is 10%);
  • the new prospectus summary will be based on the PRIIPs Regulation;
  • a simplified regime for secondary issuance;
  • a simpler “EU growth prospectus” for SMEs;
  • a simplified and streamlined frequent issuer regime; and
  • all EU prospectuses will be available on ESMA’s website.

Read the OJ here.

MiFID II developments

Recent MiFID II developments include the following:

  • FCA’s final policy statement on MiFID II has been published. It contains various important policy changes including that the MiFID best execution rules will not be extended to AIFMs. There are also improvements to the tests which will make it easier for local authorities to opt up to professional client status. Other changes include the extension of the scope of the inducements rule to collective portfolio managers and added flexibility around the research payment account; and amendments to the proposals on ‘taping’, ie, recording of phone and electronic communications.

Read the FCA's policy statement.

  • ESMA has published an opinion to help market participants assess whether their commodity derivatives activities can be considered as ancillary to their main business. Under the MiFID II Directive market participants are required to measure their own activity against total market sizes in commodity derivatives. Those market participants exceeding a certain market share are required to apply for authorisation as an investment firm. The aim of the opinion is to help market participants perform the ancillary activity test in MiFID II in the absence of publicly available data for commodity derivatives and emission allowances.

Read ESMA's opinion.

  • ESMA has also published an opinion on interim transparency calculations for liquid non-equity instruments and accompanying FAQs. The opinion sets out the outcomes of transitional transparency calculations based on data submitted by EU trading venues. Interim calculations for bonds will be published in August.

    Read the ESMA webpage on MiFID II transitional transparency calculation.

PRIIPs Q&As

The European Banking Authority, ESMA and the European Insurance and Occupational Pensions Authority have published joint Q&As on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs).

PRIIPs include new and existing alternative investment funds (AIFs) (regardless of domicile and place of management) that are available to retail investors (as defined in MiFID II, notably this will include high net worth individuals and sophisticated individuals as well as local and public authorities) in the EEA, as well as UCITS. These investors must be provided with a short three-page KID in the required format pre-investment. The performance scenarios have been particularly challenging as it is necessary to indicate anticipated future performance in various scenarios.

The PRIIPs Regulation applies to AIFs from 1 January 2018 and to UCITS and Non UCITS retail schemes (NURS) with key investor information documents (KIID) from 31 December 2019.

Read the PRIIPs Q&As.

Money Market Funds Regulation published in the OJ

The text of the Regulation on money market funds (MMF Regulation) has been published in the OJ.

Money market funds (MMFs) are important short-term financing tools for financial institutions, corporates and governments and come in two main forms:

  1. MMFs with variable net asset value (VNAV); and
  2. MMFs with constant net asset value (CNAV) (CNAV can offer share purchases and redemptions at a fixed price).

The MMF Regulation will affect MMFs established, managed or marketed in the EU - both UCITS and AIFs - and imposes an extra layer of regulation on top of the UCITS directives and the AIFMD which is intended to make MMFs more robust. Aspects covered in the MMF Regulation include: liquidity and diversification requirements, permitted assets, transparency provisions.

The MMF Regulation will apply from 21 July 2018 - before this date various implementing regulations and technical standards will be developed.

Read the MMF Regulation.

Brexit

A Softer Brexit Back on the Table - What Could This Mean for Asset Managers?

The result of the UK’s general election on 8 June has reignited speculation that the UK Government might pursue a softer Brexit. In this update, we provide a reminder of the main “softer” Brexit models which had previously been ruled out and how these might affect the asset management industry. 

Read "A Softer Brexit Back on the Table - What Could This Mean for Asset Managers?"

MiFID II

New Governance and Organisational Requirements Under MiFID II

MiFID II planning and implementation is a top priority for asset managers affected by European regulators and brings with it both challenges and opportunities. This fact sheet looks at the new governance and organisational requirements under MiFID II. 

Read the fact sheet: MiFID II: Governance and Organisation.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP
Contact
more
less

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.