Investment Funds Update Europe: Legal and regulatory updates for the funds industry from the key asset management centres and primary European fund domiciles - Issue 4, 2018: United Kingdom

by Dechert LLP

Dechert LLP

FCA statement on authorisation for firms offering cryptocurrency derivatives

The (Financial Conduct Authority) FCA has stated that cryptocurrency derivatives are capable of being financial instruments under the Markets in Financial Instruments Directive (MiFID). The FCA published a statement to the effect that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering, will require authorisation by the FCA. This includes cryptocurrency futures, contracts for differences and options. 

Read the statement in full

Read the feedback statement on distributed ledger technology.

FCA final rules implementing asset management market study; consults further

The FCA published its policy statement and final rules on its asset management market study remedies as a result of feedback sought on changes to the governance arrangements for authorised fund managers as well as technical changes to improve the fairness of how fund investors are treated. The new rules require authorised fund managers of FCA authorised funds to focus more on their duties as agents of investors in their funds and the rules part of a package of measures introduced to address weaknesses identified in last summer’s asset management market study. The main changes include new requirements for: (i) value for money assessments and reporting, (ii) independent directors and (iii) retention of box management profits. They also include measures in relation to the proposed extension of the Senior Managers &Certification Regime and guidance on share classes.

The above rules and guidance will be inserted into the Collective Investment Schemes (COLL) Sourcebook and will come into force on 1 April 2019 (on risk-free box profits) and 30 September 2019 as concerns value assessment and independent directors. The non-Handbook guidance relating to share classes is effective immediately.

The FCA also published a consultation paper proposing further rules and guidance which is focused on how authorised fund managers communicate with investors.

Read the policy statement in full.

Read the consultation paper in full.

Brexit - draft regulations on powers to “onshore” EU technical standards

The Department for Exiting the EU has published a draft statutory instrument “Financial Regulators' Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations 2018” which was prepared by HM Treasury (HMT) and which sets out the powers of the FCA, Prudential Regulation Authority and other UK financial services regulators concerning the domestication or on-shoring of EU legislation containing technical standards. The Regulations set out the process for the regulators to make instruments correcting "deficiencies" in the technical standards (EU exit instruments), so that they remain legally operative after Brexit, and to make instruments making new technical standards or amending existing technical standards (standards instruments).

HMT intends to lay the Regulations before Parliament as soon as possible after the Withdrawal Bill has received Royal Assent.

Read the draft regulations.

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Dechert LLP

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