Tag:AIFMD UCITS

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Europe: Important Issues Still Open for Debate in EU’s AIFMD and UCITS Reviews
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Europe:  FCA Sets Ambitious Goal to Improve Asset Management Regulation in the UK
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Europe: FCA Sets 2023 Regulatory Priorities for UK Asset Managers
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Europe: UK Regulator Issues New Recommendations to Firms on Consumer Duty Implementation
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Europe: Asset Managers – Are You Ready for Climate-Related Reporting Under UK TCFD?
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United Arab Emirates: SCA Overhauls Regulations Governing Foreign Fund Offerings
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United States: SEC Adopts Expanded Proxy Voting Reporting by Registered Funds and New Reporting of Executive Compensation Votes by Form 13F Filers
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Europe: AIFMD II – Proposed Refinements to Loan Originating Fund Proposals
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Europe: FCA Consults on Permitting Side Pockets for UK Retail Funds Affected by Conflict in Ukraine
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Europe: FCA Challenge to UK Fund Service Providers    

Europe: Important Issues Still Open for Debate in EU’s AIFMD and UCITS Reviews

By Giovanni Campi

On 24 January 2023, the ECON Committee of the EU Parliament adopted its report on proposed amendments to the EU’s main fund rules, AIFMD and the UCITS Directive, ahead of trilogue negotiations with the EU Council and Commission set to begin in March.  When agreed, the revised Directives are expected to come into force in 2025 in light of the 24 months transposition period. Notable proposals include:

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Europe:  FCA Sets Ambitious Goal to Improve Asset Management Regulation in the UK

By Robert Lloyd, Maya Ffrench-Adam and Philip Morgan

On 20 February 2023, the FCA published a discussion paper (DP23/2) on improving the UK asset management regime.  Key themes include:

Alignment with Relevant International Standards 

The FCA does not want to create unnecessary complexity for firms operating in multiple jurisdictions. It aims to develop the regime to interact effectively with international requirements, while promoting the international competitiveness of the UK economy.

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Europe: FCA Sets 2023 Regulatory Priorities for UK Asset Managers

By Philip Morgan

One of the UK FCA’s favoured ways of regulating is through “Dear CEO” letters, which seek to place a direct onus on CEOs to address FCA priorities.  On 3 February 2023, CEOs of UK asset management firms were the recipients of one such letter.  Much of the content is not surprising (e.g. the emphasis on consumer outcomes) but we highlight here some particularly notable points: 

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Europe: UK Regulator Issues New Recommendations to Firms on Consumer Duty Implementation

By Andrew Massey and Robert Lloyd

With effect from 31 July 2023*, a new Consumer Duty will require firms conducting regulated activities in the UK to act to deliver good outcomes for retail customers. The FCA has conducted a review of the implementation plans of a number of larger firms, and published its findings on 25 January 2023.

Although pertaining to larger firms, the findings – particularly the examples of good practice and areas for improvement – are intended to be “useful” for all firms preparing for the Duty. The underlying concern identified by the FCA is the risk that firms may not be ready in time, or may struggle to embed the Duty effectively throughout their business.

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Europe: Asset Managers – Are You Ready for Climate-Related Reporting Under UK TCFD?

By Maya Ffrench-Adam and Andrew Massey

1 January 2023 marked the latest regulatory milestone in the UK’s phased implementation of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The TCFD – first set up in 2015 by the Financial Stability Board – is an international body that has issued recommendations, targeted at multiple sectors, for disclosing climate-related financial information.

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United Arab Emirates: SCA Overhauls Regulations Governing Foreign Fund Offerings

By: C. Todd Gibson, Amjad Hussain, and Zaid Abu-Shattal

The Securities and Commodities Authority (“SCA”), the federal financial regulatory agency in the United Arab Emirates (“UAE”) issued on 16 January 2023 a suite of new decisions and regulations, which introduced sweeping changes to the public distribution of foreign funds in the UAE.

Pursuant to SCA Chairman of the Board of Directors Decision No. 4/RM of 2023 Concerning the Procedures of Adjustment of Situation to Promote Units of Foreign Funds in the UAE (“Foreign Funds Regulations”), which came into effect on 17 January 2023, promotion of foreign funds in the UAE is now limited to private distribution to professional investors and/or market counterparties, as defined in the SCA Rulebook. As of today, the updated regulations are only available in Arabic.

Amongst other obligations set out in the Foreign Funds Regulations, promoters of foreign funds in the UAE must amend their arrangements with managers of foreign funds to comply with the provisions of the Foreign Funds Regulations.

The Foreign Funds Regulations state that promoters may continue performing their obligations pursuant to contracts that are still in force for a period not exceeding six months from 1 January 2023 or until the expiration of such contracts (whichever comes first), provided that the registration of the concerned foreign funds are renewed within the transitional period and payment of the prescribed fees are made to the SCA.

The SCA seems to want to encourage global asset managers to set up an onshore presence and establish onshore domestic public or private funds to target investors in the UAE in accordance with the new requirements and processes that were also issued on 16 January 2023 under the SCA Chairman of the Board of Directors Decision No. 1/RM of 2023 on the Regulation of Investment Funds. The SCA also issued decisions with respect to regulations governing the registration of securities for listing purposes, amending certain provisions of the SCA Rulebook, clearing activities in local commodity markets, and SCA services fees.

United States: SEC Adopts Expanded Proxy Voting Reporting by Registered Funds and New Reporting of Executive Compensation Votes by Form 13F Filers

By: Lynn A. Schweinfurth, Kathy Kresch Ingber, and Crystal Liu

On November 2, by a vote of 3 to 2, the Securities and Exchange Commission adopted, largely as proposed, amendments to Form N-PX under the Investment Company Act of 1940 and new Rule 14Ad-1 under the Securities Exchange Act of 1934 (Amendments).  The Amendments expand the proxy voting information that registered investment companies (Funds) report on Form N-PX, and require, for the first time, Form 13F filers (Managers) to report annually on Form N-PX how they voted proxies concerning certain shareholder advisory votes on executive compensation (“say-on-pay” votes).

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Europe: AIFMD II – Proposed Refinements to Loan Originating Fund Proposals

By: Philipp Riedl

On 18 May 2022, the Rapporteur submitted to the Committee on Economic and Monetary Affairs (ECON) a report suggesting changes to the EU Commission’s envisaged regulation of loan originating funds under its proposed AIFMD amendments (AIFMD II).  The report includes some proposed relief, notably:

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Europe: FCA Consults on Permitting Side Pockets for UK Retail Funds Affected by Conflict in Ukraine

By: Andrew Massey and Robert Lloyd

On 28 April 2022, the FCA published consultation paper 22/8 on proposals to protect investors in UK authorised funds by allowing authorised fund managers (AFMs) to create side pockets in the form of separate unit classes for funds affected by the conflict in Ukraine.

The proposals are novel for UK authorised funds in at least two respects. Firstly, they would allow side pockets to be created without requiring a shareholder extraordinary resolution or at least 60 days’ prior notice. Secondly, the AFM would be able to suspend dealings in the unit class formed to create the side pocket without having to suspend dealing in the entire fund.

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Europe: FCA Challenge to UK Fund Service Providers    

By: Andrew Massey and Melissa Vance

Fund managers can expect changes to custodian and other fund service provider practices in response to regulator challenge, and should review their due diligence of service providers.

In a letter on 23 March 2022, the FCA instructed the Chief Executive and Boards of third-party custodians, depositories for authorised and non-authorised funds, and third-party administrators to review key risks identified by the FCA, including the following:

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