Fund News
Issue 107 – October 2013

Investment Fund Regulatory and Tax developments in selected jurisdictions


This month developments from:

European Union

Proposed EU Regulation on Money Market Funds

The European Commission issued a proposal on 4 September 2013 for a Regulation on Money Market Funds ("MMF"). The proposed regulation is a 'Product' regulation that takes certain principles in existing CESR/ESMA guidelines and makes them into law. The proposal will impact MMFs set up as UCITS, and those that qualify as AIFs, and would apply in addition to the existing UCITS and AIFMD frameworks. Furthermore, the proposed regulation would apply to MMFs established, managed or marketed in the Union. Read more

AIFM reporting guidelines published

On 1 October 2013 the European Securities and Markets Authority ("ESMA") published the final guidelines on the reporting obligations for alternative investment fund managers ("AIFMs"). These guidelines provide clarification on the information that AIFMs should report to the authorities as well as indications as to the timing of reporting. ESMA also published some technical supporting material (a consolidated reporting template, detailed IT guidance for filing of the XML and the XSD schema) that will facilitate the reporting by AIFMs to regulators.   Read more

European Commission Shadow Banking Communication

Following the release of a Green Paper in March 2012 (see Fund News Issue 90), the European Commission on 4 September 2013 published a Communication on Shadow Banking describing the issues at stake in relation to the shadow banking system. The Communication describes the key measures already taken to deal with the risks related to shadow banking and also sets out a roadmap for the future. This roadmap includes increasing transparency of the shadow banking sector, improving the framework for certain investment funds, reducing the risks associated with securities financing transactions, strengthening the prudential banking framework in order to limit contagion and arbitrage risks, and establishing more effective supervision of the shadow baking sector.  Read more

EMIR indicative timeline – ESMA update

ESMA has published an updated version of its EMIR implementation timetable. Key changes in the implementation timeline relate to the registration of the first Trade Repositories which is expected not before 7 November 2013. Consequently, the transaction reporting to trade repositories has been delayed and will not start before 12 February 2014. The revised timeline is available via the following web link.

Proposed EU Regulation on financial benchmarks

The European Commission issued a proposal on 19 September 2013 for a Regulation on financial benchmarks strengthening the rules of those used in financial instruments and financial contracts in the EU. The main objective of this proposal is to improve a benchmark's market integrity and fairness in order to restore confidence in financial markets and ensure the protection of consumers and investors. The proposal targets all published indices used to reference the price of a financial instrument or contract, or measure the performance of an investment fund. Read more


FCA's proposals for implementing the AIFMD's Remuneration Code

On 6 September the Financial Conduct Authority (“FCA”) published its quarterly consultation paper (“CP 13/9”) which includes, in Chapter 14, its proposals and draft guidance setting out how it intends to amend the FCA’s AIFM Remuneration Code (SYSC 19B) to implement key elements of the European Securities and Markets Authority (“ESMA”) final guidelines on AIFM remuneration.  In particular, the FCA sets out proposals for the proportionality regime they might adopt.  This could enable certain fund managers to disapply some of the more onerous requirements (e.g. deferral, risk adjustment and the payment in instruments of variable remuneration).  The AIFM Remuneration Code is applicable to ‘AIFM Remuneration Code Staff’ (“Code Staff”) whose activities have a material impact on the risk profile of the AIFM or the AIFs it manages, and to certain delegate entity staff.  It will apply to the first full performance period following the AIFM’s authorisation.  The consultation period ends on 6 November 2013.  The FCA intends to issue final remuneration guidance in early 2014. Read more

FCA consults on minor changes to the platform rules and proposes guidance on when cash rebates may continue for legacy business

In chapter 3 of its CP 13/9 the FCA consults on the implementation of new rules which will come into force on 6 April 2014 regarding cash rebates on legacy business where the investment products are already held by retail clients when the new rules come into force. Read more

FCA makes amendments to COLL reflecting the formal adoption of ESMA guidelines ("ESMA 2012/832")

Having indicated early in 2013 that it would comply with and adopt ESMA’s ‘Guidelines on ETFs and other UCITS issues’ (“ESMA 2012/832” “the Guidelines”), in Chapter 10 of its quarterly CP 13/9 the FCA consults to ensure its adoption of the Guidelines are considered alongside the existing rules and guidance in the Collective Investment Schemes sourcebook (“COLL”). Read more

FCA defers the implementation date for the provision of fund information to investors who hold units in funds via nominees

In CP 10/29 the then FSA proposed rules requiring nominee companies to provide fund information and voting rights to the underlying beneficial owners of units in authorised funds.  These rules were to come into effect on 31 December 2012 but after discussion with the industry on a number of issues implementation was deferred to 31 December 2013.  The FCA has now decided to place the majority of the implementation on hold until 2015.  It was recognised that some investors invested via nominees to receive less information and that an opt-in or opt-out may be a better way to proceed but care was needed if the option wording was not to risk biasing the outcome. Read more


CBI Publishes Prospectus Handbook

The Central Bank has published a Prospectus Handbook (A Guide to Prospectus Approvals in Ireland). The handbook addresses prospectus review, approval and publication and provides an overview of the structure and content of prospectuses. It is available via the following link.

CBI Consultation Paper on Investment Intermediaries

The Central Bank has issued Consultation Paper CP72 reviewing the 'Handbook of Prudential Requirements for Authorised Advisors and Intermediaries', which are investment intermediaries under the Investment Intermediaries Act 1995. The Central Bank is proposing to significantly change the supervision of firms designated as 'low impact' under its PRISM regime. Read more

AIMA submission on CBI's Loan Origination Discussion Paper

We previously reported on the Central Bank's discussion paper on loan origination in Issue 105. The Alternative Investment Management Association ("AIMA") have submitted a response to the Central Bank's discussion paper stating its view that the risks associated with loan origination by investment funds should be able to be adequately monitored and mitigated by the regulatory framework of AIFMD and that further regulatory measures should not be necessary. The full response can be obtained from AIMA via this link.

CBI Feedback on Fitness & Probity

The report gives details of the Central Bank's performance against the service standards for the processing of Individual Questionnaires for PCFs from January to June.

The report is available via this link.

Key dates reminder

30 September 2013: Deadline for filing Section 891(c) returns to the Revenue Commissioners for the year 2012. (See Issue 106 regarding the Return of Values (Investment Undertakings) Regulations, 2013 SI 245/2013.)

11 October 2013: Deadline for responses to the Central Bank’s consultation on types of AIF under AIFMD including Unit Trusts, Exempt Unit Trusts, REITs, SPVs ("CP68").

28 October 2013: Deadline for responses to the Central Bank’s consultation on the authorisation of regulated firms, funds and intermediaries, process improvements and service standards (“CP67”).

31 October 2013: Deadline for responses to the Central Bank’s consultation on client assets requirements (“CP71”).


FINMA Circular 2013/9 'Distribution of collective investment schemes' enters into force

The Swiss Financial Market Supervisory Authority (“FINMA”) has fully revised its Circular ‘Public advertising - collective investment schemes’.  The main aim of this revision is to provide a detailed definition of the term ‘distribution of collective investment schemes’. The Circular has thus been adapted to match the terms of the revised Collective Investment Schemes Act and Collective Investment Schemes Ordinance, which became law on 1 March 2013.  It entered into force on 1 October 2013 and completely replaces the existing Circular (FINMA-Circ. 2008/8).  KPMG has published an unofficial English translation of the circular which is available via the following link.

The Netherlands

Dutch REITs: ancillary activities allowed

Dutch real estate investment funds commonly have the tax status of fiscal investment institution, implying that a 0% corporate income tax rate is applicable.  However, only passive investment is allowed when applying for this status.  In the Tax Plan 2014, a relaxation of this passive investment requirement is proposed.  As tenants are increasingly expecting lessors of commercial real estate to offer additional services, it has been proposed that fiscal investment institutions be given the opportunity − albeit indirectly − to perform ancillary activities for tenants. Such ancillary activities could include, for example, cleaning, catering, reception or meeting services.  These activities need to be carried out by a ‘normal’ taxpaying subsidiary of the fiscal investment institution and some additional conditions need to be met.  These conditions should ensure that the ancillary activities are subordinate to the passive investment objective and also to avoid tax base erosion.


Evolving Investment Management Regulation – June 2013    

Evolving Investment Management Regulation – June 2013 here



Print Fund News

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