Fund News
Issue 109 - December 2013

Investment Fund Regulatory and Tax developments in selected jurisdictions


This month developments from:

European Union

COREPER agrees position on UCITS V proposal to support progress early in 2014

On 4 December the Permanent Representative Committee (“COREPER”) agreed the legislative position, on behalf of the Council, on UCITS V. This should enable the Trilogues to take place early in 2014 with the goal of reaching agreement with the European Parliament at first reading. Read more

Joint position of the European Supervisory Authorities on manufacturers’ product oversight and governance processes

In November 2013 the European Supervisory Authorities (“ESAs”) released a set of high level cross-sector product oversight and governance principles for product manufacturers in the Banking, Insurance and Investment Management sectors. The principles cover responsibilities of manufacturers in organising processes, functions and strategies aimed at designing, operating and bringing products to market, and reviewing them over the life of the product. Read more

European Parliament issues draft report on the proposal for a regulation on European Long-Term Investment Fund (“ELTIF”)

On 13 November 2013 the European Parliament issued a draft report on the Commission proposal regarding European Long-Term Investment Funds (“ELTIFs”). The main amendments proposed by the Parliament are as follows. Read more

Draft ECON resolution on proposed Money Market Fund regulation

The Committee on Economic and Monetary Affairs (“ECON”) published a draft report in November 2013 on the proposal for a regulation of the European Parliament and of the Council on Money Market Funds (“MMFs”). The report proposes several amendments to the MMF regulation. Read more

ECON draft report on the proposal for a regulation on financial benchmarks

On 15 November 2013, the Committee on Economic and Monetary Affairs (“ECON”) issued a draft report on the proposal of the European Commission for a regulation on indices used as benchmarks in financial instruments and financial contracts. The main objectives of this proposal are to improve benchmarks' market integrity and fairness in order to restore confidence in financial markets and ensure the protection of consumers and investors. Read more

ESMA publishes an updated Q&A on its Guidelines on ETFs and other UCITS issues

On 27 November ESMA published an updated version of its Q&A on the Guidelines on ETFs and other issues (Ref: 2013/1547). Two new questions were added to the document: the first specifies that the reinvestment of cash collateral should be taken into account for the calculation of the issuer concentration limits laid down in the UCITS Directive; and the second clarifies paragraph 59 mentioning that calculation mistakes in financial indices are not considered as retrospective changes. The Q&A (now 11 pages) is available via the following web link:

ESMA work on Market Abuse Regulation

ESMA has published a Discussion Paper (ESMA/2013/1649) setting out its initial views on the possible implementing measures it will have to develop for the new Market Abuse Regulation (“MAR”) which aims at enhancing market integrity and investor protection. The Discussion Paper covers the following. Read more

ESMA publishes revised AIFMD reporting guidelines

On 15 November 2013 ESMA published a revised version of its final report on ‘Guidelines on reporting obligations under Articles 3(3)(d) and 24(1), (2) and (4) of the AIFMD (revised)’ as well as revised reporting templates. The revised final report (69 pages) and documents are available via the following web link:


FCA issues consultation on the use of dealing commissions

On the 25 November the Financial Conduct Authority (“FCA”) issued a consultation paper (“CP 13/17”) on the use of dealing commission. CP 13/17 was expected following the speech by Martin Wheatley, CEO of the FCA, at the FCA’s asset management conference on 30 October. A summary of his speech was included in the prior issue of Fund News (Issue 108). The FCA has a range of concerns on the use of dealing commission by managers and the CP proposes clarifications to its ‘use of dealing commission’ requirements that are set out in the Conduct of Business Sourcebook (COBS 11.6). Appendix 1 to the CP proposes amendments to COBS 11.6 which are intended to clarify the current position. However these proposals are only the first stage of a more extensive exploration of how dealing commissions, paid by investors, are spent by managers. The review will include consideration of wider regulatory reform including, at the European level, via MiFID II. Read more

Regulations issued that support the payment of gross interest to non-UK investors in UK authorised funds

Regulations were issued on 28 November and come into effect for unit sales from 19 December that permit UK Authorised Funds (“UK AFs”), that qualify as bond funds, to pay gross interest distributions to non-UK investors provided certain conditions are met. These Regulations support the tax efficient sale of UK AFs to non-resident investors. Read more

FRC clarification and consultation on proposed amendments to FRS 102

On 12 November the Financial Reporting Council (“FRC”) clarified FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ as regards Section 12 ‘Other Financial Instruments’ and specifically the net investment hedges of foreign operations established as branches. The FRC’s clarification is available at the following link:

Also in November, the FRC published FRED 51 a consultation on proposed amendments to FRS 102 on hedge accounting to achieve two ends:

allow entities to apply hedge accounting when this reflects the economic and risk management strategies, without onerous conditions; and

use concepts and language that are consistent with those included in IFRS 9 Financial Instruments, the IASB’s standard that includes hedge accounting. Read more


CBI Issues 5th AIFMD Q&A – AIFMD Exemption for Securitisation Companies

On 8 November 2013 the Central Bank of Ireland published a fifth edition of the AIFMD Q&A document. The additional information covers whether a special purpose vehicle (“SPV”) should seek authorisation as, or appoint, an AIFM. The Central Bank of Ireland responds that in most cases: (i) registered ‘financial vehicle corporations’; and (ii) securitisation companies funded by way of debt or other non-equity instruments (i.e. which do not issue shares or units to investors), are not currently within the scope of the AIFMD, however, this is subject revision and to any further clarification by ESMA.

Finance (No.2) Bill 2013 Published

The Finance (No.2) Bill 2013 (the ‘Bill’) was published on 24 October 2013. The Bill makes a number of adjustments, including, but not limited to, the following. Read more

IFIA Guidance Paper 3 - Depositary duties

On 16 October 2013 the Irish Funds Industry Association (“IFIA”) Depositary Committee issued a revised Guidance Paper 3A – AIFMD Depositary Duties. The paper addresses changes that will be required in order to reflect depositary obligations post AIFMD. The paper is available on request from the IFIA at the following link:

Irish Stock Exchange updates listing requirements for investment funds

The Code of Listing Requirements and Procedures applicable to applicant or listed investment funds was updated by the Irish Stock Exchange in November 2013. The revised code can be obtained on the Irish Stock Exchange website at the following link.

Key dates reminder

Read more


FINMA confirms cooperation with foreign authorities to supervise distribution of funds to non-qualified investors

The Swiss Financial Market Supervisory Authority (“FINMA”) has concluded an agreement on cooperation and the exchange of information with the Irish financial regulator, the Central Bank of Ireland, regarding the distribution of foreign collective investment schemes in Switzerland to non-qualified investors (retail investors). The existing cooperation agreement with the French Autorité des Marchés Financiers (“AMF”) could also be confirmed. More information is available via the following link:

Other publications

The cost of compliance: 2013 KPMG/AIMA/MFA Global Hedge Fund Survey


Evolving Investment Management Regulation – June 2013


Industry Insights: A snapshot of the key trends, issues and challenges facing the investment management industry

The cost of compliance: 2013 KPMG/AIMA/MFA Global Hedge Fund Survey


Evolving Investment Management Regulation – June 2013


Industry Insights: A snapshot of the key trends, issues and challenges facing the investment management industry

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Print Fund News

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