If you can't read please download the document
Upload
dinhbao
View
216
Download
2
Embed Size (px)
Citation preview
ERRORS VIA SAVE:
========================Circular 087-14========================ID: 9731Date: 2014-03-11 14:08:37File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Any comments onthe paragraphshighlighted belowshould go to the relevant adviser.
Perry Braithwaite - 2.12 AIFMD reporting
2.14 - 2.16 Guidance on AIFMD Reporting
2.17 - 2.18 Risk management systems relating to credit rating
Irving Henry - 2.19 Changes to the valuation of AIF portfolios affecting prudential requirements
2.23 Clarification to requirements governing Article 36 custodians
2.26 Changes to AIFMD remuneration requirements
Karen Bowie - 2.23 - 2.25 Clarification to requirements governing Article 36 custodians
Adrian Hood - 2.31 AIFMD notification forms
2.32 Additional changes
Mike Gould - Chapter 3
-SUMMARY-
The FCA has issued aquarterlyconsultation paper on the following issues:
Comments need to be submitted to the FCA by the 6 May so please feedback comments to the relevant policy adviser at the IMA by the 28 April 2014.
================================END===============================
========================Circular 086-14========================ID: 9732Date: 2014-03-11 14:08:45File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
The FCA has said that all firms should consider the report and take action where they need to, to ensure they are managing the mis-selling risks from their financial incentives. The report highlights some of the key areas that firms should focus on when managing their incentive arrangements. These are:
Using management information to check for spikes or trends in the sales patterns of individuals to identify areas of increased risk;
Doing more to monitor behaviour in face to face conversations;
Managing the risk in discretionary schemes and balanced scorecards;
Monitoring the risk of staff who are incentivised for non-advised sales giving advice;
Improving the oversight of incentives used by appointed representatives;
Recognising that remuneration that is effectively 100% variable pay based on sales increases the risk of mis-selling and managing this risk.
Firms should also consider guidance issued by the FCA, which has other examples of good and poor practices.
-SUMMARY-
The FCA has published a follow up report on financial incentives. In it, it says that it has seen significant improvements in how firms manage the risks from their financial incentive schemes, but that there is still more to be done. There is also a question over whether changes are part of a genuine long term change leading to better outcomes for consumers.
The FCA says that financial incentives will continue to be a key priority and it will continue to focus on the issue. It will also be carrying out follow up work looking at how firms manage the performance of their sales staff, including whether pressure put on staff (for example through stringent sales targets) increases the risk of mis-selling.
================================END===============================
========================Circular 085-14========================ID: 9733Date: 2014-03-11 14:09:54File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
On conclusion of the Fixed Income review the IMA announced that self-certification would be introduced across the Fixed Income sectors (circular 176-13) as well as collecting full portfolio holdings data.
This requires a nominated Officer of the Company to verify the exposure of the fund to the monitoring company each quarter-end with the first submission at the end of Q1 2014.
In January we provided a draft template and guidance notes to members indicating the information that would be required. We noted that the monitoring company would provide a final version of the template to allow for easier reporting where a firm manages a number of funds.
This Excel template can be found here along with a final version of the guidance notes.
Submissions should be sent to [email protected]
-SUMMARY-
Following the review of the IMA Fixed Income sectors the IMA announced that the monitoring company would introduce quarterly self-certification as well as collecting full portfolio holdings data. This circular contains the template and guidance notes that should be used to provide the first submission to Morningstar at the end of Q1.
================================END===============================
========================Circular 088-14========================ID: 9734Date: 2014-03-11 14:45:32File Details:
File 1: assets/files/circulars/2014/m1m_f9c_088-14-00.pdf File 2: assets/files/circulars/2014/m1m_f9c_088-14-01.pdf File 3: assets/files/circulars/2014/m1m_f9c_088-14-02.pdf File 4: assets/files/circulars/2014/m1m_f9c_088-14-03.pdf File 5: -CONTENT-
The model funds transfer form was last updated in 2012, following requests to collect additional identity information (address and date of birth) for beneficial owners in order to facilitate more reliable sanctions screening. Now further changes are required given the abolition of Schedule 19 to the Finance Act 1999 (SDRT) from 1 April, which will put fund transfers back on an equal footing with equities etc., with investors liable to stamp duty on the transfer document in certain circumstances. At the same time, we are also responding to requests to extend the information collected about the transferees [etc.] to include their tax residency under legislation introduced last year in the light of FATCA to support the inter-governmental exchange of tax data.
We appreciate that firms historically have urged that the form be contained within a double-sided sheet of A4, but the current requirements to include the new stamp duty and tax residency declarations as well as the beneficial owner information for AML purposes means that this is no longer possible. We are therefore proposing to structure the new version as set out below:
Part 1: Stock transfer form containing the re-registration details and stamp duty declarations
The heading has been changed from a stock transfer form for UK Unit Trusts and Open-Ended Investment Companies to UK Collective Investment Schemes. This is to reflect the fact that the form will be used for the transfer of a range of collective investment schemes, not just unit trusts and OEICS.
The face of this page is altered from the current version to remove the various references to SDRT and leave space at the top for any stamp that may need to be applied. We have also added a "consideration" box for stamp duty purposes. Recognising that the other parts (see below) may become separated, we have added a section at the bottom for the submitter to tick which should be attached.
The reverse now mirrors that of the standard form for equity shares, with the declarations required where the transfer is for value, but is exempt from stamp duty for various reasons.
Part 2: Customer due diligence for AML purposes
The face of this page is unchanged from the reverse of the current form except for the section at the top, which is to enable the firm to identify the transfer to which it was attached, should the pages become separated.
The reverse is blank.
Part 3: Tax residency self-certification
This page is reversible, with one side carrying the model self-certification that has been developed for individuals and the other carrying the certification for entities. These are per the model forms we have already published (see circular 053-14), although the various footnotes to the entity self-certification have been added instead to the separate guidance document, which has also been updated to reflect the new design. As the OECD Common Reporting Standard is not currently in place we have removed, for the time being, the request for place of birth from the individual self-certification form and question 3.3 on the entity self-certification form. Both sides include details of the transfer to which the certification should be attached should they become separated.
Unfortunately we do not have a great deal of time before the abolition of Schedule 19 to make further changes to the design except to correct fatal flaws, but should be grateful for comments by no later than Tuesday, 25 March.
-SUMMARY-
Comments are invited on changes we are proposing to the model Stock Transfer Form for funds. This is to accommodate both the abolition of Schedule 19 SDRT from 1 April and the collection of tax residency information under the legislation introduced by the Government last year in the light of FATCA and the various Inter-Governmental Agreements for the exchange of tax information. Further information is provided below.
Comments are invited by 25th March 2014.
================================END===============================
========================Circular 085-14========================ID: 9728Date: 2014-03-11 17:21:23File Details:
File 1: assets/files/circulars/2014/m1m_f9c_085-14-00.xlsx File 2: assets/files/circulars/2014/m1m_f9c_085-14-01.docx File 3: File 4: File 5: -CONTENT-
On conclusion of the Fixed Income review the IMA announced that self-certification would be introduced across the Fixed Income sectors (circular 176-13) as well as collecting full portfolio holdings data.
This requires a nominated Officer of the Company to verify the exposure of the fund to the monitoring company each quarter-end with the first submission at the end of Q1 2014.
In January we provided a draft template and guidance notes to members indicating the information that would be required. We noted that the monitoring company would provide a final version of the template to allow for easier reporting where a firm manages a number of funds.
This Excel template can be found here along with a final version of the guidance notes.
Submissions should be sent to [email protected]
-SUMMARY-
Following the review of the IMA Fixed Income sectors the IMA announced that the monitoring company would introduce quarterly self-certification as well as collecting full portfolio holdings data. This circular contains the template and guidance notes that should be used to provide the first submission to Morningstar at the end of Q1.
================================END===============================
========================Circular 085-14========================ID: 9728Date: 2014-03-12 09:33:02File Details:
File 1: assets/files/circulars/2014/m1m_f9c_085-14-00.xlsx File 2: assets/files/circulars/2014/m1m_f9c_085-14-01.docx File 3: File 4: File 5: -CONTENT-
On conclusion of the Fixed Income review the IMA announced that self-certification would be introduced across the Fixed Income sectors (circular 176-13) as well as collecting full portfolio holdings data.
This requires a nominated Officer of the Company to verify the exposure of the fund to the monitoring company each quarter-end with the first submission at the end of Q1 2014.
In January we provided a draft template and guidance notes to members indicating the information that would be required. We noted that the monitoring company would provide a final version of the template to allow for easier reporting where a firm manages a number of funds.
This Excel template can be found here along with a final version of the guidance notes.
Submissions should be sent to [email protected]
-SUMMARY-
Following the review of the IMA Fixed Income sectors the IMA announced that the monitoring company would introduce quarterly self-certification as well as collecting full portfolio holdings data. This circular contains the template and guidance notes that should be used to provide the first submission to Morningstar at the end of Q1.
================================END===============================
========================Circular 085-14========================ID: 9728Date: 2014-03-12 09:33:16File Details:
File 1: assets/files/circulars/2014/m1m_f9c_085-14-00.xlsx File 2: assets/files/circulars/2014/m1m_f9c_085-14-01.docx File 3: File 4: File 5: -CONTENT-
On conclusion of the Fixed Income review the IMA announced that self-certification would be introduced across the Fixed Income sectors (circular 176-13) as well as collecting full portfolio holdings data.
This requires a nominated Officer of the Company to verify the exposure of the fund to the monitoring company each quarter-end with the first submission at the end of Q1 2014.
In January we provided a draft template and guidance notes to members indicating the information that would be required. We noted that the monitoring company would provide a final version of the template to allow for easier reporting where a firm manages a number of funds.
This Excel template can be found here along with a final version of the guidance notes.
Submissions should be sent to [email protected]
-SUMMARY-
Following the review of the IMA Fixed Income sectors the IMA announced that the monitoring company would introduce quarterly self-certification as well as collecting full portfolio holdings data. This circular contains the template and guidance notes that should be used to provide the first submission to Morningstar at the end of Q1.
================================END===============================
========================Circular 086-14========================ID: 9722Date: 2014-03-12 09:33:47File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
The FCA has said that all firms should consider the report and take action where they need to, to ensure they are managing the mis-selling risks from their financial incentives. The report highlights some of the key areas that firms should focus on when managing their incentive arrangements. These are:
Using management information to check for spikes or trends in the sales patterns of individuals to identify areas of increased risk;
Doing more to monitor behaviour in face to face conversations;
Managing the risk in discretionary schemes and balanced scorecards;
Monitoring the risk of staff who are incentivised for non-advised sales giving advice;
Improving the oversight of incentives used by appointed representatives;
Recognising that remuneration that is effectively 100% variable pay based on sales increases the risk of mis-selling and managing this risk.
Firms should also consider guidance issued by the FCA, which has other examples of good and poor practices.
-SUMMARY-
The FCA has published a follow up report on financial incentives. In it, it says that it has seen significant improvements in how firms manage the risks from their financial incentive schemes, but that there is still more to be done. There is also a question over whether changes are part of a genuine long term change leading to better outcomes for consumers.
The FCA says that financial incentives will continue to be a key priority and it will continue to focus on the issue. It will also be carrying out follow up work looking at how firms manage the performance of their sales staff, including whether pressure put on staff (for example through stringent sales targets) increases the risk of mis-selling.
================================END===============================
========================Circular 087-14========================ID: 9725Date: 2014-03-12 09:34:13File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Any comments onthe paragraphshighlighted belowshould go to the relevant adviser.
Perry Braithwaite - 2.12 AIFMD reporting
2.14 - 2.16 Guidance on AIFMD Reporting
2.17 - 2.18 Risk management systems relating to credit rating
Irving Henry - 2.19 Changes to the valuation of AIF portfolios affecting prudential requirements
2.23 Clarification to requirements governing Article 36 custodians
2.26 Changes to AIFMD remuneration requirements
Karen Bowie - 2.23 - 2.25 Clarification to requirements governing Article 36 custodians
Adrian Hood - 2.31 AIFMD notification forms
2.32 Additional changes
Mike Gould - Chapter 3
-SUMMARY-
The FCA has issued aquarterlyconsultation paper on the following issues:
Comments need to be submitted to the FCA by the 6 May so please feedback comments to the relevant policy adviser at the IMA by the 28 April 2014.
================================END===============================
========================Circular 088-14========================ID: 9734Date: 2014-03-12 09:35:37File Details:
File 1: assets/files/circulars/2014/m1m_f9c_088-14-00.pdf File 2: assets/files/circulars/2014/m1m_f9c_088-14-01.pdf File 3: assets/files/circulars/2014/m1m_f9c_088-14-02.pdf File 4: assets/files/circulars/2014/m1m_f9c_088-14-03.pdf File 5: -CONTENT-
The model funds transfer form was last updated in 2012, following requests to collect additional identity information (address and date of birth) for beneficial owners in order to facilitate more reliable sanctions screening. Now further changes are required given the abolition of Schedule 19 to the Finance Act 1999 (SDRT) from 1 April, which will put fund transfers back on an equal footing with equities etc., with investors liable to stamp duty on the transfer document in certain circumstances. At the same time, we are also responding to requests to extend the information collected about the transferees [etc.] to include their tax residency under legislation introduced last year in the light of FATCA to support the inter-governmental exchange of tax data.
We appreciate that firms historically have urged that the form be contained within a double-sided sheet of A4, but the current requirements to include the new stamp duty and tax residency declarations as well as the beneficial owner information for AML purposes means that this is no longer possible. We are therefore proposing to structure the new version as set out below:
Part 1: Stock transfer form containing the re-registration details and stamp duty declarations
The heading has been changed from a stock transfer form for UK Unit Trusts and Open-Ended Investment Companies to UK Collective Investment Schemes. This is to reflect the fact that the form will be used for the transfer of a range of collective investment schemes, not just unit trusts and OEICS.
The face of this page is altered from the current version to remove the various references to SDRT and leave space at the top for any stamp that may need to be applied. We have also added a "consideration" box for stamp duty purposes. Recognising that the other parts (see below) may become separated, we have added a section at the bottom for the submitter to tick which should be attached.
The reverse now mirrors that of the standard form for equity shares, with the declarations required where the transfer is for value, but is exempt from stamp duty for various reasons.
Part 2: Customer due diligence for AML purposes
The face of this page is unchanged from the reverse of the current form except for the section at the top, which is to enable the firm to identify the transfer to which it was attached, should the pages become separated.
The reverse is blank.
Part 3: Tax residency self-certification
This page is reversible, with one side carrying the model self-certification that has been developed for individuals and the other carrying the certification for entities. These are per the model forms we have already published (see circular 053-14), although the various footnotes to the entity self-certification have been added instead to the separate guidance document, which has also been updated to reflect the new design. As the OECD Common Reporting Standard is not currently in place we have removed, for the time being, the request for place of birth from the individual self-certification form and question 3.3 on the entity self-certification form. Both sides include details of the transfer to which the certification should be attached should they become separated.
Unfortunately we do not have a great deal of time before the abolition of Schedule 19 to make further changes to the design except to correct fatal flaws, but should be grateful for comments by no later than Tuesday, 25 March.
-SUMMARY-
Comments are invited on changes we are proposing to the model Stock Transfer Form for funds. This is to accommodate both the abolition of Schedule 19 SDRT from 1 April and the collection of tax residency information under the legislation introduced by the Government last year in the light of FATCA and the various Inter-Governmental Agreements for the exchange of tax information. Further information is provided below.
Comments are invited by 25th March 2014.
================================END===============================
========================Circular 087-14========================ID: 9725Date: 2014-03-12 09:36:59File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Any comments onthe paragraphshighlighted belowshould go to the relevant adviser.
Perry Braithwaite - 2.12 AIFMD reporting
2.14 - 2.16 Guidance on AIFMD Reporting
2.17 - 2.18 Risk management systems relating to credit rating
Irving Henry - 2.19 Changes to the valuation of AIF portfolios affecting prudential requirements
2.23 Clarification to requirements governing Article 36 custodians
2.26 Changes to AIFMD remuneration requirements
Karen Bowie - 2.23 - 2.25 Clarification to requirements governing Article 36 custodians
Adrian Hood - 2.31 AIFMD notification forms
2.32 Additional changes
Mike Gould - Chapter 3
-SUMMARY-
The FCA has issued aquarterlyconsultation paper on the following issues:
Comments need to be submitted to the FCA by the 6 May so please feedback comments to the relevant policy adviser at the IMA by the 28 April 2014.
================================END===============================
========================Circular 086-14========================ID: 9722Date: 2014-03-12 09:37:27File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
The FCA has said that all firms should consider the report and take action where they need to, to ensure they are managing the mis-selling risks from their financial incentives. The report highlights some of the key areas that firms should focus on when managing their incentive arrangements. These are:
Using management information to check for spikes or trends in the sales patterns of individuals to identify areas of increased risk;
Doing more to monitor behaviour in face to face conversations;
Managing the risk in discretionary schemes and balanced scorecards;
Monitoring the risk of staff who are incentivised for non-advised sales giving advice;
Improving the oversight of incentives used by appointed representatives;
Recognising that remuneration that is effectively 100% variable pay based on sales increases the risk of mis-selling and managing this risk.
Firms should also consider guidance issued by the FCA, which has other examples of good and poor practices.
-SUMMARY-
The FCA has published a follow up report on financial incentives. In it, it says that it has seen significant improvements in how firms manage the risks from their financial incentive schemes, but that there is still more to be done. There is also a question over whether changes are part of a genuine long term change leading to better outcomes for consumers.
The FCA says that financial incentives will continue to be a key priority and it will continue to focus on the issue. It will also be carrying out follow up work looking at how firms manage the performance of their sales staff, including whether pressure put on staff (for example through stringent sales targets) increases the risk of mis-selling.
================================END===============================
========================Circular 089-14========================ID: 9737Date: 2014-03-13 15:30:00File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
Further to our Members meeting on 30 October, KPMG is now inviting fund managers to access KPMGreportingfunds.co.uk, a new repository for UK tax reports that are required to comply with the Offshore Funds (Tax) Regulations 2009. This is with the intention of going live by the end of March.
The repository is designed to bring the following benefits to funds and fund managers:
There is no charge for funds or fund managers to participate, nor for end investors to view reports. Intermediaries pay a licence fee which varies depending on the level of service required.
Each umbrella or standalone fund wishing to participate should contact [email protected] for further details.
================================END===============================
========================Circular 090-14========================ID: 9738Date: 2014-03-13 17:24:50File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
The ECJ has found that DC pension schemes are sufficiently comparable or to UCITS and other funds that are SIFs for the purpose of the VAT exemption and that, therefore, the management of DC schemes should be exempt from VAT. In particular, a key characteristic of the DC scheme in question wasthe pooling of assets of several beneficiaries enabling members of the scheme to bear all the risk of investment.
The case was distinguished from Wheels (see circular 061-13) as members of that scheme (a defined benefit scheme) did not bear any risk arising from the management of the scheme. In the sense, the judgement usefully provided clear bounderies between what is and is not a SIF - and that was where there was pooling of assets, and the beneficiaries bore investment risk.
Note that in the UK the management of most DC pensions schemes is already exempt from VAT because most management services to DC schemes are provided under a contract of insurance.
-SUMMARY-
The ECJ today issued its judgement in ATP PensionService A/Sand found that the management of adefined contribution (DC) pension fund should be exempt from VAT. Following the opinionof the Advocate General the ECJ ruled thatsubject tocertain conditions, a defined contribution (DC)pensionfund can be classified as a special investment fund (SIF) and therefore the VAT exemption can apply. Further information is in this circular.
================================END===============================
========================Circular 089-14========================ID: 9737Date: 2014-03-13 17:50:18File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
Further to our Members meeting on 30 October, KPMG is now inviting fund managers to access KPMGreportingfunds.co.uk, a new repository for UK tax reports that are required to comply with the Offshore Funds (Tax) Regulations 2009. This is with the intention of going live by the end of March.
The repository is designed to bring the following benefits to funds and fund managers:
There is no charge for funds or fund managers to participate, nor for end investors to view reports. Intermediaries pay a licence fee which varies depending on the level of service required.
Each umbrella or standalone fund wishing to participate should contact [email protected] for further details.
================================END===============================
========================Circular 091-14========================ID: 9739Date: 2014-03-13 17:58:51File Details:
File 1: assets/files/circulars/2014/m1m_f9c_091-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
Please send reponses by email to [email protected]
-SUMMARY-
The Financial Reporting Council (FRC) has published a proposal to make minor amendments to FRS 102. For Authorised Funds the proposal is significant in that it omits the improvements to the fair value disclosure hierarchy that we had expected to see. The FRC has requested comments by 30 April 2014.
We have drafted a response highlighting why we think the FRC should make improvements to the fair value disclosure hierarchy and how they might achieve it.We would welcome your comments on this response, to arrive no later than 14 April 2014.
================================END===============================
========================Circular 091-14========================ID: 9739Date: 2014-03-14 09:26:33File Details:
File 1: assets/files/circulars/2014/m1m_f9c_091-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
Please send reponses by email to [email protected]
-SUMMARY-
The Financial Reporting Council (FRC) has published a proposal to make minor amendments to FRS 102. For Authorised Funds the proposal is significant in that it omits the improvements to the fair value disclosure hierarchy that we had expected to see. The FRC has requested comments by 30 April 2014.
We have drafted a response highlighting why we think the FRC should make improvements to the fair value disclosure hierarchy and how they might achieve it.We would welcome your comments on this response, to arrive no later than 31 March 2014.
================================END===============================
========================Circular 093-14========================ID: 9741Date: 2014-03-14 13:18:36File Details:
File 1: assets/files/circulars/2014/m1m_f9c_093-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
We have updated the Derivatives Post-Trade Processing Guide (now version 1.2) with a number of changes to the previous version that was published in September (see circular 244-13). Most of the changes are relatively minor, but most significantly the working group has developed a new section on portfolio compression, which has now been added as second an appendix to section 2 (trade processing). A change log identifying the changes is included at the beginning of the document.
The updated guide can be found here.
================================END===============================
========================Circular 083-14========================ID: 9742Date: 2014-03-14 13:20:20File Details:
File 1: assets/files/circulars/2014/m1m_f9c_083-14-00.docx File 2: assets/files/circulars/2014/m1m_f9c_083-14-01.docx File 3: File 4: File 5: -CONTENT-
After the success of the initial call in February,the IMA will continue toconduct a 40 minute conference call on a monthly basis. The dates and dial in details are at the end of this note.
We thought that a routine update would benefit members wanting to keep abreast of IMA priorities and what we are working on. We will mainly be targeting those responsible for Compliance, Risk, Operations, Legal and Product Development.
The intention of these initiatives is to allow you to get more from your membership of the IMA, to avoid you having to travel to a significant number of information only meetings and also to ensure that you can have multiple members of your firm involved with the IMA.
In no way do we wish to restrict any bilateral discussions and meetings with the IMA that occur presently.
The standard agenda will include:
a) An update on the consultations we are considering;
b) A summary of other initiatives we are working on (for example the research review or fund charge disclosure);
c) Other relevant news; and
d) Comment on other items notified to us by yourselves
We think a 40 minute slot each month will improve our service to you as members; in return it will in part rely on your identifying issues to us. Agenda items identified by you will not be attributed to any particular firm.
In the first few month we shall remind firms by sending out a circular and the website will carry details of the forthcoming calls.
Calls will be recorded and made available via the members area of our website under http://www.investmentuk.org/members/member-meetings/presentations/ 
If you want to get in touch concerning any issues raised on the call please do so through the relevant adviser.
19th March 2014 10am
23rd April 2014 10am
25th June 2014 10am
23rd July 2014 9.30am - time has changed
20th August 2014 10am
24th September 2014 10am
26th November 2014 9.30am - time has changed
17th December 2014 10am
Dial in details:
Conference Call Dial in: 0844 473 0989
Participant pin: 733 902
For international call-in please do not use the 0844 number above.
Please refer to the attached list of numbers. The participant pin is the same as above.
-SUMMARY-
This circular contains information abut the monthly Regulatory and Legal update conference call including dates anddial in details.
There has been a change to the time of two of the dates (23 July and 26 November), please check the dates and times against you calendar.
This call is intended for IMA member firms only, there is no registration required and no restriction on the number of people per firm that can call in.
================================END===============================
========================Circular 095-14========================ID: 9744Date: 2014-03-17 18:52:47File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
The OECD has published a discussion draft on preventing treaty abuse - part of their work on the Action Plan on Base Erosion and Profit Shifting (BEPS).
The discussion draft can be found here. The OECD has requested comments by 9 April. Given the short time period for this consultation, which runs for only three weeks, we will not be submitting a draft response to members for comment. However we will consider any comments received from members, and we request that these be sent to [email protected] by 7 April.
================================END===============================
========================Circular 093-14========================ID: 9741Date: 2014-03-18 10:45:32File Details:
File 1: assets/files/circulars/2014/m1m_f9c_093-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
We have updated the Derivatives Post-Trade Processing Guide (now version 1.2) with a number of changes to the previous version that was published in September (see circular 244-13). Most of the changes are relatively minor, but most significantly the working group has developed a new section on portfolio compression, which has now been added as second an appendix to section 2 (trade processing). A change log identifying the changes is included at the beginning of the document.
The updated guide can be found here.
================================END===============================
========================Circular 094-14========================ID: 9747Date: 2014-03-18 13:26:52File Details:
File 1: assets/files/circulars/2014/m1m_f9c_094-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
The Financial Conduct Authority (FCA) has written to the firms, as per the e-mail attached, that it considers to be in scope of the Capital Requirements Directive (CRD) IV with regard to the reporting obligations thereunder known as "COREP" and "FINREP".
================================END===============================
========================Circular 098-14========================ID: 9750Date: 2014-03-19 12:18:42File Details:
File 1: assets/files/circulars/2014/m1m_f9c_098-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
IMA responds to the Banking Standards Review Consultation Paper
-SUMMARY-
IMAs response to the Banking Standards Review Consultation Paper.
================================END===============================
========================Circular 097-14========================ID: 9753Date: 2014-03-19 14:46:39File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
The Chancellor of the Exchequer presented his Budget today to Parliament. Today's announcement includes:
Pensions reform
Legislation will be introduced in Finance Bill 2014 to:
These changes will have effect from 27 March 2014.
Further radical changes will be made from April 2015 to allow fully flexible pension draw down from age 55. Withdrawals will be subject to the marginal rate of income tax only and the 55% penalty rate will be abolished. The Government will consult on how best to implement this. The Government will also consult on increasing the minimum pension age so that it remains ten years below the state pension age, for which legislation will also be in a future bill.
The Government will explore with interested parties whether those tax rules that prevent individuals aged 75 and over from claiming tax relief on their pension contributions should be amended or abolished.
Savings
New ISA (NISA) and changes to JISA and CTF: From 1 July 2014, ISAs will be reformed into a simpler product, the New ISA (NISA). All existing ISAs will become NISAs, and account holders will benefit from new flexibility in relation to their accounts. The Government is changing the name to reflect the significantly increased limits and flexibility associated with the NISA.
Secondary legislation will be introduced to equalise the annual subscription limit for cash and stocks & shares ISA at 15,000, and to remove restrictions on the transfer of funds between stocks & shares and cash accounts. Consequential changes will be made to the rules concerning the securities and other investments that can be held in an ISA, and Core Capital Deferred Shares issued by a Building Society will also be eligible for investment in an ISA and CTF. The annual subscription limit for Junior ISA and CTF will be increased from 3,840 to 4,000. These changes will have effect from 1 July 2014.
Starting rate for savings income: Legislation will be introduced in Finance Bill 2014 to reduce the starting rate for savings income from 10 per cent to zero per cent, and to increase the maximum amount of an individuals savings income that can qualify for this starting rate from 2,880 in 2014-15 to 5,000 for 2015-16. These changes will have effect from 6 April 2015.
Including peer-to-peer loans (P2P) within ISA eligible investments: Secondary legislation will be introduced to enable P2P to be held advantaged within an ISA. These changes will come into effect after consultation has taken place on technical detail.
Asset Management
Implementation of tax measures announced at last Budget:
Abolition of SDRT Schedule 19: Legislation will be introduced in Finance Bill 2014 to abolish the Stamp Duty Reserve Tax (SDRT) charge on unit trusts and open-ended investment companies in Schedule 19 to the Finance Act 1999. Following consultation, the legislation has been revised to retain an SDRT charge on non-pro rata, in specie redemptions. These changes will have effect from 30 March 2014.
UK management of offshore funds: Legislation will be introduced to widen the scope of section 363A of the Taxation (International and Other Provisions) Act 2010. The current provisions treat offshore funds that are undertakings for collective investment in transferable securities as not being resident in the UK if they are resident in another Member State for the purposes of any tax imposed under the law of that state on income. Following consultation over the summer, section 363A will be amended to include alternative investment funds from 5 December 2013.
Allow UK domiciled bond funds to pay gross interest where they are marketed to non-UK residents: Regulations have been made to implement this measure and came into force on 19 December 2013.
Provide greater certainty to fund managers as to whether certain transactions will be deemed to constitute trading or investment activity: Regulations were made to implement this measure on 18 March 2014.
Changes to the tax rules for unauthorised unit trusts and their investors: Regulations have been made to ensure that certain types of unit trust are not within the scope of the Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819) and also to take holdings in non-exempt unauthorised unit trusts outside the scope of the bond fund rules. These regulations come into force on 6 April 2014.
Application of stamp duty land tax (SDLT) on certain authorised property funds: The Government will consult on the SDLT treatment of the seeding of property authorised investment funds and the wider SDLT treatment of co-ownership authorised contractual schemes.
Exchange Traded Funds - Stamp Duty and SDRT exemptions: There was no further announcement about the proposed new stamp duty and stamp duty reserve tax exemptions for units in ETFs. The consultation on draft regulations closed on 13 March and it is expected that the exemptions will be brought in by the end of April.
Real Estate Investment Trusts: Regulations coming into force on 1 April 2014 include REITS and offshore companies equivalent to UK REITS as institutional investors in a UK REIT. The regulations also align the description of an offshore equivalent of a UK REIT used in the regulations relating to Property Authorised Investment Funds with that in the REIT legislation.
Other
Base Erosion and Profit Shifting (BEPS) The Government has published a paper setting out its priorities on the current negotiations with G20 partners and with OECD members on the OECD project for countering BEPS. Separately, legislation will be introduced in Finance Bill 2014 to prevent companies from obtaining a corporation tax advantage by transferring profits between companies within a group.
Capital gains tax - non-residents and UK residential property Legislation will be introduced to charge CGT on future gains made by non-residents disposing of UK residential property. A consultation on how best to produce the charge will be published shortly. These changes will have effect from April 2015.
Review of loan relationships and derivative contracts The
Government will shortly issue a Technical Note setting out proposed
changes to make the corporation tax rules on loan relationships and
derivative contracts simpler, more certain and more robust against
avoidance. As part of these changes, legislation will be introduced
in Finance Bill 2014 in two areas:
- both profits and losses will be brought into account for tax
purposes when a group transfers a loan or derivative contract to a
company, which subsequently ceases to be a member of the group
(currently losses are not normally brought into account). These
changes have effect where the cessation of membership of the
relevant group occurs on or after 1 April 2014.
- changes will be made to the rules in Chapter 3 of Part 6 of the
Corporation Tax Act 2009, concerned with the taxation of certain
collective investment vehicles, to enhance existing anti-avoidance
provisions and to clarify aspects of the operation of the rules.
These changes have effect in relation to accounting periods
beginning on or after 1 April 2014.
Legislation, previously intended for inclusion in Finance Bill 2014, to clarify and rationalise the taxation of loan relationships and derivative contracts held by a partnership will now be deferred to 2015.
Partnerships review Finance Bill 2014 will include legislation that will take effect from April 2014, primarily aimed at countering the use of limited liability partnerships to disguise employment relationships and the tax motivated allocation of business profits to corporate partners (which are generally taxed at lower rates than individuals).
================================END===============================
========================Circular 096-14========================ID: 9755Date: 2014-03-20 15:54:21File Details:
File 1: assets/files/circulars/2014/m1m_f9c_096-14-00.docx File 2: assets/files/circulars/2014/m1m_f9c_096-14-01.docx File 3: File 4: File 5: -CONTENT-
-SUMMARY-
The IMA has updated theFATCA knowledge centreweb page for recent developments, including publication of the OECD's draftcommon reporting standard (CRS)for automatic exchange of information (AEOI)and the release of updated HMRC FATCA guidance.
The knowledge centre now also includes final versions of the IMA model self-certifications for individuals and entities (see circular 053-14). There have been minor cosmetic changes to the self-certifications since circular 053-14, such as the inclusion of a standard declaration and signature section.
The self-certifications can now also be found in the model documentation section of our knowledge centre.
================================END===============================
========================Circular 089-14========================ID: 9737Date: 2014-03-24 11:37:44File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
Further to our Members meeting on 30 October, KPMG is now inviting fund managers to access KPMGReporting Funds, a new repository for UK tax reports that are required to comply with the Offshore Funds (Tax) Regulations 2009. This is with the intention of going live by the end of March.
The repository is designed to bring the following benefits to funds and fund managers:
There is no charge for funds or fund managers to participate, nor for end investors to view reports. Intermediaries pay a licence fee which varies depending on the level of service required.
Each umbrella or standalone fund wishing to participate should contact [email protected] for further details.
================================END===============================
========================Circular 100-14========================ID: 9760Date: 2014-03-24 13:39:21File Details:
File 1: assets/files/circulars/2014/m1m_f9c_100-14-00.docx File 2: assets/files/circulars/2014/m1m_f9c_100-14-01.docx File 3: File 4: File 5: -CONTENT-
Current market practice
Currently, the only markets in Europe that have a settlement cycle on regulated of T+2 are Germany and Slovenia. With the exception of Spain, which will be given longer to comply, the others will be required by the European Regulation on Central Securities Depositories (CSDR) to implement a settlement period of T+2 by 1 January 2015. Notwithstanding this, for logistical reasons, most markets are aiming to change their settlement period from 6 October 2014.
The most common settlement period for UK funds today is 4 days, whereas trades in the underlying assets typically settle on T+3. Some firms do, however, operate a T+3 cycle, while the tendency for gilt and money market funds is to settle on T+1 due to the much shorter settlement cycles for those instruments.
COLL rules
COLL 6.2.13R and 6.2.14R require that issues and cancellations must settle no later than the 4th business day following the issue/cancellation of the units.
Historically, the old SIB rules required settlement on the next business day for gilt and money market funds, but this requirement was removed from December 2001 with the introduction of the FSA Handbook. However, there is nothing in the current FCA rules that inhibits shorter settlement cycles and, as noted above, these are adopted by some firms.
Key points to consider
We would suggest that the AFM has a responsibility to consider the impact of the change in market settlement periods on their funds. In particular, we believe firms should consider the potential detriment to investors if a T+4 settlement cycle is maintained where trades in the majority of underlying investments are required to settle on T+2. We have highlighted below a number of points that AFMs may wish to consider. This is not necessarily an exhaustive list and we should be grateful to hear of any additional concerns.
A further consideration for the industry as a whole is the potential difficulty for investor distributors, and AFMs themselves, in the event that settlement cycles for UK funds become unnecessarily fragmented.
Fund cash flow
Portfolio Managers usually want to invest proceeds from the issue of units as soon as they are aware of them. Obviously, where there is a mismatch in settlement periods this can lead to the purchases in underlying assets settling prior to the fund receiving proceeds from the issue of units. The fund would have to use existing cash reserves and/or borrow to cover these settlements. There would be a potential reduction in interest and/or increase in borrowing costs to the fund, which could affect the performance of the fund.
Under COLL, fund borrowing must not exceed 10% of the value of the scheme property, which would limit the amount that could be borrowed to cover settlements. Also, any borrowing by the fund should be on a temporary basis and therefore the fund could not borrow on a continuous or very regular basis to cover settlements.
Please refer to the attached tables, which discuss the effect on cash flow depending upon the settlement cycle chosen and the timing of the purchases or sales of underlying assets in the funds in relation to the creation or cancellation date respectively.
Dilution risk
There is always the possibility of dilution risk if the fund manager does not buy or sale underlying assets at the prices used to calculate the units price. This needs to be taken into consideration, if to avoid cash flow problems, purchases of underlying assets are delayed for a day or two. (Please see attached tables)
Passive funds Tracking errors
The dilution risk is of particular concern in the context of passive funds as any dilution (or, indeed, concentration) will add to any index tracking errors.
Liquidation decisions
Currently, with the cancellation settlement cycle usually being a day longer than the market settlement cycle, the Portfolio Manager has one day in which to sell assets to cover the cancellation. This would not be the case if the AFM decides to move the settlement cycle for cancellations to T+2.
Fund manager cash flow
If the AFM decides to reduce the settlement cycle for issues to T+2 or T+3 days, it will want to receive subscription monies within 2 or 3 days respectively of the unit deals being placed. Otherwise, it will have to fund some or all of the payment to the depositaries for issuing units.
Although it is feasible to collect direct debits within a T+3 timeframe under existing mandates, collection within 2 days following a subscription would be extremely demanding, even under existing mandates. Moreover, at least one additional day is required to set up a new mandate before a payment can be requested.
Fragmentation of fund settlement cycles
It is mooted that the US markets may follow Europe and shorten their settlement cycles to T+2. Although, there will still be markets across the world with different settlement cycles. An AFM could elect to have different settlement cycles across their range of funds depending upon where their funds invest.
However, different settlement cycles across funds is likely to lead to problems, for example, where the proceeds from the sale of a fund that settles on T+4 are not available to settle the purchase in a fund that settles on T+3. This will be an issue with switches between funds of the same AFM and between those of different fund groups (eg. on a fund platform, under discretionary management or within a fund of funds).
More generally a fragmentation of settlement cycles, especially among similar types of funds may confuse investors and cause inefficiencies for distributors, leading ultimately to monies being received routinely on T+4 or later regardless of the firms' policies.
Investor communication
Where settlement cycles are quoted in the funds prospectus, these will need to be amended. This type of amendment is not yet considered in the IMA/DATA guidance on the classification of change events, although the IMA is in discussion with DATA with a view to updating the guidance as soon as possible. It will need to be clarified whether a change in settlement cycle is notifiable or significant.
The earlier a decision is made the easier it will be to notify investors via, for example, managers reports.
Survey
We are undertaking a short survey to understand better when portfolio managers usually invest inflows or liquidate assets to cover outflows; and what AFMs are thinking currently with regard to the impact of the market changes to the settlement cycles on their funds. The answers to these questions will enable us to decide how best to work with AFMs and others to minimise unnecessary fragmentation of the industry.
We appreciate that final decisions are unlikely to have been made at this stage, but we would grateful if AFMs could share their current thoughts with us by completing the survey by 4 April.
-SUMMARY-
Further to Circular 004-14, which discussed the effect on investment and fund managers of the change in settlement periods on the main European regulated markets from T+3 to T+2, this circular looks more closely at issues firms should consider when thinking about whether or not to alter the settlement cycles for their funds.
A link to a survey is provided in the circular.
================================END===============================
========================Circular 099-14========================ID: 9761Date: 2014-03-24 13:39:44File Details:
File 1: assets/files/circulars/2014/m1m_f9c_099-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
Further to the European Banking Authority's consultation on guidelines on the disclosure of encumbered and unencumbered assets, please find attached the IMA's response.
================================END===============================
========================Circular 102-14========================ID: 9762Date: 2014-03-25 12:50:23File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
The FCA has updated two modifications by consent that will be of interest to authorised fund managers (AFMs).
The first relates to providing a key investor information document (KIID) to a client after the transaction has taken place rather than before if the client has given instructions by a means of distance communication and the firm is not able to provide the document in good time before the transaction is concluded.
The second relates to AFMsof a non-UCITS retail scheme (NURS)choosing to produce an equivalent document to the KIID instead of the key features document ora simplified prospectus.
Both modifications have had their availability extended until 30 June 2016. Firms who previously held either of these modifications will need to re-apply to the FCA's Central Waivers Team for a new modification to replace the modification that expires on 30 June 2014. Full details are available in the links above.
================================END===============================
========================Circular 103-14========================ID: 9765Date: 2014-03-25 17:42:27File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Financial Indices
Question7j has been added to clarify that theinformation to be disclosed and provided in relation to thefinancial indexmust be publicly available to investors and prospective investors, and published in such a way that direct access to this information is possible. Such information may be so accessed, for example, as a direct publication or via a source which directly links to a public website or other public forum which is not password protected, encrypted or in any way hinders or impedes immediate and direct access.
Question 7k has been added to clarify that aUCITS can invest in a commodity index for which a particular commodity component does not have 5 years of price history available for the purposes of the correlation observation. This is provided that a similar asset serves as an adequate proxy. The basis for such an asset being considered as an adequate proxy needs to be supported by both qualitative and quantitative data. Those qualitative and quantitative data should be documented by UCITS management companies. The proxy asset cannot constitute more than 3 years of the 5 years of data for the purposes of the calculation. The proxy must be a single commodity (rather than a component of a basket or other amalgam/hybrid product) asset. However, this asset could include a financial index which complies with section XIII of the guidelines.
-SUMMARY-
ESMA has published an updated version of its Qs&As on ESMAs Guidelines on ETFs and other UCITS issues. The document can be found here.
Additional questions have been added to the section onFinancial Indices.
This circular provides further details of the changes. Please forward any questions to Perry Braithwaite.
================================END===============================
========================Circular 101-14========================ID: 9766Date: 2014-03-25 17:43:11File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
ESMA has introduced a derogation from the collateral diversification requirement to limit exposure to a single issuer to 20%.
A UCITS may be fully collateralised in different transferable securities and money market instruments issued or guaranteed by a Member State, one or more of its local authorities, a third country, or a public international body to which one or more Member States belong.
Where this is the case, theUCITS should receive securities from at least six different issues, but securities from any single issue should not account for more than 30% of the UCITS net asset value.
This derogation from the collateral diversification requirements is applicable to all types of UCITS (and not only to Money Market Funds)
Additional disclosure requirements (in the prospectus and in the annual report) apply for UCITS thatintend to make use of the derogation.
-SUMMARY-
Further to circular 036-1, ESMA has issued itsfinal reporton therevision of the provisions on diversification of collateralin ESMAs Guidelines on ETFs and other UCITS issues.
The guidelines modify the rules on collateral diversification in paragraph 43(e) of the existing guidelines and introduce some further consequential changes.
The revised guidelines are currently being translated into all the official languages of the EU. They will become applicable 2 months after their official publication on ESMAs website in all these languages. The publication into the official EU languages will also trigger the two months period for National competent authorities to inform ESMA of their intention to comply with the guidelines.
This circular provides further detail.
================================END===============================
========================Circular 100-14========================ID: 9760Date: 2014-03-26 13:48:25File Details:
File 1: assets/files/circulars/2014/m1m_f9c_100-14-00.docx File 2: assets/files/circulars/2014/m1m_f9c_100-14-01.docx File 3: File 4: File 5: -CONTENT-
Current market practice
Currently, the only markets in Europe that have a settlement cycle on regulated of T+2 are Germany and Slovenia. With the exception of Spain, which will be given longer to comply, the others will be required by the European Regulation on Central Securities Depositories (CSDR) to implement a settlement period of T+2 by 1 January 2015. Notwithstanding this, for logistical reasons, most markets are aiming to change their settlement period from 6 October 2014.
The most common settlement period for UK funds today is 4 days, whereas trades in the underlying assets typically settle on T+3. Some firms do, however, operate a T+3 cycle, while the tendency for gilt and money market funds is to settle on T+1 due to the much shorter settlement cycles for those instruments.
COLL rules
COLL 6.2.13R and 6.2.14R require that issues and cancellations must settle no later than the 4th business day following the issue/cancellation of the units.
Historically, the old SIB rules required settlement on the next business day for gilt and money market funds, but this requirement was removed from December 2001 with the introduction of the FSA Handbook. However, there is nothing in the current FCA rules that inhibits shorter settlement cycles and, as noted above, these are adopted by some firms.
Key points to consider
We would suggest that the AFM has a responsibility to consider the impact of the change in market settlement periods on their funds. In particular, we believe firms should consider the potential detriment to investors if a T+4 settlement cycle is maintained where trades in the majority of underlying investments are required to settle on T+2. We have highlighted below a number of points that AFMs may wish to consider. This is not necessarily an exhaustive list and we should be grateful to hear of any additional concerns.
A further consideration for the industry as a whole is the potential difficulty for investor distributors, and AFMs themselves, in the event that settlement cycles for UK funds become unnecessarily fragmented.
Fund cash flow
Portfolio Managers usually want to invest proceeds from the issue of units as soon as they are aware of them. Obviously, where there is a mismatch in settlement periods this can lead to the purchases in underlying assets settling prior to the fund receiving proceeds from the issue of units. The fund would have to use existing cash reserves and/or borrow to cover these settlements. There would be a potential reduction in interest and/or increase in borrowing costs to the fund, which could affect the performance of the fund.
Under COLL, fund borrowing must not exceed 10% of the value of the scheme property, which would limit the amount that could be borrowed to cover settlements. Also, any borrowing by the fund should be on a temporary basis and therefore the fund could not borrow on a continuous or very regular basis to cover settlements.
Please refer to the attached tables, which discuss the effect on cash flow depending upon the settlement cycle chosen and the timing of the purchases or sales of underlying assets in the funds in relation to the creation or cancellation date respectively.
Dilution risk
There is always the possibility of dilution risk if the fund manager does not buy or sale underlying assets at the prices used to calculate the units price. This needs to be taken into consideration, if to avoid cash flow problems, purchases of underlying assets are delayed for a day or two. (Please see attached tables)
Passive funds Tracking errors
The dilution risk is of particular concern in the context of passive funds as any dilution (or, indeed, concentration) will add to any index tracking errors.
Liquidation decisions
Currently, with the cancellation settlement cycle usually being a day longer than the market settlement cycle, the Portfolio Manager has one day in which to sell assets to cover the cancellation. This would not be the case if the AFM decides to move the settlement cycle for cancellations to T+2.
Fund manager cash flow
If the AFM decides to reduce the settlement cycle for issues to T+2 or T+3 days, it will want to receive subscription monies within 2 or 3 days respectively of the unit deals being placed. Otherwise, it will have to fund some or all of the payment to the depositaries for issuing units.
Although it is feasible to collect direct debits within a T+3 timeframe under existing mandates, collection within 2 days following a subscription would be extremely demanding, even under existing mandates. Moreover, at least one additional day is required to set up a new mandate before a payment can be requested.
Fragmentation of fund settlement cycles
It is mooted that the US markets may follow Europe and shorten their settlement cycles to T+2. Although, there will still be markets across the world with different settlement cycles. An AFM could elect to have different settlement cycles across their range of funds depending upon where their funds invest.
However, different settlement cycles across funds is likely to lead to problems, for example, where the proceeds from the sale of a fund that settles on T+4 are not available to settle the purchase in a fund that settles on T+3. This will be an issue with switches between funds of the same AFM and between those of different fund groups (eg. on a fund platform, under discretionary management or within a fund of funds).
More generally a fragmentation of settlement cycles, especially among similar types of funds may confuse investors and cause inefficiencies for distributors, leading ultimately to monies being received routinely on T+4 or later regardless of the firms' policies.
Investor communication
Where settlement cycles are quoted in the funds prospectus, these will need to be amended. This type of amendment is not yet considered in the IMA/DATA guidance on the classification of change events, although the IMA is in discussion with DATA with a view to updating the guidance as soon as possible. It will need to be clarified whether a change in settlement cycle is notifiable or significant.
The earlier a decision is made the easier it will be to notify investors via, for example, managers reports.
Survey
We are undertaking a short survey to understand better when portfolio managers usually invest inflows or liquidate assets to cover outflows; and what AFMs are thinking currently with regard to the impact of the market changes to the settlement cycles on their funds. The answers to these questions will enable us to decide how best to work with AFMs and others to minimise unnecessary fragmentation of the industry.
We appreciate that final decisions are unlikely to have been made at this stage, but we would grateful if AFMs could share their current thoughts with us by completing the survey by 4 April.
-SUMMARY-
Further to Circular 004-14, which discussed the effect on investment and fund managers of the change in settlement periods on the main European regulated markets from T+3 to T+2, this circular looks more closely at issues firms should consider when thinking about whether or not to alter the settlement cycles for their funds.
A link to a survey is provided in the circular.
================================END===============================
========================Circular 100-14========================ID: 9760Date: 2014-03-26 13:54:12File Details:
File 1: assets/files/circulars/2014/m1m_f9c_100-14-00.docx File 2: assets/files/circulars/2014/m1m_f9c_100-14-01.docx File 3: File 4: File 5: -CONTENT-
Current market practice
Currently, the only markets in Europe that have a settlement cycle on regulated of T+2 are Germany and Slovenia. With the exception of Spain, which will be given longer to comply, the others will be required by the European Regulation on Central Securities Depositories (CSDR) to implement a settlement period of T+2 by 1 January 2015. Notwithstanding this, for logistical reasons, most markets are aiming to change their settlement period from 6 October 2014.
The most common settlement period for UK funds today is 4 days, whereas trades in the underlying assets typically settle on T+3. Some firms do, however, operate a T+3 cycle, while the tendency for gilt and money market funds is to settle on T+1 due to the much shorter settlement cycles for those instruments.
COLL rules
COLL 6.2.13R and 6.2.14R require that issues and cancellations must settle no later than the 4th business day following the issue/cancellation of the units.
Historically, the old SIB rules required settlement on the next business day for gilt and money market funds, but this requirement was removed from December 2001 with the introduction of the FSA Handbook. However, there is nothing in the current FCA rules that inhibits shorter settlement cycles and, as noted above, these are adopted by some firms.
Key points to consider
We would suggest that the AFM has a responsibility to consider the impact of the change in market settlement periods on their funds. In particular, we believe firms should consider the potential detriment to investors if a T+4 settlement cycle is maintained where trades in the majority of underlying investments are required to settle on T+2. We have highlighted below a number of points that AFMs may wish to consider. This is not necessarily an exhaustive list and we should be grateful to hear of any additional concerns.
A further consideration for the industry as a whole is the potential difficulty for investor distributors, and AFMs themselves, in the event that settlement cycles for UK funds become unnecessarily fragmented.
Fund cash flow
Portfolio Managers usually want to invest proceeds from the issue of units as soon as they are aware of them. Obviously, where there is a mismatch in settlement periods this can lead to the purchases in underlying assets settling prior to the fund receiving proceeds from the issue of units. The fund would have to use existing cash reserves and/or borrow to cover these settlements. There would be a potential reduction in interest and/or increase in borrowing costs to the fund, which could affect the performance of the fund.
Under COLL, fund borrowing must not exceed 10% of the value of the scheme property, which would limit the amount that could be borrowed to cover settlements. Also, any borrowing by the fund should be on a temporary basis and therefore the fund could not borrow on a continuous or very regular basis to cover settlements.
Please refer to the attached tables, which discuss the effect on cash flow depending upon the settlement cycle chosen and the timing of the purchases or sales of underlying assets in the funds in relation to the creation or cancellation date respectively.
Dilution risk
There is always the possibility of dilution risk if the fund manager does not buy or sale underlying assets at the prices used to calculate the units price. This needs to be taken into consideration, if to avoid cash flow problems, purchases of underlying assets are delayed for a day or two. (Please see attached tables)
Passive funds Tracking errors
The dilution risk is of particular concern in the context of passive funds as any dilution (or, indeed, concentration) will add to any index tracking errors.
Liquidation decisions
Currently, with the cancellation settlement cycle usually being a day longer than the market settlement cycle, the Portfolio Manager has one day in which to sell assets to cover the cancellation. This would not be the case if the AFM decides to move the settlement cycle for cancellations to T+2.
Fund manager cash flow
If the AFM decides to reduce the settlement cycle for issues to T+2 or T+3 days, it will want to receive subscription monies within 2 or 3 days respectively of the unit deals being placed. Otherwise, it will have to fund some or all of the payment to the depositaries for issuing units.
Although it is feasible to collect direct debits within a T+3 timeframe under existing mandates, collection within 2 days following a subscription would be extremely demanding, even under existing mandates. Moreover, at least one additional day is required to set up a new mandate before a payment can be requested.
Fragmentation of fund settlement cycles
It is mooted that the US markets may follow Europe and shorten their settlement cycles to T+2. Although, there will still be markets across the world with different settlement cycles. An AFM could elect to have different settlement cycles across their range of funds depending upon where their funds invest.
However, different settlement cycles across funds is likely to lead to problems, for example, where the proceeds from the sale of a fund that settles on T+4 are not available to settle the purchase in a fund that settles on T+3. This will be an issue with switches between funds of the same AFM and between those of different fund groups (eg. on a fund platform, under discretionary management or within a fund of funds).
More generally a fragmentation of settlement cycles, especially among similar types of funds may confuse investors and cause inefficiencies for distributors, leading ultimately to monies being received routinely on T+4 or later regardless of the firms' policies.
Investor communication
Where settlement cycles are quoted in the funds prospectus, these will need to be amended. This type of amendment is not yet considered in the IMA/DATA guidance on the classification of change events, although the IMA is in discussion with DATA with a view to updating the guidance as soon as possible. It will need to be clarified whether a change in settlement cycle is notifiable or significant.
The earlier a decision is made the easier it will be to notify investors via, for example, managers reports.
Survey
We are undertaking a short survey to understand better when portfolio managers usually invest inflows or liquidate assets to cover outflows; and what AFMs are thinking currently with regard to the impact of the market changes to the settlement cycles on their funds. The answers to these questions will enable us to decide how best to work with AFMs and others to minimise unnecessary fragmentation of the industry.
We appreciate that final decisions are unlikely to have been made at this stage, but we would grateful if AFMs could share their current thoughts with us by completing the survey by 4 April.
-SUMMARY-
Further to Circular 004-14, which discussed the effect on investment and fund managers of the change in settlement periods on the main European regulated markets from T+3 to T+2, this circular looks more closely at issues firms should consider when thinking about whether or not to alter the settlement cycles for their funds.
A link to a survey is provided in the circular.
================================END===============================
========================Circular 104-14========================ID: 9767Date: 2014-03-26 13:55:42File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Question 1clarifies that when a non-EU AIFM reports information to the national competent authorities of a Member State under Article 42 of the AIFMD, only the AIFs marketed in that Member State have to be taken into account for the purpose of the reporting.
Question 2clarifies thatrepurchase transactions (at the level of the portfolio of the AIF) by or on behalf of a reporting AIF should be considered as financing operations for the purpose of the AIFMD reporting obligations (questions 54 56 and 210- 217 of the consolidated reporting template). AIFMs should take into account the counterparties of those transactions when reporting the information related to funding sources in questions 54 56 and take into account the aggregate amount of these transactions in questions 210-217.
Question 3 clarifies that AIFMs should use the residual maturity as of the reporting date when reporting information on Instruments traded and individual exposures (questions 121 to 124 of the consolidated reporting template)
Question 4 clarfies that thenumerator used for calculating the geographical exposure as a percentage of the net asset value of the AIF should be the NAV of the AIF for each geographical area. Therefore, this may result in negative values for certain regions but the total should equal 100% (question 78 to 85 of the consolidated reporting template).
Question 5 clarifies that the numerator used for calculating the geographical exposure as a percentage of the aggregated value of the AIF should be the total value of assets under management of the AIF for each geographical area. The basis for the denominator should the total value of assets under management of the AIF. The total should equal 100% (questions 86 to 93 of the consolidated reporting template).
Question 6 clarifies that the numerator used for calculating the breakdown of investment strategies as a percentage of the NAV of the AIF should be the net asset value of the AIF for each investment strategy. Therefore, this may result in negative values for certain investment strategies but the total should equal 100%(question 60 of the consolidated reporting template).
Question 7 clarifes that AIFMs should submit the last AIF report not later than one month after the end of the quarter in which the AIF has been liquidated or put into liquidation.
Question 8 clarifies that, for the percentage of market value for securities traded on regulated markets and OTC markets, AIFMs should aggregate the market value of all securities traded and report the percentage of the market value of securities traded on a regulated exchange and OTC. Regulated exchanges include regulated markets, multilateral trading facilities and organised trading facilities. For the European Union, regulated markets and multilateral trading facilities are published on ESMAs website. Securities that are not traded on regulated exchanges should be considered as traded OTC. This means that the total should equal 100% (questions 148 and 149 of the consolidated reporting template).
Question 9 clarifies that, for the percentage of trade volumes for derivatives traded on regulated markets and OTC markets, AIFMs should take into account the total number of trades and report the percentage of number of trades on a regulated exchange and OTC. This means that the total should equal 100% (questions 150 and 151 of the consolidated reporting template).
Question 10 clarifies that where the AIF is invested in assets with no current liquidity for which it is not possible to determine the future liquidity, AIFMs should assign the instrument to the longest period bucket when reporting the information on the liquidity portfolio (questions 178 -184 of the consolidated reporting template).
Question 11 clarifies that when reporting information on investor liquidity, AIFMs should divide the AIFs NAV among the period buckets depending on the shortest period within which investors are entitled to withdraw invested funds or receive redemption payments, as applicable.
Question 12 clarifies that if an AIF is subject to pre-authorisation, the inception date should be the date of authorisation. If an AIF is established without pre-authorisation by the competent authority, the inception date should be the date when the AIF was established. Finally, if the AIF is subject to registrationat national level with its competent authority after the date of establishment, the inception date should be the date when the AIF was constituted.
Question 13 statesthat for assumptions and stress tests, ESMA recommends that the national competent authority allow AIFMs to report the information in English, which would allow multinational groups to centralise and harmonise their AIFMD reporting. However, this will depend on the national legislation transposing the AIFMD.
Question 14 states that there arepredetermined codes for the XML filing that cannot be changed.
Question 15 clarifies thatcash resulting from repurchase agreements should be included in the amount of cash and cash equivalents to be reported by AIFMs under questions 121 -124.
Question 16 clarifies that AIFMs shouldreport the full name of the counterparty where they do not have details of the relevant BIC and LEI codes (questions 163 and 164 of the consolidated reporting template - five biggest counterparties to which an AIF has exposure).
Question 17 states that AIFMs should report "N/A" where they do not have an expected annual return/IRR in normal market conditions (question 137 of the consolidated reporting template).
Question18 clarifies thatonly AIFMs managing AIFs employing leverage on a substantive basis must answer questions 296 to 301 of the consolidated reporting template.
-SUMMARY-
ESMA has issued an updated set of Qs&As on the Application of the AIFMD. The document can be found here.The updated document contains a number of questions in relation to AIFMD Reporting.
ESMA has also issued updatedIT technical guidance and XML documents.
This circular provides further details.
================================END===============================
========================Circular 105-14========================ID: 9773Date: 2014-03-26 15:02:17File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Management of EuSEF and EuVECA by AIFMs
Question 1 clarifes thatEuSEF and EuVECA managers that subsequently exceed the threshold of Article 3(2)(b) of the AIFMD can set up new EuSEF and EuVECA funds once the threshold is exceeded.
In accordance with Article 2(2) of the Regulations, EuSEF and EuVECA managers that subsequently exceed the threshold in Article 3(2)(b) of the AIFMD have to seek authorisation in accordance with the AIFMD and comply with the AIFMD requirements. These managers can continue using the EuSEF and EuVECA denomination in relation to the marketing of qualifying funds under the conditions set out in subparagraphs (a) and (b) of Article 2(2) of the Regulations. The Regulations, therefore, do not prohibit the managers in this situation from setting up and marketing new funds under the EuSEF and EuVECA denominations.
Registration of EuSEF and EuVECA managers
Question 2 clarifies thatEuSEF and EuVECA managers have to register with the competent authority of their home Member State twice, once in accordance with the AIFMD, and once in accordance with the EuSEF and EuVECA Regulations.
Management and marketing of AIFs by EuSEF and EuVECA managers
Question 3 clarifies thatEuSEF and EuVECA managers can manage and market AIFs.However, these managers will not benefit from the passport set out in Chapter III of EuVECA Regulation and of EuSEF Regulation regarding those AIFs which are not EuSEF or EuVECA.
-SUMMARY-
ESMA has publisheda Qs&As on the application of the European SocialEntrepreneurship Funds (EuSEF) and European Venture Capital Funds (EuVECA) Regulations. The document can be found here.
The document includes questions on the management of EuSEF and EuVECA by AIFMs, registration of EuSEF and EuVECA managers and management and marketing of AIFs by EuSEF and EuVECA managers.
This circular provides further details.
================================END===============================
========================Circular 108-14========================ID: 9775Date: 2014-03-27 14:01:45File Details:
File 1: assets/files/circulars/2014/m1m_f9c_108-14-00.pdf File 2: File 3: File 4: File 5: -CONTENT-
-SUMMARY-
The Financial Conduct Authority has updated its GABRIEL e-learning to reflect the reporting changes brought in by the Capital Requirements Directive and Capital Requirements Regulation, which together make up CRD IV.
================================END===============================
========================Circular 107-14========================ID: 9776Date: 2014-03-27 14:07:04File Details:
File 1: File 2: File 3: File 4: File 5: -CONTENT-
Discussions this week have highlighted to us that only Part II (paragraphs 2-9) of Schedule 19 is being abolished. Significantly paragraph 1 will, in fact, remain in place and continue to exempt all transfers of units or shares in investment funds from stamp duty. Given this, the stamp duty exemption certificates we had added to the back of the Form, are not required; nor is there a need to capture anywhere the amount of any consideration.
We have therefore removed these and restored the Customer Due Diligence for AML Purposes section to the reverse of the Form.
We have simplified the Details of the Transfer section at the top of the Tax Residency Self-Certification forms and now ask only for the name of the specific transferee to which the form relates. A few revisions have been made to the self-certifications to reflect the latest revisions to the separate IMA models (please see circular 096-14). On the form for individuals we have also made it clear that all countries in which you are resident for tax purposes includes the UK.
Although the tax residency aspect was added at the request of some members, a couple of firms have asked if they must to use self-certification forms, as they plan to capture this information in another way. The Stock Transfer Form is offered as a template to assist industry harmonisation, but can be modified, for example to remove the self-certification, to suit a firm's own operating model. The PDF version will be available to the general public, but we are also publishing a Word version in the model documents area of the members' website, for firms that wish to modify it in some way.
We have been asked if firms can continue to use the current Stock Transfer Form until their stocks have run down. There is no reason why the current forms cannot be used after 31st March and even if the SDRT boxes are not ticked there will not be a liability to pay SDRT from 1st April onwards.
The final versions of the forms can be found, as follows:
Finally, we would like to thank everyone who provided feedback.
-SUMMARY-
In circular 088-14 we invited comments on a new Stock Transfer Form for Collective Investment Schemes. The changes to the form were to accommodate both the abolition of Schedule 19 SDRT from 1 April and the collection of tax residency information under the legislation introduced by the Government last year in the light of FATCA and the various Inter-Governmental Agreements for the exchange of tax information.
We received a number of comments from members and having taken this feedback into consideration we have made further changes to the Stock Transfer Form and the associated guidance, particularly as regards the stamp duty provisions. Details of these updates are provided below.
================================END===============================
=======================
![Page 2 Phone 087 2513126 • 087 2330398 Kenmare News News Feb 2013.pdf · Page 2 Phone 087 2513126 • 087 2330398 Kenmare News Dear Editor, ... wedding album; The wedding [book]](https://img.pdfslide.net/doc/110x75/5b78280a7f8b9a515a8e9ea6/page-2-phone-087-2513126-087-2330398-kenmare-news-feb-2013pdf-page-2-phone.jpg)
