The Financial Services Authority (the FSA) plans to issue a consultation paper before the end of 2010 regarding the implementation of the UCITS IV Directive.
HM Treasury is also expected to consult on implementing the UCITS IV Directive in 2010.
In his speech on 22 November 2010 Mark Hoban (Financial Secretary to the Treasury) announced that in order to help competitive UK firms take advantage of this opportunity, the UK would launch a new authorised fund regime for a tax transparent vehicle. In his speech Mr Hoban said that one of the key features of the UCITS IV Directive is the fact that it could see the widespread introduction of a master-feeder fund structure across Europe. However, as things currently stand, it is unlikely that firms will establish master funds in the UK due to our lack of a suitable tax-transparent vehicle. See “Speech by the Financial Secretary to the Treasury, Mark Hoban MP, to PricewaterhouseCoopers”, 22 November 2010.
For the implementation of the UCITS IV Directive, the Board of the Financial Markets Authority (AMF) set up an asset management stakeholders’ committee in November 2009. The committee’s report, based on stakeholder dialogue, sets out 14 recommendations linked to three major strategic principles:
- Implement the directive literally into French law without adding national rules. In return, the AMF would work within ESMA to ensure pan-European harmonisation of investor protection.
- Refocus asset management regulation on supervising fund distribution, in three ways:
- strengthen supervision of the distribution of all French and foreign investment funds marketed in France;
- ensure that distributors provide understandable information to investors both at the point of sale and throughout the investment period, notably in the event of a material change affecting the fund. The AMF could help the industry to provide the disclosures needed for investors to take informed decisions by preparing a standard letter that could form the template of the individual letters to be issued to investors in the event of a material change. Furthermore, to make it easier to compare information provided to investors, the report suggests extending the use of the Key Investor Information Document (KIID) to all funds marketed to retail investors in France, including those not subject to the directive;
- revisit the distribution rules to clarify the distributor’s duties and make sure that the investor is properly supported from purchase to disposal of the investment.
- Take steps to make French financial markets more competitive. The committee suggests three types of measures:
- adopting the regulatory measures deemed necessary to encourage the asset management industry to set up and expand in France. These include simplifying French regulations for CIS and management companies to harmonise with those adopted by other Member States, while at the same time ensuring a high level of investor protection. Examples include simplifying the authorisation procedure for management companies and products, simplifying the regulatory classification of French funds, facilitating intra-group delegation of financial management and reviewing the rules on disclosing fund charges;
- introducing technical solutions, such as a fund master file for the Paris market, order marking and direct orders, to lift the barriers to the international distribution of French funds;
- taking steps to promote French regulations and funds abroad.
The Treasury and the AMF have commenced work on the implementation of the Directive following the recommendations of the committee. To enable the industry to benefit from the opportunities presented by the UCITS IV Directive at the earliest, the French rules will be put to consultation by the end of the year.
The Federal Ministry of Finance started a consultation of the "discussion draft" of the amended Investment Act (the Draft InvG). The Draft InvG contains the implementation of the new European Investment Funds Directive 2009/65/EC, as well as a partial implementation of the four implementation measures enacted in the course of the UCITS IV implementation. The following measures shall be implemented by the Draft InvG:
- Introduction of the possibility of cross-border collective portfolio management by extending the European Passport for management companies.
- Facilitation of cross-border fund mergers.
- Introduction of Master-Feeder-Structures.
- Introduction of "key investor information".
- Facilitation of the notification procedure mandatory for UCITS compliant investment funds prior to cross-border distribution.
- Improvement of co-operation of the authorities which are in charge of supervision and approval.
The Department of Finance is in discussions with the Central Bank regarding a preliminary draft of the Irish Regulations transposing the UCITS IV Directive. Once the discussions conclude, the draft Regulations will be sent to Parliamentary Counsel for formal legal drafting. The Regulations are expected to be finalised on or around Easter 2011.
The Central Bank is in discussion with the Irish Funds Industry Association regarding the authorisation and supervision of Irish UCITS management companies and the Central Bank intends to provide for a full consultation once these discussions have concluded.
No consultation paper nor draft bill have yet been issued regarding the implementation of the UCITS IV Directive.
The asset management industry association (Assogestioni) has been assisting on the implementation of the UCITS IV Directive by establishing a task force group aiming at making suggestions to the Italian authorities and by regularly submitting comments in the context of the CESR consultations. In addition, industry operators have commented that a full implementation of the UCITS IV Directive will definitively require a radical change in the taxation applicable to Italian UCITS.
Luxembourg deposited a bill with Luxembourg Parliament on 6 August 2010, in order to implement Level 1 provisions of the UCITS IV Directive into national law.
Beyond the minimum requirements imposed by the UCITS IV Directive in relation to the management company passport, the cross-border merger, the master-feeder structures or the key information document (KIID), Luxembourg aims to further modernise its legal and regulatory environment to meet the investment industry's needs. The bill as submitted to Luxembourg Parliament notably offers to asset managers the possibility to undertake cross-investment within the same investment vehicle. The bill further proposes to abolish the subscription tax for tracker funds.
The draft text provides for a transitory period according to which existing UCITS and management companies as well as UCITS and management companies created between the entering into force of the new law and 1 July 2011 have the choice until 1 July 2011 to either remain subject to the existing law dated 20 December 2002 on undertakings for collective investments or to convert to the new regime. It is worth mentioning that the creation of a new sub-fund within an existing UCITS will not challenge the option given to the fund, such option being exercised for the UCITS as a whole.
As from 1 July 2011, all UCITS and management companies will be subject to the new regime. However, in relation to the KIID, UCITS will have until 1 July 2012 to replace their simplified prospectus.
The Luxembourg fund industry is now working on the implementation of Level 2 measures adopted by the European Commission earlier this summer.
The Dutch Ministry of Finance has published a consultation on the implementation of Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302) (UCITS IV). The Dutch Act on the Financial Supervision (Wft) shall be amended due to the implementation of UCITS IV. The proposed amendments to the Wft include simplifying the notification procedure, the introduction of a European passport for the manager of UCITS, simplifying (cross-border) mergers between UCITS, creating a legal framework for master-feeder structures and providing essential information for investors in financial leaflets. The first two proposed changes shall be further developed in the Decree on Market Access of Financial Undertakings pursuant to the Wft. The other proposed changes shall be further developed in the Decree on the Supervision of Conduct of Financial Enterprises pursuant to the Wft. A consultation on these amendments has not yet been published.
Further information on the consultation on the implementation of the UCITS-IV (in Dutch) can be found on the website of the Dutch Ministry of Finance.