On April 20, the UK Financial Conduct Authority (FCA) updated its asset management authorization hub (Hub), which launched on October 16, 2017, as detailed in the Corporate & Financial Weekly Digest edition of October 20, 2017. The updated Hub includes a number of new interactive tools, complementing existing ones, to support firms through the regulatory process.
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On April 5, the UK Financial Conduct Authority (FCA) published a policy statement with the final rules from its consultation paper 17/18 on asset management market study remedies and changes to the FCA Handbook. The policy statement announces the following prominent changes, among others:

  • Authorized Fund Managers (AFMs) must assess the overall value delivered to investors and publish a description of this assessment in a fund’s annual report (or a separate composite report);
  • “box profits” (i.e., risk-free profits resulting from differences in the bid-offer prices) will need to be paid to the fund or individual investors, as opposed to asset managers retaining these profits, which is currently the case;
  • removing the requirement in the FCA guidance for asset managers to obtain investor consent before “conversion” from more expensive share classes to cheaper, but otherwise identical, share classes; and
  • requiring AFMs to appoint at least two independent directors, comprising at least 25% of total board membership.


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Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA) spoke on March 20, regarding ESMA’s work during the past year. In his speech, Mr. Maijoor commented on ESMA’s work in relation to:

  1. supervisory convergence to limit the scope for regulatory arbitrage in light of the United Kingdom’s upcoming withdrawal from the European Union

On March 14, the UK Financial Conduct Authority (FCA) published a webpage in relation to its review of potential closet tracker funds and closet constrained funds. The review forms part of the FCA’s supervision to protect investors and maintain a competitive market.

On its webpage, the FCA explains that both types of funds look like and charge similar fees to funds that strive to beat a benchmark (active funds), but are managed in a way that is similar to funds that track a benchmark (passive funds).
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On March 12, as part of the development of the EU’s Capital Markets Union (CMU), the European Commission (EC) published two legislative proposals in relation to the cross-border distribution of collective investment funds within the EU:

  1. a Regulation (Proposed Regulation) facilitating the above and amending existing Regulations on European venture capital funds and European social entrepreneurship funds; and
  2. a Directive (Proposed Directive) amending the Undertakings for Collective Investment in Transferable Securities (UCITS) IV Directive and the Alternative Investment Fund Managers Directive (AIFMD).


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On December 20, 2017, the UK Financial Conduct Authority (FCA) published a statement on the UK’s withdrawal from the European Union (EU).

Referencing the announcement made by the European Council that enough progress had been made in negotiations to begin discussions on future trading relations (for further information please see the Corporate & Financial Weekly Digest of December 8, 2017), the FCA states that it welcomes the progress that has been made and is supportive of open markets and free trade in financial services, underpinned by strong regulatory standards.
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On December 6, Her Majesty’s Treasury published a report setting out the UK government’s renewed long-term investment management strategy. This follows the announcement by the UK Chancellor of the Exchequer, Philip Hammond, in his Autumn 2017 Budget on November 22, that the government would be publishing its new strategy to “ensure that the UK asset management industry continues to thrive and deliver the best outcomes for investors and the UK economy.”
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Following months of, at times, protracted negotiations, the UK and European Union (EU) negotiating teams have published the text of an agreement on the terms of the UK’s withdrawal from the EU.

These negotiations have focused on three primary topics:
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On November 20, the European Commission published a speech on the future of the European Union given by Michel Barnier, the EU’s chief Brexit negotiator, at the Centre for European Reform.

In the Speech, Mr. Barnier focused on Brexit and identified three keys to the European Union building a strong partnership with the United Kingdom:

  • agreement on the terms for the UK’s orderly withdrawal from the European Union, especially in relation to citizens’ rights, financial settlement and the Irish border;
  • maintenance of the integrity of the EU’s Single Market; and
  • a level playing field between the European Union and the United Kingdom.


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