World Securities Law Report informs you of developments in the regulation of transactions involving securities around the world. It provides expert analysis and practical guidance, with...
HM Treasury has issued regulations implementing changes to the FSMA, among other regulatory developments in the U.K., as outlined below.
Treasury has made the Regulations implementing changes to the FSMA necessary to bring U.K. law into line with the UCITS V. The changes relate to:
The changes took effect on 18 March. Much of the detail of UCITS V is implemented by changes to FCA Rules, and Treasury has also published a transposition table showing relevant FCA provisions, including the changes to the Senior Management Arrangements, Systems and Controls Sourcebook (SYSC) covering remuneration.
Treasury has launched a consultation on a new regulatory and tax framework for insurance-linked securities (ILS) business. The consultation sets out the key features that will be needed to attract ILS vehicles to the U.K. In particular, it examines how to take an effective and competitive approach to the authorisation and supervision, corporate structure and taxation of ILS vehicles. Treasury plans to draft regulations for a new ILS framework later this year. Consultation closes on 29 April.
Treasury has published a summary of the responses received to its consultation on using legislative reform order to change partnership legislation for private equity investments as well as the government's decision on the final policy design. The proposed amendments to the Limited Partnerships Act 1907 related to:
The government received 22 responses. Based on the responses, the government has changed the process for setting up a private fund limited partnership (PFLP) to remove the requirement for a solicitor's certificate for registration purposes. Instead the general partner will be required to confirm that the partnership fulfils the requirements to qualify at the point of registration. The one year transition period will also be removed, so that a limited partnership will always have the option of applying for PFLP. Changes have also been made in relation to the provisions for striking off partnerships from the limited partnership register. The government intends to submit draft legislative amendments in due course and for the changes to be fully operational within a year.
FCA has made various changes to its Handbook following its Board meetings in February and March and FOS rule changes made in March. Those instruments made by FOS have also been reflected by FCA changes to the Handbook. Regulators made the:
FCA has published a policy statement setting out its final position on making consequential changes relating to the SMR reflecting Treasury's removal of the FSMA requirement for firms to report known and suspected breaches of FCA conduct rules to the regulator. These changes follow consultation. The statement summarises the feedback received and confirms the final policy and forms. After 7 March, firms should use only the versions of forms included in this statement. The statement also finalises some minor technical amendments dealing with how the SYSC module of FCA's Handbook applies to foreign branches. PRA has also published its statement containing its final rules on the notification of conduct rules breaches for individuals in scope of the SMR for U.K. banks, building societies, credit unions and PRA-designated investment firms. It also sets out the amended definition of the term “significant risk taker” in PRA's certification rules as proposed in a previous occasional consultation paper. The concept of a significant risk taker is now limited to employees of firms governed by the Capital Requirements Regulation.
The latest edition of FCA's Policy Development Update provides information and links to publications issued since the last edition, recent Handbook developments and an updated timetable for forthcoming publications. Publications expected before the end of April include:
The next MiFID 2 consultation is scheduled for “mid-2016.”
FCA and BoE have revised their memorandum of understanding (MoU) on cooperation in supervising markets and market infrastructure and concluded it is still fit for purpose and is working well.
FCA has published the minutes of the MiFID 2 implementation roundtable meeting it held on 22 February. FCA noted that there was little implementation news since the previous meeting but that progress in this area is expected soon. The minutes recognised that the debate around the Commission's proposal to delay the implementation by a year focused around the issues of the application of pre-trade transparency to package transaction, and the possible opportunity to change Article 2.1.d to allow commercial firms to be members or participants in forex venues without being required to be authorised. The round table also discussed aspects of FCA's now-closed consultation on MiFID 2. The minutes also report that the Commission will not be publishing written responses to questions raised on the Level 1 legislation at its MiFID 2 transposition workshop.
FCA has issued its latest quarterly consultation on proposed miscellaneous amendments to the Handbook. Proposals include:
Responses are due by 18 April on the MCD-related changes, and 18 May for all other proposals.
FCA has published a policy statement setting out its response to feedback submitted in relation to two consultations. The statement first sets out FCA's views in relation to its consultation on loan-based crowdfunding/P2P platforms and segregation of client money. It then gives FCA feedback to the responses received to its consultation which proposed Handbook changes to reflect the introduction of the Innovative Finance ISA (IFISA) and the regulated activity of advising on P2P agreements. The statement includes the finalised rules and guidance made by FCA in the Peer-to-Peer Lending Instrument 2016, effective from 6 April when the IFISA is introduced, and the Client Assets Sourcebook (Amendment No 9) Instrument 2016, which took effect on 21 March.
FCA and the Australian Securities and Investments Commission (ASIC) have signed a co-operation agreement to help start-up fintech providers seeking to enter each others' markets. The agreement could help automated financial advisers, crowd-sourced equity funds, digital payments and blockchain business models. The move forms part of FCA's Project Innovate.
BoE has published its annual report on its supervision of financial market infrastructures (FMI). The report looks at BoE's focus on enhancing cyber resilience, increasing the robustness of a range of financial risk mitigants across FMIs, and improving the governance of FMIs, in particular the effectiveness of FMI boards, and of central counterparty board risk committees. It notes the Basel Committee on Payment and Market Infrastructures and IOSCO have assessed BoE as meeting all its responsibilities. The report also sets out next year's priorities.
PRA has published its first consultation on how it will change its rules to implement MiFID 2. The consultation covers two areas:
PRA will consult further on other necessary changes to its rules, and may need to change these proposals depending on the final text of EU measures, but wanted to provide some clarity for firms. PRA asks for comment by 27 May.
PRA has published its policy statement setting out its approach to and application of the Fees Part of the PRA Rulebook following consultation. These changes have been designed to make the FEES module conform more with the Rulebook's style. PRA consults on its fee rates annually, with the new fee rates taking effect from 1 March each year. It addresses periodic fees, regulatory transaction fees, special project fees for restructurings and the invoicing and collection of fees.
PRA has published an updated version of its supervisory statement on guidelines for completing regulatory reports following consultation on including guidelines for completing supervisory reports relating to the Close Links and Change in Control Parts of the PRA Rulebook. It sets out PRA's expectations for how firms should complete the data items and returns as required.
SFO has announced the closure of its investigation into allegations of fraudulent conduct in the foreign exchange market. SFO has concluded that despite grounds to suspect offences involving serious or complex fraud, a review of the available evidence suggests that the alleged conduct, even if proven, would not meet the evidential test required for SFO to mount a prosecution and it would not be able to remedy this by continuing the investigation. The US Department of Justice is still continuing its investigation, with which SFO is helping it.
Emma Radmore is a Managing Associate and Catherine Hogg is an Information Assistant in Denton's UKMEA LLP's Financial Services and Funds Practice in London. Emma Radmore is also a member of the World Securities Law Report Advisory Board. They may be contacted at firstname.lastname@example.org and email@example.com.
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