Financial Services Quarterly Report – Asia
June 29, 2016
A review of recent developments in the international financial services industry, including:
- Brexit Update and Resource Center
- The Hong Kong Professional Investor Regime
- OECD Common Reporting Standard: The Next Steps
- What Fund Investors Should Know About US Bank Control Rules
- MiFID II: Key Considerations for Asset Managers
- Effects of UCITS V Transposition into Luxembourg Law
- Loan Origination: Update to the CSSF FAQ Concerning the Luxembourg Law on AIFMs
- Does the Supreme Court’s Dudenhoeffer Decision under ERISA do “More Harm than Good” for “Stock Drop” Plaintiffs?
- New Legal Framework Regarding Loan Funds in Germany
- The Société de Libre Partenariat: A New French Fund Alternative
- Upcoming and Recent Events
- Dechert's World Compass
Brexit Update and Resource Center
The voters have spoken. Britain will (absent any new deals) leave the EU. Companies operating or having commercial interests in the UK are grappling with the many legal and regulatory uncertainties that Brexit could bring. Challenges loom for the financial services industry and other highly regulated industry sectors.
Hotline. Dechert has established a dedicated hotline with access to a team of expert partners and senior lawyers across our offices to respond to any urgent questions you may have. You can call 24 hours-a-day on: +44 20 7184 7575. Read more »
Webinar. Dechert hosted a webinar on the implications of the Brexit vote. Presenters included Dechert partners well-versed in financial services, international trade and employment law.
What Does Brexit Mean for Asset Managers? Asset managers will need to consider how their current client and distribution arrangements will be impacted if the UK becomes a “third country” for financial services purposes and UK funds cease to qualify for UCITS and AIFMD passports. It is important to understand how to make best use of third country access rights, national private placement regimes and targeted restructuring. Read our Newsflash and March OnPoint.
The Implications of Brexit. While the precise impact of the Brexit vote will largely depend on the new arrangements agreed by the UK and the EU, there will certainly be an impact on a wide range of sectors and industries, whether they are based in the UK or simply trade with the UK. Read more »
MiFID II: Key Considerations for Asset Managers
Following the endorsement by the Council of the European Union of a new regulatory regime that will replace the current Markets in Financial Instruments Directive (MiFID), new legislation – in the form of a recast Directive (MiFID II) and Regulation (MiFIR) – is scheduled to go into effect on 3 January 2018. MiFID II is one of the most ambitious and contentious legislative reform proposals to come out of Europe in decades, with the potential to affect a wide range of asset management functions, including trading, product development, client services, human resources and IT infrastructure.
The Société de Libre Partenariat: A New French Fund Alternative
The implementation of the AIFMD has afforded the French legislature the opportunity to simplify its range of regulated investment vehicles, with the aim of making France’s financial markets more attractive – both to French and international institutional investors – by creating a new category of fund comparable to the English limited partnership or Luxembourg SCS/SCSp. The new société de libre partenariat is a type of alternative investment fund with legal personality, which would enable French managers to take advantage of the AIFMD passport.
New Legal Framework Regarding Loan Funds in Germany
BaFin, the German Federal Financial Supervisory Authority, has eased its administrative practice with respect to loan origination and loan restructuring activities of alternative investment funds. This change was welcomed by the German fund industry as it mirrors similar initiatives adopted in other EU Member States. The German legislator subsequently enacted the UCITS V Implementation Act, which entered into force on 18 March 2016, creating an alternative to the more traditional (but cumbersome) loan origination mechanisms previously used.
Loan Origination: Update to the CSSF FAQ Concerning the Luxembourg Law on AIFMs
The Luxembourg financial regulator, the CSSF, published on 9 June 2016 an updated version of its FAQ concerning the Luxembourg law on alternative investment fund managers. The updated FAQ notably includes a new section focusing on loan origination, in which the CSSF clarifies that Luxembourg alternative investment funds – including those qualifying as an ELTIF, EuSEF or EuVECA – are in principle permitted to originate loans.
What Fund Investors Should Know About US Bank Control Rules
Many private equity, hedge and mutual funds constantly have to confront the complex control rules that may impact even the smallest of investments in banks or bank holding companies (BHCs). The issue may be as simple as avoiding acquiring more than 10% of a BHC through the aggregation of all investments in that BHC by a number of commonly advised funds. Registered investment companies are generally subject to the same control and acting in concert rules as other investors.
The Hong Kong Professional Investor Regime
Similar to the situation in many other jurisdictions, fund managers, banks and other market participants in Hong Kong were, until recently, not required to apply the same regulations to high net worth, corporate or institutional investors as were applied to retail investors. Licensed intermediaries in Hong Kong were exempt from applying various regulatory requirements under the Hong Kong Securities and Futures Commission’s code of conduct when dealing with professional investors. However, a number of changes to the professional investor regime took effect on 25 March 2016.
OECD Common Reporting Standard: The Next Steps
The Common Reporting Standard of the Organisation of Economic Co-operation and Development (CRS) came into effect on 1 January 2016 in “early adopter” jurisdictions, including the UK and popular fund jurisdictions such as the Cayman Islands, Ireland and Luxembourg. The CRS imposes new investor due diligence and reporting obligations on funds and other financial institutions based in 100+ participating jurisdictions.
Effects of UCITS V Transposition into Luxembourg Law
The law that transposed UCITS V into Luxembourg law entered into force on 1 June 2016. Among other matters, the new law: (i) implements a depository regime; (ii) requires UCITS management companies and self-managed UCITS in the form of SICAVs to establish a remuneration policy; (iii) contemplates the imposition of sanctions and administrative measures by the CSSF on certain persons and entities; (iv) requires all authorised Luxembourg AIFMs to have an external auditor; and (v) introduces a MiFID II passporting for certain Luxembourg AIFMs.
Does the Supreme Court’s Dudenhoeffer Decision under ERISA do “More Harm than Good” for “Stock Drop” Plaintiffs?
Earlier this year, the U.S. Supreme Court decided the case of Amgen v. Harris, in which the Court revisited and clarified its 2014 holding in Dudenhoeffer v. Fifth Third Bancorp. Both cases concern the application of a fiduciary’s duty of prudence with respect to employer stock held in a benefit plan governed by ERISA. The 2015-16 Term has been a busy one for the Supreme Court when it comes to ERISA issues.
Dechert's World Compass
World Compass is a web-based subscription service that offers investment firms 24/7 access to concise global marketing and distribution guidance in approximately 100 jurisdictions worldwide, updated regularly to ensure accuracy, and covering funds, managed accounts and beneficial ownership reporting.
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