Financial Services Quarterly Report – Asia
October 04, 2017
A review of recent developments in the international financial services industry, including:
- Global Update: Regulators Focus on Initial Coin Offerings
- Hong Kong SFC Issues Clarification on Standards Expected of Asset Managers
- Regulatory and Investment Tax Law Changes Create Opportunities for Marketing Funds to the German Institutional Market
- Luxembourg Developments
- UK Criminal Finance Act 2017: Immediate Considerations for Asset Managers
- Interpretive and Other Challenges to Liquidity Classification under the U.S. SEC’s New Liquidity Risk Management Rule
- U.S. Fund Liquidity Risk Management Task Force
- U.S. Financial Regulation Reform Tracker
- Dechert’s World Passport
- Dechert’s World Compass
Global Update: Regulators Focus on Initial Coin Offerings
Since January 2017, more than $2 billion has been raised through the rapidly growing market for so-called “token sales” or “initial coin offerings” (ICOs). The U.S. SEC announced on July 25, 2017 that some tokens issued through ICOs may be securities under the federal securities laws, and regulators in a number of other jurisdictions have released public statements taking similar positions. Dechert is continuing to monitor the rapid developments by regulators globally as the market for ICOs continues to grow and take shape.
Hong Kong SFC Issues Clarification on Standards Expected of Asset Managers
The Hong Kong Securities and Futures Commission recently released a circular outlining its views on how asset managers should address certain conflicts of interest between private funds and separately managed accounts and avoid practices that undermine market integrity. The circular sets out several examples of inappropriate conduct on the part of asset managers and informs the industry of the relevant standards expected by the SFC.
Tribute to Richard Hervey
Dechert mourns the loss of our long-time partner, colleague and friend, Richard Matthew Hervey, who passed away on September 2, 2017. He will be dearly missed by all his colleagues at Dechert, who for many years were privileged to benefit from his towering intelligence, thought leadership in matters of investment company taxation and gentle, humble nature.
Regulatory and Investment Tax Law Changes Create Opportunities for Marketing Funds to the German Institutional Market
Germany is the largest inbound market for alternative and traditional fund investments by institutional investors in the EU. Although obstacles to investment by German institutional investors in non-German funds had been created by provisions of German investment tax law and insurance regulatory law, the conditions for such investments have improved significantly, due to the entry into force of the European Solvency II regime for insurers and the upcoming implementation of the German Investment Tax Reform Act.
Luxembourg Developments
Luxembourg recently has taken a number of actions in connection with the transposition or implementation of various EU directives and regulations. The Luxembourg government deposited a bill of law with Parliament that would transpose MiFID II and implement MiFIR in Luxembourg. Also, the CSSF published FAQs to provide interpretative guidance on the upcoming effectiveness of the PRIIPs Regulation. In another area, the Luxembourg government deposited a bill of law with Parliament to introduce a new BEPS-compliant regime of taxation of certain intellectual property rights.
UK Criminal Finance Act 2017: Immediate Considerations for Asset Managers
UK asset managers, non-UK asset managers carrying on business in the UK and the funds they manage are within the scope of the new corporate criminal offences of failing to prevent the facilitation of tax evasion. As the new offences apply with effect from 30 September 2017, to the extent not already completed, asset managers and funds should prioritise conducting a risk assessment and formulating a strategy to implement reasonable preventative measures.
Interpretive and Other Challenges to Liquidity Classification under the U.S. SEC’s New Liquidity Risk Management Rule
Many fund complexes have begun to plan for the numerous liquidity management compliance and reporting requirements they will face under new Rule 22e-4 under the Investment Company Act of 1940. With the compliance deadlines approaching, a start on these preparations is advisable in light of the many interpretive and other challenges under the new rule.
U.S. Fund Liquidity Risk Management Task Force
Implementing the Securities and Exchange Commission’s fund liquidity risk management rules presents distinct challenges for open-end mutual funds and exchange-traded funds, and compliance with the rules will benefit from careful planning. Dechert’s financial services practice has organized a task force to help clients prepare.
U.S. Financial Regulation Reform Tracker
To assist clients in navigating the reform of the regulation of U.S. financial services by Congress and the Trump Administration, Dechert has created a Financial Regulation Reform Tracker website. Lawyers contributing to the Tracker include members from Dechert’s banking, investment management, derivatives, corporate, securities, finance/securitization, employee benefits and litigation groups. Subscribe to Tracker updates.
Dechert’s World Passport
World Passport is a web-based subscription service that offers UCITS and AIFs registration and advice on distribution globally.
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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