Asset Management Regulatory Roundup - September 2017, Issue 6
September 20, 2017
A compact summary of the most recent regulatory developments relevant to the UK asset management industry. This issue includes details on Brexit: Impact on cross-border financial services contracts; cryptocurrency: initial coin offerings; market abuse: updated Q&As published; MiFID II implementation: updated Q&As and Commission Report; tax guidance on failure to prevent facilitation of tax evasion; the Hedge Fund Standards Board becomes the Standards Board for Alternative Investments and UK Competition and Markets Authority to investigate asset management sector.
Brexit: Impact on cross-border financial services contracts
The Association for Financial Markets in Europe (AFME) and UK Finance have published a paper addressed to policy makers that examines the impact of Brexit on cross-border financial services contracts.
The report highlights a range of actions that are potentially available to address cross-border contractual uncertainty in the absence of EU “passporting” rights. Actions include having a transitional period in place that confirms the legal right to contract in a certain way for a defined period. In addition, existing contracts, subject to certain limitations or conditions, should be allowed to run to maturity. Also, the UK, and individual EU member states, could consider grandfathering contracts under their existing national licensing regimes where appropriate.
Cryptocurrency: Initial Coin Offerings
A number of national regulators have issued statements on Initial Coin Offerings (ICOs) and this month the FCA issued a warning to consumers, calling them “very high-risk, speculative investments”.
This follows from an FCA discussion paper on distributed ledger technology, issued in April.
Market Abuse: updated Q&As published
The European Securities and Markets Authority (ESMA) has published updated Questions and Answers (Q&As) on the Market Abuse Regulation. These include new questions on market soundings and insider lists.
MiFID II implementation: updated Q&As and Commission report
ESMA has published updated Q&As on the implementation of the Markets in Financial Instruments Directive (MiFID II) and the Regulation on Markets in Financial Instruments (MiFIR). The updated questions relate to the temporary opt-out, exemptions and timing for applications for exchange-traded derivatives trading venues.
This follows a report from the European Commission (the Commission) on the need to temporarily exclude exchange-traded derivatives from the scope of Articles 35 and 36 of MiFIR. The report concluded that it is not necessary to temporarily exclude exchange-traded derivatives from the scope of these articles.
Tax guidance on failure to prevent facilitation of tax evasion
A new offence of failure to prevent facilitation of UK and foreign tax evasion comes into effect at the end of this month.
HM Revenue & Customs has published guidance about the procedures which relevant bodies might put in place to assess and mitigate their risk under the Criminal Finances Act 2017. The six principles in the guidance are almost identical to those in the Bribery Act guidance.
The Hedge Fund Standards Board becomes the Standards Board for Alternative Investments
The Hedge Fund Standards Board (HFSB) has changed its name to the Standards Board for Alternative Investments (SBAI).
SBAI is the ‘custodian’ of the Alternative Investment Standards (previously the Hedge Funds Standards) which create a framework of transparency, integrity and good governance, facilitate investor due diligence and complement public policy. The standards are applied voluntarily on a comply-or-explain basis.
There are currently over 130 manager and two managed account platform signatories to the SBAI Standards.
UK Competition and Markets Authority to investigate asset management sector
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