CP12/32: Implementation of the Alternative ... - BVCA admin

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CP12/32 Implementation of the Alternative Investment Fund Managers Directive Funds for non-professional investors Non-UCITS retail schemes Annex X 2.23 In DP12/1 we explained that the UK Authorities have discretion whether to allow specific regimes for categories of fund that can be marketed to retail investors. 14 We confirm it is the intention to treat authorised non-UCITS retail schemes (NURS) as AIFs that may be marketed to ‘retail investors’ within the meaning of Article 43 of AIFMD. This will mean that, as now, such funds may be marketed to the general public. 2.24 We asked respondents to DP12/1 what changes, if any, we should make to the current NURS regime 15 . The majority wished to see the NURS regime maintained, except where the requirements of AIFMD affect existing rules and changes are needed. We agree that AIFMD implementation should not be used as an opportunity to make widespread changes to the NURS regime. So, although some NURS rules may need modifying to meet AIFMD requirements, where the FCA can exercise discretion we will generally not be seeking to make changes. We will address this issue in more detail in CP2. Qualified investor schemes 2.25 Qualified investor schemes (QIS) are authorised funds intended primarily for professional investors, but they may be sold to certain limited categories of retail investors, as is the case for unregulated collective investment schemes (CIS) more generally. All these funds will fall within the scope of Article 43, so we intend to continue allowing them to be marketed to limited categories of investors. This policy is of course subject to our proposals in CP12/19 16 to restrict further the categories of non-professional investors to whom ‘non-mainstream pooled investments’ (including unregulated CIS and QIS) may be promoted. If those proposals are carried through, they will not affect the general principle of treating these categories of fund as ‘retail’ under Article 43 – where, for example, units are sold to retail clients certified as ‘sophisticated investors’. 2.26 We asked respondents to DP12/1 what changes, if any, we should make to the current QIS regime. 17 There was less consensus than for NURS: most respondents argued to keep the QIS requirements, on the basis that they provide a useful bridge between mainstream retail funds and unregulated CIS, as well as being tax-efficient for professional investors who do not enjoy tax-exempt status. However, some stakeholders thought that many of our specific rule requirements should be dropped, so that such funds only need to comply with the minimum AIFMD requirements. 2.27 We accept the arguments for retaining QIS, and propose to take a similar approach to the QIS regime as for NURS, making rule changes only where it is necessary to transpose the 14 DP12/1 Chapter 9 at paras 9.21-9.33. 15 Questions 58 and 59 of DP12/1. 16 CP12/19 Restrictions on the retail distribution of unregulated collective investment schemes and close substitutes, August 2012. 17 Question 66 of DP12/1. 18 Financial Services Authority November 2012
November 2012 CP12/32 Implementation of the Alternative Investment Fund Managers Directive Directive correctly. We do not consider that all non-AIFMD rules applying to QIS should be removed. This would leave no meaningful distinction between a QIS and an unregulated CIS in terms of their regulatory obligations, and we think that granting authorised status to a fund should bring with it a higher standard of investor protection. Alignment between retail AIFs and UCITS schemes 2.28 In DP12/1, we also asked whether we should consider aligning requirements for UCITS management companies and AIFMs where the Directives contain common requirements. A majority of respondents broadly supported this idea, although some thought it would damage competition if additional AIFMD-based requirements were imposed on UCITS schemes, or if professional-only funds were also subjected to retail investor protection measures. 2.29 We are mindful of the government’s stated intention to avoid ‘gold-plating’ when implementing Directives, as well as the burden on and costs for firms of having to make operational changes over and above what is strictly necessary. So we have decided not to try to align the requirements of the two directives in our Handbook beyond what is already in place for authorised funds. We may reconsider this issue in the future, when we know the outcome of the Commission’s proposals for further changes to the UCITS Directive. Non-UCITS recognised schemes 2.30 The Treasury will consult in due course on the treatment of non-UK funds (other than EEA UCITS) that can be promoted to the general public. At present, such funds may only be promoted if they are recognised schemes under sections 270 or 272 of FSMA. We propose to deal with any resulting changes to our rules and guidance either in CP2 or a subsequent consultation paper. Transposing AIFMD into the Handbook 2.31 We intend to transpose AIFMD requirements into the Handbook in the way we explained in DP12/1. We said we would, where appropriate, distribute Directive requirements between the most suitable parts of the Handbook; for example, rules for systems and controls in SYSC and rules for conduct of business in COBS. At the same time, we proposed a new sourcebook to replace COLL, to accommodate both AIFMD and expected future changes to the UCITS Directive. 2.32 Some respondents to DP12/1 did not agree with this suggested approach and asked instead for COLL to be retained and a new, separate sourcebook to be created for other funds and fund managers subject to AIFMD. The reasons they gave were convenience and ease of reference for firms managing only authorised funds; it would be less disruptive to them than introducing a single comprehensive funds sourcebook under the banner of AIFMD implementation. Financial Services Authority 19
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Annex 2 List of consultation questi
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Annex 2 November 2012 CP12/32 Imple
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ALTERNATIVE INVESTMENT FUND MANAGER
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Annex A Making the Investment Funds
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3.2.5 R An AIFM must, for each AIF
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Page 11 of 91 Appendix 1 (4) the id
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[Note: article 15(1) of AIFMD] this
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(1) a full scope UK AIFM of: (a) a
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Page 17 of 91 Appendix 1 (b) the re
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experienced; Page 19 of 91 Appendix
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Page 21 of 91 Appendix 1 by the fac
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Page 23 of 91 Appendix 1 3.11.5 G T
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(Own funds requirement). [Note: art
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supplements the meaning of financia
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instruments remain in its custody;
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supplementing this section] 4. Comm
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Annex B Amendments to the Glossary
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collective portfolio management fir
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Page 37 of 91 Appendix 1 non-listed
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BIPRU 730k firm Page 39 of 91 Appen
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… Page 41 of 91 Appendix 1 (e) (i
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esources only at excessive cost. Pa
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Single Market Directive … Page 45
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[Note: paragraph 1(r) of Annex II o
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Types of investment firm: BIPRU 50K
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The following text is new and is no
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TABLE 7.4 PART I A firm must calcul
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Note consistently in respect of any
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initial capital (see item 5) if the
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Form of qualifying subordinated loa
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Annex H Amendments to the Supervisi
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Descriptio n of data item Annual re
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… Data item SUP 16.12.12R, unless
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indicated otherwise. Data item Firm
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client assets … Page 87 of 91 App
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… Data item SUP 16.12.23R, unless
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FSA066 and FSA06 are added - see fo
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Liquid assets test 32 Liquid assets
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Professional negligence capital req
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is not listed, select ‘Other’.
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FSA067 Capital adequacy - supplemen
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PII capital requirement 5A This is
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External validations Validation Dat
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