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August 19, 2014

UK Financial Services Authority (FSA) Publishes Second EU Alternative Investment Fund Managers Directive (AIFMD) Consultation Paper

On March 19, the UK Financial Services Authority (FSA) published Consultation Paper CP13/9, its second consultation on the rules and guidance required for the UK transposition of the EU Alternative Investment Fund Managers Directive (AIFMD).

CP13/9 covers many of the issues that the FSA was unable to address in its first AIFMD consultation paper (CP12/32 issued in November 2012, as reported in Corporate and Financial Weekly Digest of November 16, 2012). A further consultation paper will be issued by the FSA’s successor regulator, the Financial Conduct Authority (FCA), after April 1. This further consultation will cover marketing and management passports for non-EU funds and managers as well as changes required to bring the FCA Handbook into line with rules previously consulted on in CP12/32 and CP13/9.

The FSA proposes to permit UK firms marketing alternative investment funds (AIFs) in the United Kingdom to make full use of the AIFMD’s twelve-month transitional period ending on July 21, 2014. The FSA acknowledges that certain firms’ business may potentially be impacted if they are not authorized under AIFMD by July 22, 2013, and accordingly that it may need to permit firms to apply for authorization or variation of permissions prior to July 22, 2013 in order for firms to be able use the EU marketing passport beginning July 22, 2013. A further announcement on this will be made by the FCA after April 1.

The matters addressed in CP13/9 include:

  • How the FSA proposes to give guidance about the scope of the AIFMD and the FSA’s regulatory perimeter under AIFMD.
     
  • The FSA’s current views on delegation by AIF managers and on what is meant by “letterbox entity.”
     
  • Proposed modifications to current organizational and conduct of business rules (SYSC and COBS) that will affect full-scope UK AIF managers.
     
  • Further proposals for prudential rules and guidance supplementing those set out in CP12/32.
     
  • Proposals to adapt the rules and guidance in the Client Assets Sourcebook (CASS) to apply to depositaries of AIFs.
     
  • The FSA’s approach to marketing for AIFMD purposes and how AIF managers may exercise single-market passporting rights, as well as its approach to registering funds to be marketed in the United Kingdom by private placement.

The deadline for responses to the consultation is May 10.

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©2014 Katten Muchin Rosenman LLP

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About this Author

Partner

Edward Black, a partner in Katten Muchin Rosenman UK LLP, has a wide range of funds and financial services experience. He has acted for securities, commodities and derivatives brokers and dealers, banks, investment banks and investment managers for over 20 years. This has led to substantial involvement in commercial and transactional work in the financial services field as well as extensive regulatory expertise, and to significant experience with employment law matters.

+44 2 20 7776 7624
Tim Aron, Katten Muchin Law Firm, Finance Attorney
Partner

Tim Aron, a partner in Katten Muchin Rosenman UK LLP, specialises in the regulation of financial services firms, clearing houses and trading platforms. He advises on a wide range of regulatory matters including securities and derivatives transactions, safe-keeping of money and assets, systems and controls and other high level standards, conduct of business rules, and the restructuring, acquisition and disposal of entities in the financial sector.

+44.0.20.7776.7627