January 16, 2019

January 16, 2019

Subscribe to Latest Legal News and Analysis

January 15, 2019

Subscribe to Latest Legal News and Analysis

January 14, 2019

Subscribe to Latest Legal News and Analysis

FCA Publishes Webpage on Review of Closet Trackers

On March 14, the UK Financial Conduct Authority (FCA) published a webpage in relation to its review of potential closet tracker funds and closet constrained funds. The review forms part of the FCA’s supervision to protect investors and maintain a competitive market.

On its webpage, the FCA explains that both types of funds look like and charge similar fees to funds that strive to beat a benchmark (active funds), but are managed in a way that is similar to funds that track a benchmark (passive funds).

The FCA’s priority is for promotional material and investment objectives to be clear, fair and not misleading. Therefore, the FCA expects fund managers to communicate fund investment objectives and policies clearly, including changes to these, even if they are merely clarifying existing disclosures. The FCA also emphasizes the importance of investors having clear information and the best possible understanding of the funds they are looking to invest in or are invested in.

By the end of 2017, the FCA had reviewed 84 funds, consisting of a mix of equity, fixed income and multi-asset funds. In the FCA’s findings following its review, 20 funds were considered as adequately describing how investors’ money was being managed. The FCA is working together with firms on 42 of the remaining funds to ensure that disclosures are made clearer. The webpage notes that, overall, £34m in compensation has been paid to funds and investors, and one firm is currently under enforcement investigation by the FCA.

The FCA’s webpage is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

John Ahern, Financial Attorney, London, Katten Law Firm

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

+44 (0) 20 7770 5253
David A. Brennand, Financial Services Lawyer, Katten Muchin Law Firm

David Brennand is a partner in the Financial Services practice in Katten Muchin Rosenman UK LLP. David provides advice to a wide range of clients active in asset management on a broad spectrum of matters pertinent to their operations, with a particular focus on advising asset managers on the structuring and ongoing operation of hedge and other alternative fund structures investing in a diverse range of asset classes.

As well as advising on fund structuring and their ongoing operation, David's expertise also extends to advising asset managers and other market participants on fund and management restructurings and on negotiating the structures and terms applicable to managed accounts, seed capital arrangements and illiquid portfolio acquisitions and divestments.

Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...