Readers of this blog will no doubt be aware that regulators and legislators worldwide are working manically to update their financial services legislation to conform to political agendas (rightly or wrongly) arising from the credit crisis. I thought that it may be useful to give you a reminder of a couple of the forthcoming changes that we’ll all need to get used to.
- US CFTC Exemptions – US and non-US managers and funds that operate on US futures markets generally should be registered with or apply for an exemption from registration with the CFTC. Those of us working for non-US clients and funds typically rely on a number of exemptions and are accustomed to making a couple of exemption notice filings and leaving it at that. Going forward, the old exemptions are rescinded and will be replaced with annual exemption filings together with the requirement to make risk disclosures regarding swap transactions.
- US Investment Adviser Registration – No doubt you have all read reams on this topic already. However, we do need to keep in mind that the exemptive goalposts have moved. The old 15 client exemption falls away and, while the SEC has written a letter (click here for PDF copy) to the NASAA indicating that it will consider extending the transition time for Federal registration until Q1 2012, it is worth noting that the Staff do not have the power to take this step because the drop dead date was set in stone by Congress in Dodd-Frank itself. We will need to wait for final rulemaking by the Commission due on 21 July 2011.
- UK Bribery Act – Please do read Oliver’s blog from 19 April. Investment management businesses must have measures in place to comply with their Bribery Act obligations generally and need to be particularly careful when entering into capital introduction and rebating arrangements. US-based businesses that have a link to the UK will need to ensure that their policies are updated as the Bribery Act does not contain a safe harbour for the aptly named “grease payments” which are permissible under the US’s FCPA.
- Acronyms Galore – Taking a Eurocentric view, it is out with the FSA and in with the PRA, CPMA and FPC in the UK and out with CESR and in with ESMA at the EU level. Interestingly, the site “cpma.org.uk” is for sale!
- UCITS and the Key Investor Information Document or “KIID” – Managers of UCITS funds will be acutely aware that from July 2011 the simplified prospectus regime will be replaced with the 2 page Key Investor Information Document which must contain a synthetic risk/reward indicator or “SRRI”. It will be interesting to see if it will be possible for managers across the EU to keep within the 2 page limit for the KIID. Do please let us know your views on the KIID requirements whether from a manager’s or buy-side perspective.