Investment Funds Update – Europe: Key legal and regulatory updates for the funds industry from the primary European asset management centres and fund domiciles: UK

AIFMD – FCA Publishes Information to Assist Alternative Investment Fund Managers with Annex IV Reporting

New FCA Q&As on GABRIEL for Annex IV reporting: On 20 January 2015, the FCA published a new Q&As document to provide additional technical help to firms using GABRIEL to submit AIFMD Annex IV reports. See here.

GABRIEL access difficulties: Reporting via the FCA’s online regulatory reporting system GABRIEL (Gathering Better Regulatory Information ELectronically) is required both for (i) FCA-authorised AIFMs and (ii) non-EEA AIFMs with AIFs qualified for marketing under AIFMD Article 42 or as sub-threshold AIFMs under Article 3(3). FCA-authorised AIFMs should already have access to GABRIEL for the submission of other FCA reporting, but non-EEA AIFMs will need to register for access. A number of non-EEA AIFMs are experiencing delays in receiving access codes from the FCA. Also, the GABRIEL system has been suffering from technical problems preventing those UK AIFMs and Non-EEA AIFMs that do have access codes from making timely filings. On 29 January 2015, the FCA posted the following statement on its website:

29 January 2015 – Important message regarding AIFMD Annex IV transparency reporting and GABRIEL

We are aware that some AIFMs have not yet received the information they need to be able to submit transparency reports using GABRIEL. We confirm that where an AIFM did not receive a Product Reference Number (PRN) for the AIF it manages before 1 January 2015 we will not take any enforcement action against that firm for a failure to report for that AIF by the due date for its most recent reporting period. However, this is provided that the AIFM submits its report to us for that AIF as soon as possible after receiving its PRN for that AIF, and in any event within a month of that date (plus an additional 15 days for an AIF that is a fund of funds).

We are also experiencing ongoing systems issues with GABRIEL, which we are working to resolve. As a result we are aware that firms may not be able to access GABRIEL, or to complete their sessions once within the system, at this time. Similarly, we will not take any enforcement action against firms affected by these issues for a failure to report for that AIF by the due date for its most recent reporting period. However, this is provided that the AIFM submits its reports to us for that AIF as soon as possible after the issues with the system have been resolved.”

MiFID – FCA Confirms Copy Trading in the Retail Market Can Amount to Portfolio Management

The FCA supports ESMA’s view that copy trading or ‘mirror trading’, which allows clients to choose to mimic the trades of other users of a contract for difference (CFD) platform, can amount to the MiFID service of portfolio management. See the statement published on the FCA’s website on 12 January 2015.

MiFID II – FCA Outlines Timetable for HM Treasury and FCA Consultations on MiFID II Implementation Measures

MiFID II is scheduled to come into effect on 3 January 2017. On 22 December 2014, the FCA updated its website, from which the following can be gleaned:

  • HM Treasury consultation: HM Treasury expects to consult on the legislative changes required to implement MiFID II in the first quarter of 2015. The topics covered will include changes to the boundaries of UK regulation through amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, an authorisation regime for data reporting service providers, changes to the FCA’s supervisory powers (including for position limits), implementing the third country branching provisions in MiFID and changes to the requirements to be met by recognised investment exchanges.
  • FCA consultations:

    • Towards the end of the first quarter of 2015, the FCA expects to issue a discussion paper seeking views on various issues relating to conduct of business. This will include asking firms how the FCA should approach dealing with the fact that the conduct of business rules for investment business currently cover insurance-based investment business as well as business relating to MiFID financial instruments.
    • Towards the end of 2015, the FCA plans to issue its formal consultation on the necessary FCA Handbook changes to implement MiFID II.
    • Also during 2015, the FCA intends to provide more detail on various practical issues involved in implementing MiFID II, including on transaction reporting, commodities position reporting and provision of information to ESMA for various purposes, with a view to assisting firms to better understand MiFID II and the various prescribed notifications, authorisations and variations of permission that will be required.