The consultation process in relation to the regulatory treatment of managed accounts has continued, with the JFSC issuing feedback papers in August and October 2013.

The aim of the consultation was to simplify the regime by creating a new category of fund services business (that of managing a managed account) and exempting such managers from the requirement to be regulated for investment business. The JFSC has responded to industry concern regarding the minimum account size of US$5 million for managed accounts and agreed to reduce this to US$1 million, being consistent with the minimum subscription amount for investors in eligible investor unregulated funds. In addition, the JFSC has agreed to extend the definition of the “owner” of the managed accounts to include individuals, family offices and institutional investors. Although this progress is good news for potential managers, a number of areas of uncertainty remain, including:

• The extent to which a manager of a managed account would need to be a standalone entity, with reliance on MoME arrangements only being permitted for 24 months (increased from the 12 months contemplated in the original consultation paper); and
• The requirement for a manager of a managed account to comply in full with FSB Codes (rather than just the principles).