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Comsure operates in:the UK, Jersey, Guernsey

UCITS V Level 2 Regulation and STFR

FCA consults on UCITS V Level 2 Regulation and STFR – The FCA has published a consultation paper (CP 16/14) setting out its proposals to amend rules and guidance in the Client Assets sourcebook (CASS) and the Collective Investment Schemes sourcebook (COLL), following the adoption of the Undertakings for Collective Investment in Transferable Securities V (UCITS V) Level 2 Regulation.

The UCITS V Level 2 Regulation introduces the following requirements:

  1. minimum terms in the contract between the management company and the depositary;
  2. detailed oversight, cash monitoring and safekeeping requirements for the depositary;
  3. types of assets that the depositary must hold in custody and segregate from the depositary’s own assets;
  4. conditions for the depositary’s liability for any loss of assets;
  5. insolvency protection for assets when delegating safekeeping; and
  6. requirements for independence between the management company and the depositary.

In addition the FCA is proposing changes to CASS, as follows:

  1. depositaries must have adequate organisation arrangements to minimise the risk of loss of assets as a result of fraud, poor administration, inadequate registering or negligence;
  2. firms must maintain records and segregated accounts in a way that ensures accuracy; and
  3. strict requirements on depositaries when conducting reconciliations of records.

In addition the FCA is consulting on minor changes to

  1. the Senior Management Arrangements, Systems and Controls sourcebook and
  2. consequential amendments in COLL and the Investment Funds sourcebook to reflect certain measures in the Securities Financing Transactions Regulation (SFTR). The SFTR introduces a number of measures including new requirements on the transparency of SFTs, total return swaps and re-use of financial instruments received under a collateral arrangement. The SFTR sets out new disclosure requirements for managers of UCITS and alternative investment funds (AIFs).

The deadline for comments is 19 July 2016.

A copy of the consultation paper is available HERE


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