UK: Financial Services UK And International Update

Last Updated: 1 December 2009

FSA and SEC discuss approaches to global regulatory requirements

The Financial Services Authority (FSA) and the Securities and Exchange Commission (SEC) have issued a joint press release in which they set out their plans to explore common approaches to reporting and other regulatory requirements for key market participants such as hedge funds and their advisers. In particular, the regulators have agreed to identify a common set of data to collect from hedge fund advisers and managers to help them identify risks to their regulatory objectives and mandates.

Hector Sants, Chief Executive of the FSA, said, "The global crisis has underlined how intertwined financial markets and institutions are and regulators around the world have to work together to ensure appropriate oversight. We are all working alongside the Financial Stability Board and other international regulatory committees to drive forward global financial reforms. The strategic dialogue with the SEC is a valuable component of the discussions around these reforms, particularly in areas of joint interest and in identifying potential regulatory gaps".

G20 publishes statement and report following Pittsburgh summit

The G20 has published a leaders' statement (Statement) and progress report on the actions to promote financial regulatory reform following the G20 summit held in Pittsburgh on 24 and 25 September 2009.

The Statement sets out the progress which has been made on the strengthening of the international financial regulatory system, especially in the areas of strengthening prudential oversight, improving risk management, strengthening transparency, promoting market integrity, establishing supervisory colleges and reinforcing international cooperation. The scope of regulation in relation to OTC derivatives, securitisation markets, credit rating agencies and hedge funds has been enhanced and expanded.

However, the Statement states that more needs to be done to protect consumers, depositors and investors, promote high quality standards and ensure the world does not face another crisis. The G20 leaders have called for agreement to be reached in the following areas:

  • building high quality capital and mitigating pro-cyclicality;
  • reforming compensation practices to support financial stability;
  • improving OTC derivatives markets; and
  • addressing cross-border resolutions and systemically important financial institutions by end 2010.

The next summit will be held in Canada in June 2010, with a summit in Korea in November 2010.

European Commission publishes proposal for a Directive to amend the Prospectus Directive

The European Commission has published a proposal for a Directive to amend the Prospectus Directive. This follows a consultation in January which examined proposals to improve and simplify the application of the Prospectus Directive. The Prospectus Directive sets out the rules which govern the prospectus which has to be made available to the public where there is a public offer or an admission to trading of transferable securities in a regulated market in the EU.

The main proposals are in the following areas:

  • the definition of "qualified investor" will be aligned to the MiFID "professional clients" definition;
  • certain types of securities issues will have simplified disclosures requirements (small companies, small lenders, rights issues and government guarantee schemes);
  • issuers of all non-equity securities will be able to determine their home Member State;
  • the prospectus summary's format and content have been revised;
  • duplicate disclosure requirements with the Transparency Directive will be repealed; and
  • exemptions in relation to retail cascades and employee share schemes.

CESR responds to the European Commission's consultation on the UCITS depositary function

The Committee of European Securities Regulators (CESR) has provided a response to the European Commission's consultation on the UCITS depositary function. The impact of Madoff showed that some Member States had implemented and interpreted the UCITS Directive's provisions relating to the depositary's status, role and liability as the minimum provided for by the Directive whilst other Member States added supplementary obligations resulting in inconsistencies in EU investor protection.

CESR sees UCITS depositaries as a core element of European investment fund regulation and supports the European Commission's view that legal certainty, greater clarity and harmonisation are required in this area. CESR examines a number of areas including:

  • the definition of safe keeping—currently there is no definition—CESR suggests that it should include two principles: overall control of all assets and the segregation of the assets from the depositary's own assets so they can be identified as belonging to the UCITS in the event of depositary default; and
  • clarification of the conditions of delegation to a sub-custodian—including that the sub-custodian:
  • is subject to supervision by a public authority in its own jurisdiction;
  • is audited by independent auditors on a regulator basis to ensure the presence of the assets;
  • segregates the assets it keeps from its own assets and is prohibited from re-hypothecating on its own initiative and/or without the consent of the UCITS;
  • has adequate and proportionate organisational structure and expertise; and
  • keeps adequate records of custody delegation.

CESR also has concerns about any proposed extension of the draft depositary provisions of the Alternative Investment Fund Managers (AIFM) Directive to encompass UCITS funds.

IOSCO publishes regulatory standards for funds of hedge funds

The Technical Committee of the International Organisation of Securities Commissions (IOSCO) has published its final report on "Elements of International Regulatory Standards on Funds of Hedge Funds Related Issues Based on Best Market Practices". IOSCO has identified two additional investor protection regulatory issues in addition to those it published in June 2008. These issues are:

  • the methods by which funds of hedge funds' managers deal with liquidity risk; and
  • the nature and conditions of the due diligence process used by funds of hedge funds' managers prior to and during investment.

FSA and HMT response to EU Consultation Document on OTC derivatives market

The Financial Services Authority and HM Treasury (HMT), (together, the UK Authorities) have published a joint response to the EU Consultation: Possible initiatives to enhance the resilience of OTC derivatives markets. The UK Authorities believe that the principle objectives of regulatory reform should be designed to reduce systemic risk and to improve overall transparency. In order to achieve these objectives, the UK Authorities believe that the following issues need to be addressed:

  • further standardisation of contract and economic terms;
  • greater use of central counterparty (CCP) clearing for "clearing-eligible" products;
  • strengthened risk management for non-CCP cleared products; and
  • increased transparency to the market and to regulators.

The UK Authorities believe that the key tools to enable regulators to achieve the objectives are:

  • the application of capital charges that are proportionate to the risks assumed;
  • market-led initiatives which are closely overseen and monitored by regulators; and
  • further legislative/regulatory action.

European Commission publishes draft legislative proposals to strengthen EU financial supervision

The European Commission has published a number of draft legislative proposals designed to significantly strengthen the supervision of the financial sector in Europe. The proposals address the weaknesses highlighted by the financial crisis in the EU's supervisory framework at both the macro and micro prudential levels by creating a European Systemic Risk Board to monitor and assess the risks to the stability of the financial system as a whole and a European System of Financial Supervisors for the supervision of individual financial institutions.

The draft legislative proposals are:

  • a Regulation on Community macro prudential oversight of the financial system and establishing a European Systemic Risk Board;
  • a Council Decision entrusting the European Central Bank with specific tasks concerning the functioning of the European Systemic Risk Board;
  • a Regulation establishing a European Banking Authority;
  • a Regulation establishing a European Insurance and Occupational Pensions Authority; and
  • a Regulation establishing a European Securities and Markets Authority.

Charlie McCreevy, European Commissioner for Internal Market and Services, said, "This package represents rapid and robust action by the Commission to remedy shortcomings in European financial supervision and will help prevent future financial crises".

Open Europe publishes survey results on AIFM Directive

Open Europe, an independent think tank, has published the results of two surveys in a paper entitled "The EU's AIFM Directive: Likely impact and best way forward". One of the surveys was aimed at members of the Alternative Investment Management Association (AIMA) and the other at members of the British Private Equity and Venture Capital Association. The report sets out both problems with the draft Directive and recommendations for improving it.

AIMA publishes position paper on AIFM Directive

The Alternative Investment Management Association, (AIMA) has published its position paper on the AIFM Directive. AIMA's key points to note are:

  • AIMA supports the authorisation of all AIFMs without any threshold;
  • AIMA supports enhancing the safety of European markets by the provision to national regulators of the data necessary to monitor financial stability within their capital markets;
  • AIMA calls for an increased limit of €1 billion for disclosure of systemically relevant data; and
  • AIMA concludes that, without significant revision, the Directive will lead to less choice and greater costs for investors within the EU—without achieving the stated objectives of the Directive.

MFA publishes white paper on AIFM Directive

The Managed Funds Association (MFA) has published a white paper on the AIFM Directive. The paper discusses the terms of the proposal and areas in which the MFA believes that the AIFM Directive will provide serious issues to the ability of AIFM to provide vital services to investors. MFA also believes that the AIFM Directive has the potential to limit the available choices and potential benefits to EU investors who seek to invest in alternative investment funds.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.