The FCA's Consultation Paper 16/14 consults on minor changes
to SYSC and consequential amendments to COLL and FUND to reflect
certain measures in the Securities Financing Transaction Regulation
SFTR is directly applicable to firms. Please see our existing
briefing paper on SFTR for further details. For ease of reference,
the proposed amendments to be introduced by the Investment Funds
(Securities Financing Transactions) Instrument 2016 are set out in
Annex to this briefing paper.
CP 16/14 simply picks up on particular issues which necessitate
changes to the FCA's Handbook regarding SFTR provisions. The
intention is to copy out in COLL the SFTR provisions requiring
managers of UCITS and AIFs to disclose details of their use of SFTs
and Total Return Swaps in the Fund's pre‑contractual
documents and periodical reports to investors. This might affect
UCITS, NURS and QIS schemes. The new disclosure requirements apply
to managers of UCITS and AIFs. Note:
as NURS and QIS managers must issue a prospectus (see COLL 4.2
or COLL 8.3 respectively), the FCA's proposed Guidance
clarifies that managers should disclose SFTR information in the
Prospectus instead of disclosing it in other pre contractual
if firms are not using, or are not authorised to use, SFTs or
total return swaps, they are not required to make any disclosures
under Articles 13 or 14 of SFTR;
the periodic report requirements in Article 13 will apply from
13 January 2017 and the provisions relating to these in the
FCA's proposals will not come into force until that date;
for the pre contractual disclosure requirements in Article 14,
there is a transitional provision running to 13 July 2017 for funds
constituted before 12 January 2016.
The FCA are maintaining their view that sub funds constituted
after 12 January 2016, even for pre-existing umbrella structures,
do not benefit from this transitional measure. This is a different
position from that taken by other European regulators. The FCA may
review any European Commission clarification on this issue in due
course but the CP 16/14 proposals indicate no change of approach
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.
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