UK open-ended funds review: BoE and FCA conclusions
On 13 July 2021, the Bank of England (BoE) and the Financial Conduct Authority (FCA) set out the conclusions of their joint review into UK open-ended funds in a section on the BoE webpage on its market-based finance resilience report and a section of the July 2021 Financial Stability Report (FSR).
The BoE and the FCA have used the survey's results to develop possible frameworks (detailed further in the report) for:
- a consistent and realistic classification of the liquidity of funds' assets; and
- enhancing the calculation and use of swing pricing.
In the FSR, the BoE confirms that its Financial Policy Committee (FPC) has fully endorsed these conclusions. It recognises that further technical work is needed to consider how the principles could be applied and a number of operational changes would need to be addressed before any final policy could be designed and implemented.
The regulators note that it is important to address liquidity mismatches in open-ended funds internationally, given the global nature of asset management and of key markets. The effectiveness of any domestic policy measures will depend in part on policies implemented in other jurisdictions. Therefore, the BoE and FCA continue to support work led by the Financial Stability Board and IOSCO.
PRIIPs Regulation: European Commission consults on extending temporary exemption for UCITS from requirement to provide KIDs
The European Commission is consulting on a draft Regulation amending the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation regards the extension of the transitional arrangement for management companies, investment companies and persons advising on, or selling, units of undertakings for collective investment in transferable securities (UCITS) and non-UCITS.
Article 32 of the PRIIPs Regulation provides for a temporary exemption from the requirement to provide retail investors with a key information document (KID) for management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS. The exemption expires on 31 December 2021. In order to give the time needed to implement the amendments to Delegated Regulation (EU) 2017/6535 (the RTS on the presentation and content, etc of the KID) and to reduce legal uncertainty, the Commission proposes this draft Regulation to extend the transitional arrangement to 30 June 2022. This would coincide with the date of application of the Delegated Regulation to amend Delegated Regulation (EU) 2017/6535, which is set for 1 July 2022.
The consultation on the draft Regulation closes for comments on 9 September 2021.
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Authored by Yvonne Clapham