Regulatory Eye - UK & Europe - May 2024
Welcome to Regulatory Eye, IQ-EQ’s regulatory and compliance newsletter, providing updates on the latest international regulatory developments.
In this edition, we discuss ELTIF 2.0, LTAFs, the UK-Switzerland Berne Financial Services Agreement and AIFMD 2.0. You'll also find expert insights into recent FCA updates, including IFPR, guidance on the anti-greenwashing rule and the Overseas Funds Regime.
UK & EUROPE
ELTIF 2.0: a game-changer for the alternative investments industry?
Earlier this year, a new version of the European Long-Term Investment Fund (ELTIF) regulation, known as ‘ELTIF 2.0’, became applicable. The aim of this new framework is to boost the take-up of ELTIFs by making them more attractive to investors. So, what exactly has changed with ELTIF 2.0? And what does the new regulation mean for the industry?
UK
Understanding long-term asset funds (LTAFs)
Private markets have historically shown high risk-adjusted returns over the long term. Seeking to broaden access to these products, the FCA introduced a new authorised fund regime in 2021 for investing in long-term assets. Access was broadened to retail investors in 2023, subject to a number of measures designed to reduce the risk of harm to those investors, making LTAFs an exciting opportunity for a larger segment of the investor base. In this post, we discuss the impact and ramifications of long-term asset funds (LTAFs) as a restricted mass market investment (RMMI).
UK & EUROPE
FCA publishes proposed guidance on new anti-greenwashing rule
The Financial Conduct Authority’s consultation on the new anti-greenwashing rule guidance closed earlier this year. This guidance will apply to all FCA-authorised firms who make sustainability-related claims about their products and services. The guidance acts as an aid to the implementation of the current anti-greenwashing rule, and provides four key principles that any sustainability claim must consider. We discuss the four principles in this article.
EUROPE
AIFMD 2.0: The impact on loan origination
On 7 February 2024, the European Parliament approved the final version of the text amending the Alternative Investment Fund Managers Directive (AIFMD). The new regulation, known as ‘AIFMD 2.0’, came into force on 15 April 2024 and will apply from April 2026. In this article, we highlight the changes in relation to loan origination under AIFMD 2.0. Here’s what investment managers need to know.
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UK
FCA publishes final observations on IFPR implementation
The Financial Conduct Authority has published its final observations on the Investment Firms Prudential Regime (IFPR) implementation following the publication of the initial observations published in Q1 2023. The FCA has clarified its expectations for firms in a number of areas relating to IFPR. Here, we summarise the key clarifications and how firms may be impacted.
UK & EUROPE
An update on the Overseas Funds Regime
On 12 February 2024, the consultation period closed on the FCA's draft rules on Implementing the Overseas Funds Regime (CP23/26). The investment management industry is now waiting for the FCA to publish the final rules which will allow the registration process to start later this year. Many investment fund managers with overseas Undertakings for the Collective Investment in Transferable Securities (UCITS) fund products are eagerly waiting for the new Overseas Funds Regime registration process to begin in the UK. We discuss what firms need to know.
UK & EUROPE
What is so ‘groundbreaking’ about the UK-Switzerland Berne Financial Services Agreement?
Late last year, the UK Government and the Swiss Confederation signed the Berne Financial Services Agreement on specific areas of wholesale financial services. Undoubtedly, the key pillar of the agreement is the mutual recognition that both the UK and Switzerland’s regulatory standards and supervision regimes hope to achieve similar market integrity and investor protection outcomes. In this article, we introduce the key features of the agreement and its impact on in-scope financial services providers.
Across the pond: U.S. regulations to watch
A summary of the 2024 FINRA Annual Regulatory Oversight Report
The Financial Industry Regulatory Authority’s (FINRA) 2024 Annual Regulatory Oversight Report, formerly known as the Report on FINRA’s Examination and Risk Monitoring Program, was released on 9 January 2024. The report covers a broad range of topics intended to convey risks, considerations, findings and resources across the entirety of FINRA’s membership. This summary provides a more concise guide for our broker-dealer clients.
Analyzing the SEC’s first e-comms case against a standalone RIA
On 3 April, the U.S. Securities and Exchange Commission (SEC) announced a settlement with a registered investment adviser for recordkeeping failures relating to so-called “off channel” communications. This is the first case against a standalone adviser (i.e., not also registered as or affiliated with a broker-dealer). Read more
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Chair at IQ-EQ, UK Regulatory & Compliance Solutions
6moThe rapid pace of policymaking by ESMA and the FCA in recent years is showing no sign of slowing in 2024. IQ-EQ Regulatory Eye 👁️ is an invaluable resource for investment firms to navigate the practical implications of new and enhanced regulations. If you would like to discuss any of the topics further please feel free to reach out to our experts.
Covers very timely topics to keep an "Eye" on. Interesting to see similar regulatory developments in parallel in the UK and the EU. Will also be good to to see the pick-up of ELTIF vs LTAF and the further development of ESG regulations including those on anti-greenwashing.