UCITS V Regulatory memo - BNP Paribas Securities Services

Ucits V
All you need to know in a nutshell
What is it?
¡Ucits V will amend the Ucits IV Directive
(Undertakings for Collective Investments
in Transferable Securities ) with regard to
rules on:
¡ Ucits depositary functions and responsibilities
Key dates
¡ July 2012: The Commission published the Ucits V text proposal
¡ September 2014: Publication of the Ucits V level 1 text
¡ N
ovember 2014: ESMA published its advice on assets’ insolvency protection
and independence requirements between depositaries and asset managers
¡ Manager remuneration policy
¡ A
pril 2015: EU Commission level 2 text will be subjected to the EU
Parliament and Council
¡ Administrative sanctions
¡ July 2015: Level 2 text adopted
¡Objectives:
¡ 18 March 2016: Ucits V Directive implementation date
¡ Harmonise and increase Ucits depositaries’
duties and liabilities and align them with
those of non-Ucits depositaries regulated
by AIFMD
¡ Restrict the eligibility of Ucits
depositaries to credit institutions and
investment firms which are subject to
prudential regulation
¡ Regulate asset managers’ remuneration
policies in order to avoid excessive risk taking
¡ Ensure the uniform application of sanctions
for breach of Ucits obligations
Scope
¡Ucits depositaries
¡Asset managers managing Ucits funds
Clients impacted and how?
¡
A strict remuneration policy is required for persons whose professional
activities have a material impact on the risk profiles of a Ucits fund,
including delegates for investment management
¡
The list of cases where Member States must impose sanctions is harmonised
BNP Paribas Securities Services’ opinion
¡We support the harmonisation and clarification
of depository functions/liabilities and alignment
with the AIFMD
¡Ucits asset managers will need to appoint a
strong and high quality depositary as:
¡ The depositary has the obligation to
restitute the assets held in case of loss
by its sub‑custodians
¡ Ucits V provisions on sanctions reinforces
the importance of the oversight function
performed by the depositary
150223U_UCITSV_RM_EN
¡Our custody network and our global/local
model allow us to support all types of asset
managers’ strategies as well as address
cross‑border distribution of funds
¡Given our large presence in Europe, and also
in non-European hubs, we can accompany our
clients’ strategies
For additional information, please contact your
local relationship manager or email:
securitiesservices@bnpparibas.com
¡
Depositary eligibility criteria have been restricted to credit institutions,
Central Banks and entities authorised under the laws of Member States
on depositary activities, provided that they are subject to both specific
prudential and organisational requirements (in particular the obligation to
have the infrastructure necessary to carry out custody of financial instruments)
¡
E xisting Ucits at the time of the implementation will have two years
to appoint a depositary which meets the eligibility criteria. However,
depositaries’ new duties and stricter liabilities will apply from the
implementation date
¡
New Ucits funds will have to appoint a depositary compliant with all
new requirements (eligibility criteria, duties and liabilities) from the
implementation date
¡
Depositaries will not be allowed to appoint sub-custodians subject to
insolvency laws which do not recognise the effects of segregation. As a
result, contractual arrangements with depositaries and asset managers
need to be reviewed. In addition, depositaries fees could increase and
investment in some countries could be restricted
¡
Further to the ESMA’s advice , the level 2 text is likely to strengthen
independence requirements between depositaries and asset managers:
common management should be prohibited and asset managers should put
in place a decising-making process for choosing the depositary in the sole
interests of the Ucits. In case of cross-shareholdings, conflict of interests
shall be managed and disclosed to investors and a number of independent
members should be appointed to the management bodies of both the
depositaries and the asset manager
The information contained within this document (‘information’) is believed to be reliable but BNP Paribas Securities Services does not warrant its completeness or accuracy. Opinions and estimates contained herein constitute BNP Paribas Securities Services’ judgment and are subject to change without
notice. BNP Paribas Securities Services and its subsidiaries shall not be liable for any errors, omissions or opinions contained within this document. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. BNP Paribas Securities Services is incorporated in
France as a Partnership Limited by Shares and is authorised and supervised by the ACPR (Autorité de Contrôle Prudentiel et de Résolution) and the AMF (Autorité des Marchés Financiers).