17 02 22 - veneziano and partners - ucits passport
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Transcript of 17 02 22 - veneziano and partners - ucits passport
Overview - European Fund Distribution
• Recent Numbers of Fund Management Industry in Europe
• Fund Distribution Acronyms in Europe
• UCITS
• UCITS Passport• Notification Process
• Notification Application
• UCITS Share Classes• UCITS KIIDs
Recent Numbers of Fund Management Industry in Europe
• European Fund and Asset Management Association released in January net sales information for UCITS and non-UCITS as at October 2016
• Total net assets of European UCITS funds• Total net assets of 8,428 billions
• Net inflows of 47 billions
Fund Distribution Acronyms in Europe
The landscape of Fund Distribution in Europe is characterised by various acronyms for the applicable European directives on financial services
• UCITS• The Undertakings for Collective Investment in Transferable Securities Directive represents
the main framework for collective investment schemes offered to retail investors.
• AIFMD• The Alternative Investment Fund Managers Directive. Recently introduced framework to
regulate managers of alternative investment schemes offered to professional investors.
• MIFID• The Market in Financial Instruments Directive governs the provision of investment services in
financial instruments by banks and investment firms.
• PRIIPs• The Packaged Retail and Insurance Investment Product regulation introduces a key investor
information document for collective investment schemes and also other packaged investments.
UCITS
• UCITS was introduced in 1985 with the following aims:• Create a single regulatory regime across Europe for collective investment schemes
• Facilitate cross-border fund offering to retail investors
• UCITS is a product directive and governs collective investment schemes, imposing rules in the following areas• Organisation, management and oversight
• Diversification, liquidity and use of leverage
• Cross-border and domestic mergers
• Master-feeder structures
UCITS Passport
• UCITS Directive is a milestone of the free movement of capital within the single market
• Before UCITS existed, managers needed to set-up funds in specific jurisdictions to access local clientele
• The introduction of the UCITS passport allowed for marketing of funds throughout Europe on the basis of authorisation in one domicile
• The undeniable success of the UCITS passport is applied also to similar frameworks in financial services regulation (AIFMD, MIFID etc.)
Notification Process
• At inception the passport notification process was paper based procedure directly with host state regulator
• A regulatory delay of 2 month was required to approve a passport application
• UCITS IV introduced electronic passport procedure
• Passport now is email based process between the Home State competentauthority of the fund and the Host State competent authority
• Within 10 business days from submission of a complete application, the fund isnotified by its Home State competent authority and marketing can commence
• Capital Market Union might make the passport even more streamlined
Notification Process
Version introduced with UCITS IV
Passport application
UCITS Fund
Home State Competent Authority
Host State
Host State
Host State
Notification Application
• Member states regulatory authorities need to publish local information
• Notification letter• Part B and marketing arrangements
• Appointment of third parties (local agents or distributors)
• Notification package• Fund documents and KIIDs
• Translation issues
• Price publication
• Electronic Transmission
• Maintenance of notification• Changes in marketing arrangements
• Documents/KIIDs Updates
• Notices to investors
UCITS Share Classes
UCITS Umbrella Fund
Sub-Fund/Compartment
Sub-Fund/Compartment
Sub-Fund/Compartment
Share Class
Share Class
Share Class
Share Class
Share Class
Share Class
UCITS Share Classes
• ESMA Opinion on UCITS Share Classes
• UCITS Directive defines compartment but has little to no reference to share classes (only in relation to marketing)
• Reasons to set-up share classes• Technical share classes
• Overlay share classes
• ESMA Common Principles on Share Classes• Common investment objective
• Non-contagion
• Pre-determination
• Transparency
UCITS KIIDs
• Introduced with UCITS IV directive in 2011 with grandfathering until 2012 to replace Simplified Prospectus
• Aims of the KIID• Comparability
• Main Requirements• Prepared at share class level but representative share class also allowed
• Two pages or three for structured UCITS (article 36 of Regulation 583/2010)
• Updating• In case of material changes
• At least annually to reflect up to date past performance information within 35 business days from calendar year end
UCITS KIIDs
• Objective and investment policy
• Risk and reward profile• Narrative section describing key risks
• Synthetic risk and reward indicator (SRRI)
• Scale 1 to 7 according to increased level of volatility/risk-reward
• Calculated on historical volatility based on annualised volatility intervals
• Cost and Charges• Costs payable by investor
• Cost borne by the fund
• Ongoing charge
• Performance fee
UCITS KIIDs
• Past Performance• Presented in a bar chart for the last 10 years
• Indicate fees included or excluded from calculation
• Limited value as guide to future performance
• Practical Information• Depositary Bank
• How to obtain fund documents and prices
• Information on master structures
How can we help
• Introduction and selection of service providers
• Project management
• Passport/Private placement marketing authorisations
• KIIDs production
Veneziano & Partners Limited is registered in England and Wales with number 8416146. The fact that you receive this information does not create nor impose any relationship with Veneziano & Partners Limited. The contents of this document are for
information purpose only and represent a summary of subject matters of interest. While we endeavour to keep the information up to date and correct, we make no representations or warranties, expressed or implied, about the completeness,
accuracy and suitability thereof for any purpose. Any reliance you place on such information is therefore strictly at your own risk. The contents of this document should not be relied upon, treated as or substitute legal advice. Veneziano & Partners
Limited is not a law firm, nor provides legal advice to the public. It is not authorised nor regulated by the Solicitors Regulation Authority in England and Wales. Veneziano & Partners disclaims any and all liability for any loss or damage, including, without
limitation, indirect or consequential loss or damage, or any loss or damage whatsoever from loss of data or profits arising out of, or in connection with, the use of this document.
Veneziano & Partners Limited
25 Sackville StreetW1S 3AX London+44 20 7264 4827