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Regulatory Parallel Play

Theresa Hamacher, CFA

President

NICSA

Globalisation of Investment Funds Conference

June 9, 2014

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Regulators are Prepared for Simple or Complex . . . But Not In Between

Mutual funds Hybrid Hedge funds

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Reconsidering the Rules in the U.S. . .

SEC Concept release on mutual fund use of derivatives

SEC Moratorium on new ETFs using derivatives and leverage (lifted)

CFTC Expanded commodity pool operator registration

IRS Suspends private letter rulings on indirect commodity exposure

FINRA Sanctions for improper leveraged and inverse ETF sales; continued focus on suitability for complex products

SEC Sweep exam of retail alternatives funds

4

New Rules in Europe. . .

UCITS

Non-complex

Alternative UCITS

Complex?

. . . And UCITS VI looms

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The Investment Industry Provides Products. . .

Mutual funds

ICI

Managed accounts

MMI

Annuities

IRI

Investment advisers

IAA

Life insurance

ACLI

Hedge funds

MFA

Collective trusts

Coalition for CTs

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. . . While Financial Advisers Provide Solutions

FundsWrap accountBrokerage account

Unified management account

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Rethinking Investment Product Sales

SEC Considering a fiduciary standard for brokers

DOL Revising fiduciary rule applying to retirement plans

SECConsidering negotiated

commissions for funds as part of review of Rule 12b-1

GAORecommends that SEC review financial planner titles and designations

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Europe Grapples with Similar Issues

RDR

Retail Distribution Review

UK

Entirely fee-based compensation;

minimum qualifications for

advisers

MiFID II

Markets in Financial

Instruments Directives

EU

Ban on “inducements” for

independent advisers

PRIPS

Packaged Retail Investment Products

EU

Establish uniform rules for all products

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Europe Grapples with Similar Issues

RDR

Retail Distribution Review

UK

Entirely fee-based compensation;

minimum qualifications for

advisers

MiFID II

Markets in Financial

Instruments Directives

EU

Ban on “inducements” for

independent advisers

PRIPS

Packaged Retail Investment Products

EU

Establish uniform rules for all products

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Australia has New Rules, Too

Future of Financial Advice

Ban on commissions

Fiduciary standard

Fee disclosure

Client opt-in

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Other High-Priority Regulatory Issues

Systemic Risk

• Money market funds: U.S. and Europe• SIFI designation: FSOC and FSB

FATCA

• Rebound back to the U.S.?

Market Structure

• What to do with HFTs?

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