UK AIFM authorisation deadline
On 11 October 2013, the FCA restated its view that existing managers relying upon the one year transitional provisions must be authorised by the FCA to "manage an AIF" by 22 July 2014. Whilst this reading clearly amounts to gold-plating, managers would be foolish to ignore it. As the FCA can take up to six months to process an application if it deems it to be incomplete when submitted – managers who are required to be authorised rather than just registered would be advised to submit their application to the FCA by 22 January 2014 at the latest rather than waiting until 22 April 2014 or later. Managers who are unable to meet this deadline should contact the FCA as soon as possible to minimise the risk of disruption to their business, including marketing efforts. The same deadlines apply to small AIFMs applying for registration, although the risk of their application being deemed incomplete is low so a 22 April 2014 application is less likely to be a problem.
The FCA will accept marketing passport notifications forms during the one year transitional period but it is important that firms complete the notification as if the notification is a standalone document rather than cross referring to their authorisation or variation of permission application (VOP). Firms relying on the one year transitional period will not be able to take the benefit of the marketing passport until their AIFM authorisation or VOP application has been determined by the FCA.
Notify now to avoid CRD IV reporting requirements
Broadly the requirements in Capital Requirements Directive IV, including the controversial bonus cap rules and onerous reporting requirements are intended to apply to banks, large principal dealers, MTF operators, investment firms that carry out placing and underwriting and firms that hold client assets and/or money. However, investment firms with permission to 'arrange deals in investments' or 'deal as agent in investments' will be viewed by the FCA as having permission to 'place financial instruments on a non-firm commitment basis' unless this is expressly excluded from their permissions. Such firms will fall within the scope of CRD IV. On Tuesday 15 October 2013 the FCA sent an email to investment firms advising them to consider submitting a short form variation of permission to the FCA by 20 November 2013 if they do not intend to "place investments on a non-firm commitment basis" post 1 January 2014. It is important that relevant investment firms respond to this request to ensure that the requirements in CRD IV are not unnecessarily applied to their business.
Are you ready for EMIR report?
EU counterparties (i.e. any firm that is established in the EU and enters into MiFID derivative contracts) have less than four months to put arrangements in place to enable them to report details of concluded, modified or terminated derivative contracts to a registered trade repository. Counterparties will need to ensure that they have been issued with a pre-legal entity identifier code, which can be obtained from a pre-local operating unit (e.g. the London Stock Exchange which has the authority to allocate pre-legal entity identifier codes to legal entities using the agreed principles outlined by the LEI Regulatory Oversight Committee) and have arrangements in place to generate a unique trade identifier code for each derivative transaction.
Whilst no trade repository has been registered as yet, reporting of the 85 field items is expected to commence on 12 February 2014 for both OTC and exchange traded derivatives (provided that a trade repository is approved by ESMA by 7 November 2013).
From 12 February 2014 EU counterparties will have the unenviable task of reporting all outstanding derivative contracts entered into on or after 16 August 2012.
EU counterparties will have 3 years to report derivative contracts that were entered into on or after 16 August 2012 but are not outstanding on the reporting start date. This requirement will also apply to contracts entered into before 16 August 2012 that were outstanding on 16 August 2012.