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: [email protected] ¡ 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).
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