The UK Government confirmed that investment funds regulated under Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (“UCITS Directive”) (recast), are equivalent under the UK overseas funds regime (OFR). On 30 January 2024, the UK Government published the statement (the “Statement”) in respect of EU undertakings for collective investment in transferable securities (the “EU UCITS”) and the OFR, confirming that in order to create a more streamlined process for overseas investment funds to be sold to UK investors and other relevant arguments expressed in the Statement, it has found the EEA states, including the EU member states, equivalent under the OFR.
Other Key points covered in the Statement
The Statement also cover the following matters:
- the Government does not intend to require the funds assessed to comply with any additional UK requirements as part of this equivalence determination at this time;
- the equivalence assessment does not include UCITS which are also money market funds (MMFs);
- to allow for a smooth transition for EU UCITS currently marketing in the UK under temporary arrangements, the Government is planning to extend the existing UK’s temporary permissions regime until 2026 (currently to be closed at the end of 2025);
- the UK's sustainable disclosure regime (SDR) is currently in development - the Government will consult on whether to broaden the scope of SDR to include funds recognised under the OFR. Industry will, though, be given adequate time to adapt to any further requirements in this area.
Conclusions
We regard this as a welcome result for the managers of EU UCITS who market their funds to UK retail clients as the positive equivalence decision will remove a significant concern of disruption to these fund ranges. While it was sated that there is no intention to require EU UCITS to comply with any additional UK requirements at this time, the Statement also notes that secondary legislation will be required in due course to enact the equivalence decision.
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