Investment Funds

  • MiFID II, Research and Extraterritoriality: The SEC, European Commission and FCA Solution

    15 Nov 2017

    On October 26, 2017, the US Securities and Exchange Commission, European Commission and the UK Financial Conduct Authority released, in a coordinated manner, a series of significant orders and guidance to address some of the most problematic extraterritorial effects of the EU’s new financial regulation, MiFID II.

  • Final Rule Issued on Qualified Financial Contracts: What You Need to Know

    8 Nov 2017
    On September 1 2017 the Board of Governors of the Federal Reserve System adopted a final rule requiring US global systemically important banking institutions (GSIBs), their subsidiaries and the US operations of foreign GSIBs (covered entities) to amend many of their qualified financial contracts (QFCs) in order to restrict their counterparties' ability to immediately terminate such contracts in the event that the covered entity or an affiliate enters into bankruptcy or resolution proceedings.
  • Continuity of Contracts and Business on a “Hard” Brexit: Human Rights and Reverse Solicitation to the Rescue!

    31 Oct 2017

    Various industry bodies and regulators, including the Bank of England and Bafin, have recently raised fears that there will be a cliff edge on Brexit for certain types of financial contract, most notably derivatives and insurance, due to the loss of passporting rights.[1] This note explains why, in a no-deal Brexit scenario, this should not be the case. The loss of “passporting” rights and other freedoms under EU treaties should neither frustrate existing contracts nor render the performance of existing cross-border UK-EU contracts illegal nor cause them to be void or voidable.

    We discuss how the right to property under the European Convention on Human Rights (ECHR) and the EU Charter of Fundamental Rights, and the doctrine of “acquired rights” under public international law, protect contractual rights. The protections afforded will shield many contracts entered into between UK and EU-27 parties before Brexit and should therefore permit such contracts to be performed to their full extent in a hard-Brexit scenario. These human rights concepts will mean that, despite the removal of the financial services “passport” upon Brexit, any licensing requirements that spring into force on Brexit for parties performing existing contracts—and any other legislative changes that frustrate contracts—would be contrary to the human rights and other protections afforded to contracts entered into before Brexit.

    UK-based and EU-based businesses should be cognisant of these protections and, moreover, should take additional steps to future-proof their existing contractual agreements before the UK withdraws from the EU so that they can continue to provide a full range of services to their customers.

    Our previous client note on Brexit and the free movement of natural persons considered whether the concept of “acquired rights” would safeguard free movement rights post-Brexit. This note now evaluates the concept, and human rights law, in the context of businesses and contracts, with particular reference to financial sector contracts.

  • EU Proposals to Strengthen the Powers of the European Supervisory Authorities

    26 Oct 2017

    On 20 September 2017, the European Commission made proposals[1] to strengthen the regulatory and supervisory powers of the three European Supervisory Agencies (ESAs) namely the European Securities and Markets Authority (ESMA), European Banking Authority (EBA) and the European Insurance and Occupational Pension Authority (EIOPA). To become legally binding, the proposals must be approved by the European Parliament and the European Council. The proposals are part of the Commission’s plan to create more integrated financial markets, and to complete the Capital Markets Union and Banking Union. The EU has increasingly used regulations to implement new requirements in financial services instead of using directives which require member states to adopt national laws to implement the requirements. The intention has been to iron out local member state discrepancies. However, it is apparent that there are still differences in the application of EU regulations by national regulators and that this leads to distortions across the EU. The Commission considers that more integrated financial markets supervision is necessary and that enhancing the powers of the ESAs is key to achieving that objective.

  • CFTC Extends and Revises Relief for Position Aggregation Requirements and Notice Filings

    20 Sep 2017

    The Commodity Futures Trading Commission (CFTC) has extended and revised no-action relief that provides an exemption from compliance with certain aggregation requirements for CFTC-specified position limits for futures and option trading.

  • MiFID II for Non-EU Investment Banks and Brokers

    18 Sep 2017

    The revised EU Markets in Financial Instruments package—known as MiFID II—takes effect on January 3, 2018. Some aspects of this legislation are extra-territorial. New rules on inducements, the unbundling of research, legal entity identifiers and the regulation of algorithmic trading are some of the areas where a non-EU investment bank or non-EU broker may find that it is impacted, directly or indirectly. Non-EU investment banks and brokers should consider how these new requirements will affect how they do business in the EU or with EU counterparties from the start of next year.

  • John Reiss Authors Article on Advisers Act Registration for Real Estate Managers

    1 Sep 2017

    Counsel John Reiss (New York-Investment Funds) authored an article titled “When Real Estate Investing Involves Securities: An Overview of Advisers Act Registration Obligations for Real Estate Fund Managers,” which was published in the September 2017 issue of The Investment Lawyer. In this article, Reiss provides an overview of the analysis to be conducted in determining whether a real estate fund manager is subject to registration requirements and other compliance obligations under the Investment Advisers Act of 1940, as amended.

  • The OCC Takes Initiative on Seeking Public Comment for Changes to the Volcker Rule

    16 Aug 2017

    The Office of the Comptroller of the Currency (OCC), which regulates national banks and, as such, is responsible for administering the Volcker Rule with respect to the largest banking entities in the United States, has released a notice and request for comment (Request for Comment) on the question of how to modify the implementing regulations, as well as the application and administration, of the Volcker Rule.[1]

  • DOL Seeks Further Delay of ‘Fiduciary Rule’ Exemptions

    10 Aug 2017

    On August 9, 2017, the Department of Labor notified the District Court of Minnesota that it had submitted to the Office of Management and Budget amendments that would delay until July 1, 2019 the applicability of three prohibited transaction exemptions related to the DOL’s “fiduciary rule”: the (i) Best Interest Contract Exemption, (ii) Principal Transaction Exemption and (iii) PTE 84-24. The fiduciary rule became applicable on June 9, 2017, following a sixty-day delay of its initial applicability date of April 10, 2017.

  • The Extended UK PSC Regime

    31 Jul 2017

    The UK’s beneficial ownership disclosure rules for persons with significant control (PSCs) over certain UK entities, introduced in April 2016, have been extended as part of the UK’s implementation of the EU’s Fourth Anti Money Laundering Directive (4MLD). These rules now apply to additional UK companies and entities and require beneficial ownership information to be updated and publicly filed within prescribed 14 day time periods. This publication sets out the main features and requirements of these rules (the so-called PSC regime) following these changes.

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