Financial Services Regulation |  Dec 03, 2015

UCITS V – MFSA Issue Consultation on Transposition

The MFSA has today launched a consultation process on the transposition into Maltese law of Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014 which is known as UCITS V.

This consultation process has been launched further to the publication of UCITS V in Official Journal of the European Union on the 28 August 2014 and ahead of the EU wide transposition deadline of the 18th March 2016.

UCITS V in a nutshell

UCITS V introduces the following matters which make the UCITS requirements align with those found under AIFMD:

  • new rules applicable to custodians of UCITS funds, such as the entities eligible to assume this role, their tasks, delegation arrangement and liability; and
  • general remuneration principles which will be applicable to UCITS management companies.

Amendments to Maltese law and regulatory framework

From the consultation paper issued to the industry it is noted that the MFSA is proposing to transpose the provisions of the UCITS V Directive as follows:

  • To make minor amendments to the Investment Services Act in relation to the applicable sanctions together with the issuance of new specific regulations to deal with penalties and sanctions;
  • To issue specific regulations to make provision for custodians of all collective investment schemes;
  • To amend the Investment Services Act (Control of Assets) Regulations;
  • To amend the Investment Services Act (UCITS Management Company Passport) Regulations;
  • To make specific amendments to the Investment Services Rules to transpose the provisions of UCITS V.

Amendment to the PIF/Retail non-UCITS Framework

Whilst both Professional Investor Funds and Retail non-UCITS funds have remained, at least for the most part, out of the scope of the regulatory developments brought by the AIFMD and UCITS V, the MFSA is using the transposition of UCITS V as an opportunity to extend the applicability of specific sub-articles of Article 21 AIFMD to custodians of non-UCITS retail schemes and PIFs targeting Experienced Investors. These provisions relate to conflicts of interest, the duties of the custodian, delegation, liability and discharge of liability.

However, it the MFSA has retained the flexibility which characterised this PIF regime by reaffirming that PIFs targeting Qualifying and Extraordinary Investors are not required to appoint a custodian.

Next Steps

The consultation process will run until the 15th January 2016 wherein the MFSA will consider all comments received from stakeholders. The consultation paper and consultation documents may be found here. Please forward any queries and/or feedback regarding this consultation paper or seek advice in connection with any of these activities.

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