The FCA published a consultation paper (CP16/14) on 19 May 2016, containing proposals to amend its rules and guidance in the Client Assets sourcebook (CASS) and the Collective Investment Schemes sourcebook (COLL) following the adoption and publication of the UCITS V Level 2 Regulation. The proposed changes affect UCITS depositaries and seek to amend relevant FCA rules and guidance for consistency with the UCITS V Level 2 measures. Affected firms must comply with the new requirements by 13 October 2016.

This consultation also includes minor proposed changes to the FCA’s Senior Management Arrangements Systems and Controls sourcebook (SYSC), COLL and the Investment Funds sourcebook (FUND), to reflect certain requirements of the EU Regulation on reporting and transparency of securities financing transactions ((EU) 2015/2365) (SFT Regulation).

The proposed changes include:

  • Amendments to CASS 6.6: the FCA proposes to disapply certain CASS rules and guidance to ensure consistency with the requirements under the Level 2 Regulation;
  • New guidance in COLL 6.9: highlighting the conditions for meeting the independence requirements introduced by the Level 2 Regulation;
  • Amendment to SYSC 19E.2.9R(1): setting out the circumstances in which a UCITS management company must appoint a remuneration committee; and
  • Copying out into COLL, the provisions of the SFT Regulation that require managers of UCITS and alternative investment funds to disclose details of their use of securities financing transactions and total return swaps in the funds' pre-contractual documents and periodical reports to investors.

Comments can be made until 19 July 2016 and a policy statement is expected in the third quarter of 2016.