Following its 2015 consultation on reforming UK limited partnership law (summarised in our July 2015 note), the UK government has placed draft legislation before Parliament to amend the Limited Partnerships Act 1907 by introducing a new type of limited partnership: the "private fund limited partnership" or PFLP.

The draft legislation is due to come into effect on 6 April 2017. Some of the principal changes are:

  • limited partnerships that qualify as PFLPs and opt into the PFLP regime will be subject to: (i) fewer and less detailed filing and notice requirements; and (ii) more flexible winding up procedures;
  • limited partners in a PFLP will no longer be obliged to contribute capital or property to the partnership, nor be restricted from withdrawing capital from the partnership during the life of the partnership; and
  • the introduction of a "white list" of activities that may be undertaken by limited partners without running the risk of losing their limited liability.

Limited partnerships registered on or after 6 April 2017 that qualify as PFLPs may opt into the PFLP regime immediately upon registration or at any time thereafter. Limited partnerships registered before 6 April 2017 that qualify as PFLPs may also opt into the PFLP regime at any time after the legislation comes into effect, but the restriction on limited partners withdrawing capital from those partnerships will continue to apply to any capital previously contributed to those partnerships.

The government expects the changes to reduce administrative burdens and legal uncertainties and hopes that they will help the UK to remain an attractive jurisdiction for private funds.


With effect from 13 January 2017 the annual reports for most UCITS NURSs and AIFs must include a number of prescribed disclosures required by the Securities Financing Transactions Regulation (SFTR).

The required disclosures include the amount of assets engaged in each type of securities financing transaction (SFT), counterparties to the SFTs, collateral issuers and quality of collateral. The COLL and FUND Sourcebooks have been amended to reflect this disclosure requirement.


The European Securities and Markets Authority (ESMA) has published an opinion calling for consistent application of product intervention powers under the Markets in Financial Instruments Regulation (MiFIR which supplements the second Markets in Financial Instruments Directive (MiFID II)).

These powers allow ESMA and national competent authorities (NCAs) to temporarily prohibit or restrict MiFID firms' marketing, distribution or sale of shares in UCITS and Alternative Investment Funds and financial instruments with certain specified features.

But the powers do not extend to firms authorised as Alternative Investment Fund Managers or UCITS Management firms when they carry on MiFID activities. ESMA sees in this a risk of regulatory arbitrage.

ESMA chairman, Steven Maijoor, comments that "including fund management companies in scope of the MiFIR intervention regime would ensure a harmonised framework across entities and instruments" and would "create a level-playing field between MiFID firms and fund management companies".


The Financial Stability Board (FSB) has published 14 final policy recommendations regarding risks to global financial stability associated with structural vulnerabilities from asset management activities that could materialise in the future. The policy recommendations focus on four structural vulnerabilities: open-ended fund liquidity mismatch, investment fund leverage, operational risk and securities lending.

The FSB initially published proposed policy recommendations for public consultation in June 2016. These final recommendations have been modified to incorporate responses to the consultation, many of which are focussed on improving the authorities' ability to monitor and identity potential financial stability risks and to take action where necessary. The earlier proposed policy recommendations have been changed as follows:


  • to encourage authorities to develop consistent reporting requirements to facilitate effective monitoring of financial stability risks across jurisdictions;
  • to better distinguish information useful to authorities and investors;
  • to emphasise the exploratory nature of system-wide stress testing; and
  • to clarify circumstances where authorities could consider providing specific guidance to facilitate the use of exceptional liquidity management tools.


  • to clarify the nature and objectives of the leverage measures to be developed by the International Organisation of Securities Commission which will also be used to identify funds whose use of leverage should be subject to additional assessment.

Operational Risk

  • to ask authorities to apply the requirements or guidance for asset managers to have comprehensive and robust risk management frameworks and practices to all asset managers commensurate with the level of risks their activities may pose to the financial system; and
  • to clarify that the orderly transfer of client accounts and investment mandates in stressed conditions should be covered by comprehensive and robust risk management frameworks.

Securities Lending

  • to recommend that authorities take an approach consistent with the recommendation regarding securities lending indemnification in other areas, where asset managers take on similar financial risks as principals.

The FSB recommends that the relevant authorities review their existing regimes and consider amending them as appropriate in line with the policy recommendations to ensure potential financial stability risks are addressed and to allow for a uniform international approach. The FSB intends to review regularly progress in the operationalization and implementation of the recommendations.