The UK Government announced on November 8, that it will introduce a new covered bonds regime with effect from March 6, 2008. Originally, the Government had intended to implement the regime from January 2008, as described in the July 27, 2007 edition of Corporate and Financial Weekly Digest. There is currently no UK legislative framework under which UK issuers can issue covered bonds which are permitted investments under Article 22(4) of the EU Undertakings for Collective Investment in Transferable Securities (UCITS) Directive for funds established under the UCITS Directive

The UK Treasury and the Financial Services Authority have been considering proposals for a covered bonds regime that complies with the UCITS Directive requirements. It is anticipated that a UCITS compliant regime will enable UK issuers to access a larger investor base

The proposals were first announced in July 2007 and the consultation closed last month. A summary of all responses together with proposed regulations is expected to be published in January 2008.