The Commission published the final version of its proposed UCITS V Directive on 9 July 2012. The Commission’s key proposals relate to the UCITS depositary function, remuneration and sanctions for breach of the rules. The rules relating to the depositary function are similar to the equivalent provisions in the AIFM Directive (noting that, unlike under the AIFM Directive, the depositary’s liability cannot be delegated or transferred contractually). The remuneration requirements relate to the implementation of remuneration policies by UCITS managers and disclosure of total remuneration amounts, and are intended to be consistent with the equivalent provisions of the AIFM Directive.

Separately, the Commission has published a consultation paper on further changes to the UCITS regime (UCITS VI). The topics which the Commission is consulting on include eligible assets and use of derivatives, efficient portfolio management (EPM) techniques, the use of OTC derivatives, extraordinary liquidity management tools, passporting rights for UCITS depositaries and money market funds.

Timings: The FSA intends to publish a consultation paper on UCITS V by the end of 2012. The Commission has indicated that UCITS V will apply by the end of 2014. The Commission may adopt its legislative proposal for UCITS VI by the end of the first quarter of 2013.