Following a joint announcement by the Investment Association, the Charity Investors' Group and the Charity Law Association, the long-awaited Charity Authorised Investment Funds (CAIFs) can now be established.

As foreshadowed in FCA's CP15/27 of September 2015, CAIFs will be available for investment only by charities, and will have charitable status in their own right, with the tax benefits which come with that.

CAIFs will be regulated by the Charity Commission as charities and by the FCA as funds. The Investment Association has published a basic guide to CAIFs on its website.

It will be possible to convert existing Common Investment Funds (CIF) into CAIFs. An important reason for converting is that as an authorised fund, the management fee in a CAIF will be free of VAT. That is an area of uncertainty in the case of CIFs.

A new chapter 14 in FCA's Collective Investment Schemes Sourcebook provides that a CAIF may be a UCITS, a NonUCITS retail scheme or a Qualified Investor Scheme; and it may take the form of a unit trust, an investment company with variable capital (ie an OEIC) or an authorised contractual scheme. The basic guide envisages that a unit trust will be the most popular structure as it most closely reflects existing charity structures. A model trust deed for a CAIF is also available on the Investment Association website.


The European Securities and Markets Authority (ESMA) has published a revised version of its Q&As dealing with UCITS.

The revised version contains four new Q&As which address the following areas:

  • Regulated markets in Member States under the UCITS Directive the term `regulated market in a member state' may be understood as including a `multilateral trading facility', as defined in MiFID.
  • Translation requirements in relation to the remuneration disclosure remuneration disclosure information which is required to be published on a website does not need to be translated into the same language(s) as those into which the KIID has been translated.
  • Reinvestment of cash collateral investments of cash collateral in short-term money market funds must be treated in the same way as other UCITS investments in units of another UCITS or collective investment schemes.
  • The commencement of periodical reporting pursuant to Article 13 of the Securities Financing Transactions Regulation (SFTR) the information required to be reported should be included in the next annual or halfyearly report published after 13 January 2017 (and may relate to reporting periods before that date).


The European Securities and Markets Authority (ESMA) issued two sets of guidelines dealing with remuneration practices under UCITS and AIFMD. The revised guidelines follow ESMA's final report on sound remuneration policies published in March 2016.


The UCITS guidelines aim to ensure convergent practices when applying remuneration policies and guidance on remuneration generally, including the requirements on risk alignment and disclosure. In particular, the UCITS guidelines clarify the policies applicable to management companies when applying a remuneration policy to key staff.


The revised AIFMD guidelines amend the current remuneration guidelines relating to the application of remuneration rules in a group context. This revision is aimed at acknowledging the potential scope of the Capital Requirements Directive rules in a banking group.

National Competent Authorities (NCAs) will now have two months in which to notify ESMA whether they comply or intend to comply with the guidelines, including reasons for any noncompliance. Responses from NCAs will form the basis of a compliance table which ESMA will publish.

Both sets of guidelines will apply from 1 January 2017.


The European Securities and Markets Authority (ESMA) has published a revised version of its Q&As relating to the provision of Contracts for Differences (CFDs) and other speculative products to retail investors under MiFID.

The revised version contains four new Q&As which address the following areas:

  • The use of trading benefits when offering CFDs or other speculative products a trading benefit such as a "bonus" may lower the psychological threshold of retail clients to invest in speculative products which may result in a greater risk of loss.
  • The withdrawal of funds from trading accounts when investing in CFDs or other speculative products firms offering CFDs or other speculative products to retail clients should be able to, at any time and without delay, identify assets belonging to a particular client, such that there should be no reason for the investment firm to delay the return of funds to that client.
  • The use of leverage when offering CFDs or other leveraged products to retail clients leverage, whilst increasing the possible profit, also increases the risks involved because leverage significantly increases the possible losses, including the possibility for the client to lose more than the sum initially invested. National competent authorities (NCAs) should consider (i) whether the firm establishes a level of margin deposit based on objective criteria; (ii) whether the firm takes into account the conditions existing at the underlying exchange or market; (iii) whether the firm establishes a margin level that takes into account the client's knowledge and experience; and (iv) how the firm determines the level of margin at which margin calls and any automatic position closures are triggered.
  • Best execution obligations for firms offering CFDs or other speculative products to retail clients any firm that executes orders for retail clients in CFDs or other speculative products is required to ensure that orders are executed on terms most favourable to the client. Firms that receive and transmit orders also have a corresponding duty to act in the client's best interests.


The European Securities and Markets Authority (ESMA) has published new questions and answers (Q&As) on the implementation of investor protection under the Markets in Financial Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR), which will both be applicable from 3 January 2018.

The Q&As are intended to promote common supervisory approaches and practices, and to provide responses to questions posed by the general public, market participants and competent authorities, in relation to the practical application of MiFID II and MiFIR requirements.

The topics covered by the Q&As are as follows:

  • Best Execution
  • Suitability and Appropriateness
  • Recording telephone conversations and electronic communications
  • Record keeping
  • Investment advice on an independent basis
  • Underwriting and placing
  • Inducements

ESMA plans to further develop its Q&As on investor protection under MiFID II and MiFIR in the coming months; expanding on the areas listed above and introducing new ones.