In its consultation paper CP08/12 the FSA is effectively proposing that a look-through be applied in relation to collective investment schemes, including UCITS, where performance is expected to mirror or substantially depend on a derivative. This would be a major departure for UCITS funds which have historically not been subject to look-through requirements.

The result could be that the fund will cease to be an admissible asset because the rules relating to the use of derivatives in INSPRU 3.2 are different to those relating to UCITS funds (eg where the underlying is not itself an admissible asset, for example a commodity).

The closing date for responses to this part of the consultation paper is 9th September 2008.

For further information: FSA proposes changes to apply a look-through to collective investment schemes