2017年-FCA英国金融行为监管局_ukla_406_1_application_of_related_party_rules_to_funds_investing_in_highly_illiquid_asset_classes_3页_115kb

Regulator Assessment Summary: UKLA Technical Note - UKLA/TN/406.1

Core Content

The document outlines the FCA's assessment of the UKLA Technical Note 406.1, which provides guidance on the application of related party rules to closed-ended investment companies (CEICs) investing in highly illiquid asset classes. This guidance is part of the FCA's Listing Rules, Prospectus Rules, and Disclosure and Transparency Rules, and it is also influenced by the Market Abuse Regulation (MAR).

The technical note was published in November 2015 and became finalised in March 2016, with the commencement date of the guidance being set in the same month. The assessment is domestic in origin and does not include the implementation of the Cutting Red Tape review.

Main Points and Key Information

1. Purpose of the Guidance

• To clarify the application of Listing Rule 11 related to related party transactions.
• To provide flexibility for CEICs investing in highly illiquid asset classes (e.g., infrastructure funds) in terms of disclosure requirements.

2. Scope of Application

• The guidance applies to closed-ended investment companies with a premium listing on the Official List.
• Only 15 out of approximately 300 such companies are estimated to be affected, as they invest in highly illiquid asset classes.

3. Key Conditions for Exemption

• Funds must demonstrate that purchases from related parties are the only viable option to provide investors with exposure to the asset class.
• They must also show that they have arrangements to manage conflicts of interest.

4. Impact on Business

Familiarisation Cost

• All 300 CEICs with a premium listing are expected to review the two-page note.
• 285 companies (those not investing in highly illiquid assets) will find the guidance irrelevant and require no further action.
• Estimated cost for all companies: £14,400 (based on £48/hour for 30 hours).
• Estimated cost for the 15 affected companies: £720.

Ongoing Cost

• The guidance does not introduce new obligations, so it is considered to create no ongoing costs.
• It is based on existing interpretations of the Listing Rules and is intended to simplify the application process.
• On a net basis, the guidance may result in cost savings for businesses seeking to apply for eligibility in the future.

5. Cost Estimation Assumptions

• The hourly rate of £48 is based on the assumption that the changes will be implemented by experienced compliance staff.
• This rate is considered prudent and aligns with the 2016 Robert Half salary guide for compliance managers in London.

Additional Information

• The BIT score and Net cost to business are both estimated at £0 for this measure.
• The level of detail for scoring is rounded to the nearest £100,000, so any cost estimate under £50,000 is scored as zero.
• A link to the Robert Half salary centre is provided for reference:
  https://www.ROBERTHalf.co.uk/news-insights/salary-centre-2016

Conclusion

The guidance aims to clarify and simplify the application of related party rules for certain CEICs, particularly those investing in highly illiquid asset classes. It provides flexibility without introducing new obligations, and the estimated cost is minimal, with no ongoing costs expected. The impact is limited to a small subset of companies, and the overall effect is expected to be cost-neutral or beneficial.