UCITS IV - New Obligations and Opportunities for Management Companies

Course Code:	UMC 1106
Dates:	On a date of your choice
Venue:	Venue of your choice
Course Fees:	Available on application
CPD Credits:	6 hours

Course Outline & Objectives

At a European level, the UCITS IV provisions are now largely in place and consist of 3 European Commission Directives, 2 Regulations and CESR’s Level 3 Guidelines. Member States are required to transpose the provisions of the Directive and the 'implementing measures' into national law, and implement them by 1 July 2011

While there are significant opportunities for Management Companies, there also significant challenges ahead for the European investment fund industry. These include the mandatory elements of UCITS IV, such as the 'KID' requirements, the 'MiFID for Management Company' requirements and the clarified provisions in respect of derivatives exposure and risk management arrangements.

This focused one day workshop will help authorised fund firms:

Evaluate the opportunities offered under UCITS IV
Examine the regulatory, technical and operational challenges involved
Identify the steps to addressing these challenges

Key issues to be covered include:

UCITS IV Efficiency Package: exploring the opportuntities for consolidation
New operational requirements for Management Companies: how your business needs to adapt
Developing an effective risk and control framework under UCITS IV
Calculating and managing global exposure and counterparty risk
Cross border marketing and notification
Meeting the Key Investor Information Document (KID) requirements
Preparing for the post UCITS IV regulatory environment

This programme or any element of it can be delivered at a time and place to suit your business. for more information please telephone 020 3170 5779 or email enquiries@ctp.uk.com.

Who will benefit?

This course will be of value people in a range of roles within authorised fund firms and their advisers, including:

Fund managers
Risk Analysts
Compliance Managers
Product Development specialists
Lawyers
Trustees

Course Leader: Darren Burrows

Darren is a funds expert (primarily UCITS) and Managing Director of Funds-Axis Limited, CTP's training partner in the investment management sector.

Darren is a law graduate, chartered accountant and Member of the Chartered Institute of Securities and Investment with over 12 years financial services and fund management experience. His specialities include: risk, compliance and business process optimisation, derivatives and eligible assets under UCITS III, fund accounting, UCITS IV and implementation of investment restriction monitoring systems.

Since founding Funds-Axis, Darren has delivered successful training programmes to more than 350 individuals in over 80 organisations in UK, Ireland and Luxembourg.

Course Programme

Session	Aim	Content
An Introduction to UCITS IV	To gain an overview of key elements of UCITS IV	Legislative overview – Directives, Regulations and CESR’s Level 3 Advice Mandatory vs Optional Provisions Implementation Timeframes and Transitional Arrangements The Management Company Passport Fund Mergers and Master/Feeder Structures Management Company organizational requirements The simplified notification procedure The key investor information document Enhanced supervisory co-operation
The UCITS IV Efficiency Package	To consider the opportunities for consolidation at fund, Management Company and service provider level	Management Company Passport: remote control? Master / feeder structures: product rationalization and development opportunities Fund mergers Potential for centres of excellence – the removal of the substance requirements Tax hindrance preventing the realization of the UCITS IV Efficiency Package Defining your end-state operating model
Management Company arrangements (excluding risk management)	To review the Management Company provisions and consider the likely gaps versus current operating responsibilities	General requirements on procedures and organization Resources requirements Complaints Handling Electronic Data Processing Accounting Procedures Internal control mechanisms – senior management, compliance and internal audit functions Personal account dealing transaction requirements Recording of portfolio transactions Recording of subscriptions and redemptions Record keeping requirements Conflict of interest requirements Strategies of exercise of voting rights connected with the investments of the UCITS Duty to act in best interests of UCITS and Unit holders Due diligence requirements and risk management policy requirements Reporting obligations in respect of subscriptions and redemptions Best execution, timely execution, aggregation and allocation of orders Inducements and disclosure of fee arrangements The Depositary Agreement – matters to be contained in the agreement
Risk management arrangements	To understand risk management requirements under UCITS IV and identigy the changes needed to current practice	Requirements for the identification, monitoring, management and reporting of risk Contents of the risk management policies Assessment, monitoring and review of risk management policies Requirements for submission of risk management policies to the Competent Authorities and for on-going review Liquidity risk management requirements Role and responsibility of the ManCo in the valuation process of assets Reporting to the Competent Authorities – frequency and contents of reporting How to format / report information Distinguishing risk management oversight & best practices by fund’s profile Risk management & reporting requirements for funds using complex derivatives
UCITS IV impact on the calculation of global exposure and counterparty risk for UCITS	To examine the requirements and guidance on how global exposure and counterparty risk should be measured and managed	Commitment approach calculations; conversion of financial derivatives into the equivalent position in the underlying assets – UCITS IV guidelines Long / short strategies and acceptable hedging and netting strategies Changes required to Manager’s investment compliance monitoring systems Where VaR methodologies must be used Choice between Relative and Absolute VaR Setting of confidence intervals, time horizons and loss-levels Selection of stress testing scenarios Back-testing challenges Management and regulatory reporting VaR disclosures in the Prospectus and Report and Accounts under UCITS IV. Counterparty exposure - the changes in calculation methodology that will be required pursuant to UCITS IV Criteria for utilizing netting and collateralization The need to take account of broker exposure Counterparty risk when OTCs are novated to central clearing CESR’s Level 3 Guidance on 'Cover' requirements CESR’s initial views on specific guidelines for structured UCITS and plans to perform further work
The Notification Procedure	To review the notification procedure for cross border marketing under UCITS IV	Why enhancements to the current notification procedure were required Form and content of the standard model notification letter to be used by a UCITS Form and content of the attestation the UCITS fulfils Directive 2009/65/EC conditions Transmission of the attestation file and the obligation of the member states’ competent authorities Timeframes for the notification process, attestation process and commencement of marketing Practical impacts on the Management Company and the UCITS CESR’s work on development of electronic communication systems
The Key Investor Information Document (KID)	To know what information must be included in the KID and consider how this can be achieved	The thinking behind the KID Timeline for implementing When does it have to be provided? General format requirements Key contents of the KID Past Performance, On-going Charges The Synthetic Risk Reward Indicator (SRRI) Narrative disclosures ‘Representative’ or ‘multiple share class’ KII Plain language requirements Translation requirements The 'durable medium’ requirements Use by Distributors and the impact on Fund Distribution and Fund Distributors Agreements Benchmarking and comparability of funds for multiple jurisdictions Other risk disclosures to investors, including of VaR levels
Supervisory oversight and co-operation	To prepare for changes in supervisory approach under UCITS IV	Co-operation requirements where a UCITS is managed by a management company situated in another member state The obligations of the requesting and the requested competent authorities Requests for on-the-spot verifications and investigations Carrying out the on-the-spot verification or investigation, including through the engagement of auditors and experts Routine exchanges of Information between competent authorities How practically cooperation will crystallise? Systematic exchange of information? On site visits? Oversight rights? How cooperation will materialise through the role and responsibilities of the European System of Financial Supervisors (ESFS). Specific issues in respect of fund mergers and in respect of master / feeder arrangements Co-operation and communication between supervisors through the notification procedure Communications with third country (non-EU) supervisors

Booking

If you are interested in booking this course, or if you have any questions, please call call us on 020 3170 5779.

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