Doing Business in the EU Your Regulatory Options

Transcription

1 Doing Business in the EU Your Regulatory Options February 25th, 2016 New York

2 Contents Introduction Your Options to Enter Europe Focus on Distribution Case Studies About Laven Partners Our Management Team 2

3 Introduction - AuM in the EU: EUR 16 trillion. - Europe is still an attractive market to raise assets for Investment Advisers (fund managers in the UK). - MiFID and AIFMD are the main regulations in place for fund managers. - MiFID regulates financial market activities. - AIFMD regulates fund manager specifically. 3

4 Your Options to Enter Europe Regulatory Hosting Works well when setting up an EU firm start up Corporate entity located in the UK AR Umbrella (MIFID) Distribution, advice and/or arranging activities dealing and managing EU Passport for the MIFID activity 2-3 weeks to set up FCA Direct Authorisation MiFID Authorisation to distribute funds or manage & deal UCITS or managed accounts AIFM Authorisation to manage non-ucits assets (AIFs) funds (small or full scope) EU Passport available for the activity and for EU-based AIFs (NOT Swiss) Around 25 weeks to get a FCA license Ongoing compliance requirements NPPR Distribution Compliance with Article 42 (disclosure on PPM) Country by country notification/registration process Some gold plating apply Registration can take from 1 day to 5 months depending on the country Switzerland is not in the EU, non-aifmd Annex IV reporting (including risk data) Beware of constant changes: UCITS V, MIFID II 4

5 Focus on Distribution - Options Set up your own AIFM and EU AIFs (direct FCA Authorisation) Consider costs and operational burden with regards to your European commercial strategy. Be hosted on an AIFM platform and set up an EU-AIF Consider hosting costs (starts from 5bps per year according to the structures and strategies); operational skills and robustness of the platform; domiciliation (fund jurisdiction or manager jurisdiction). Consider setting up a parallel fund domiciled in the EU and managed by the AIFM platform: choice of jurisdiction, structure, service providers, etc. Set up a UCITS if involved in liquid investments Consider a feasibility assessment if your strategy is complex as well as timelines and operations issues. Consider the entry into force of UCITS V - 18 March 2016 which aligns requirements with AIFMD on remuneration and depositary regulation. Distribute under NPPR/Article 42 5

6 Focus on Distribution: NPPR Distributing under Article 42 of the AIFMD (NPPR) 3 levels of action: Comply with AIFMD at a pan-european level (mainly transparency and reporting requirements). Register/notify the local regulator of the country where you plan to distribute. Comply with potential gold platting requirements (local representative, depositary-lite for non-eu AIFMs, etc.). Recommended for distribution in 4 to 5 countries maximum. 4 types of countries : Easy: UK, Ireland Netherlands, Luxembourg (notification but no need to wait for authorisation). Impossible: Italy and Greece Challenging: Norway, Spain and France. Complex: Belgium, Germany and Nordics. Main challenges : Disclosure of remuneration. Country by country rules/interpretation of marketing and AIFMD requirements Be very careful when using reverse solicitation 6

7 Focus On Distribution 7

8 Case Studies Chinese PE, USD 1 Bn AUM, wishing to distribute in 6+ EU countries Complex structure which would have encountered a lot of questions from the various local authorities. Wish to speak to investors in several EU countries. Chose to hire a 3 rd party manco, set up a Dublin AIF with the same strategy than their flagship funds. 3 rd party manco would also handle their marketing. Benefit: EU Passport, Annex IV reporting to only one local authority, handled by the 3 rd party manager, EU regulated vehicle which some institutional investors prefer, where able to benefit from distribution channels from the 3 rd party manco. US/Cayman Hedge Fund USD 500 mln AUM, wishing to distribute in the UK, in Norway and in Finland. PPM amendment according to disclosure requirements (Article 42). Review of PPM amendments in light of Norway s and Finland s interpretation of the AIFMD. o For example when AIFMD requires that information is made available, Norway requires the information to be given out to the investor before he invests, Finland asks that the information be reasonably available for example on a website. Easy notification process in the UK, more complex but doable in Finland (2 months) and in Norway (3 months). Annex IV reporting to 3 local authorities. Benefits: can operate without a formal presence in the EU, impact of AIFMD only on disclosure and reporting, can easily stop marketing in the EU (light process of deregistering). 8

9 Some useful definitions AIF: a collective investment undertaking, including investment compartments of such an undertaking, which (a) raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of these investors; and (b) is not a UCITS. AIFMD: Alternative Investments Fund Manager Directive. Annex IV: EU transparency reporting form to be conducted on a frequent basis (yearly, bi-annually or quarterly according to total AUM of the AIFM). AR: An appointed representative (AR) is a firm which is able to arrange deals in investments and advise on investments by being under the umbrella of a firm directly authorised by the FCA to arrange deals in investments and advise on investments. (UK specific terminology equivalent in the EU: Tied Agent). FCA: Financial Conduct Authority. MiFID : the Market in Financial Instruments Directive is a legislation for the regulation of investment services within the European Union. MiFID II should enter into force in 2018 NPPR: The AIFMD National Private Placement Regime (NPPR) is a mechanism to allow AIFMs to market AIFs that are not allowed to be marketed under the AIFMD domestic marketing or passporting regimes. UCITS: Undertakings for Collective Investments in Transferable Securities. UCITS provides a single European regulatory framework for an investment vehicle which means it is possible to market the vehicle across the EU without worrying which country it is domiciled in. UCITS are strictly regulated. 9

10 Disclaimer This material has been prepared by Laven Partners Ltd for informational purposes only and should not be construed as legal, tax or other professional advice. You should consult with your own independent legal, tax and other professional advisors before taking any action on the basis of this information. The information provided in the material is based upon sources believed to have been reliable by Laven Partners Ltd, but Laven Partners Ltd has not taken any steps to verify the accuracy or completeness of the information. Neither Laven Partners Ltd nor any of its officers, employees, agents, affiliates or advisers make any representation or warranty as to the accuracy or completeness of the material or are under any obligation, express or implied, to update the information to correct any inaccuracies it may contain or to reflect any changes that may occur in the future. This material is confidential and may not be disclosed to any person other than the intended recipient without the express written approval of Laven Partners Ltd. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means or (ii) redistributed, without Laven Partners Ltd's prior written consent. February 2016 Laven Partners Ltd All rights reserved, and all moral rights are asserted and reserved. 10

11 About Laven Partners

12 Introduction Laven Partners provides compliance, due diligence and operations consulting services to the financial industry Certificate No. FS A global team of 30 professionals in six locations London, New York Singapore, Luxembourg, Geneva and Barbados Our clients include Private Banks, Pension Funds, Fund Managers, Family Offices and represent over USD 300Bn of AUM in funds Since 2009, Laven Partners has held the ISO 9001:2008 quality standard designation for the quality and reliability of its independent process of operational due diligence (IPODD) and reports Winner of the HFM Week Best Regulatory Advisory Firm Award and Best Overall Hedge Fund Consultant, Global Custodian Awards In June 2012, Laven published the FT Guide to Investing in Funds, authored by Jerome Lussan Laven Advisors LLP is authorized and regulated by the Financial Conduct Authority 12

13 1 3 Our Management Team Our Management Team

14 Our Management Team Jérôme de Lavenère Lussan, CEO, Laven group Jérôme de Lavenère Lussan is the CEO and founder of Laven Partners. Jérôme s background includes acting as a COO of a hedge fund and as a financial lawyer at Jones Day. Jérôme has a broad degree of expertise in the hedge fund and fund management industry and is an advisor to many international financial services firms specialising in operations, legal and regulatory matters. He is a member of the Law Society of England and Wales, the International Tax Planning Association Jonathan Currie, Managing Director, Laven Partners Jonathan is part of Laven Partners compliance department and has over 25 years of experience in the financial industry. He has an extensive background in all aspects of investment business financial services regulation and compliance work, including FCA authorisation and approvals, variation of permissions, change of control applications, general compliance support and advice, regular compliance monitoring and independent reviews and regulatory and of the CFA Society of the UK. Jérôme holds an LLB from University of Edinburgh. In 2010 and 2011, Jérôme was named by Financial News as one of its 100 Rising Stars, and in 2011 and 2012 one of its 40 under 40 Rising Stars in Hedge Funds. He is the author of the Financial Times Guide to Investing in Funds. documentation production. Jonathan previously held positions at Cordium as Director of Business Development and Director of Cordium s Asia office as well as being a Managing Consultant of the Regulatory Transaction team. Prior to this, he worked as a Compliance consultant at CCL and a Compliance Auditor at Euronext.liffe and held Foreign Exchange back and front office roles at Barclays de Zoete Wedd. Petra Hollis, Managing Director, Laven Partners Petra has been with Laven Partners since 2007 and works on international regulatory compliance. She advises on compliance matters such as regulatory applications, regulatory reporting, passporting and compliance monitoring. Petra is also involved in operational projects and assists managers and banks setting up their compliance businesses. She also advises clients on risk management compliance. Petra previously worked in consulting on new government trade legislation. Petra graduated from King s College, University of London with a Bachelor in Law (LLB) and also holds a Master of Laws (LLM) from University College London. 14

15 Our Management Team Tanja Ferri, Managing Director, Laven Partners Tanja has been with Laven Partners since 2007 and works with financial institutions and asset managers, co-heading Laven Partners Operational Due Diligence. Tanja is based in Dublin and provides due diligence consulting services to Laven Partners clients in North America, Europe and Asia. Tanja also leads a number of Laven Partners private equity focused projects and has a keen interest in private equity and impact Pierre-Edouard Coiffard, Managing Director, Laven Partners Pierre-Edouard is the co-head of Laven Partners due diligence department and has over 20 years of experience in the fund industry. He has an extensive background in sourcing, analyzing and monitoring managers and strategies, across all styles and asset classes. Pierre-Edouard previously occupied positions as Head of Research and CIO at Olympia Capital Management, Integrated Asset Management and Altigefi. Prior to moving into Linhao Guo, CFA ACCA, Director, Laven Partners Linhao is the group s financial officer and a member of Laven Partners compliance and due diligence team with regards to risk and investment due diligence. Linhao is focusing the analysis of financial performance, asset allocations, risk reporting and risk processes. Prior to joining Laven Partners, Linhao was trained and qualified as a chartered certified accountant in Leapman Weiss (Charted Accountants), gaining tner s.com investing. She previously led Laven Partners offshore consulting business in the Caribbean. Prior to joining Laven Partners, Tanja was at the International Chamber of Commerce in Paris, France. Tanja holds a BA in European Studies from Goldsmiths College, University of London. alternative funds, he was a consultant in the Finance department at Deloitte Touche & Tohmatsu. Pierre-Edouard holds an MBA from ESSEC and is a graduate engineer from Ecole Centrale de Marseille. experience in accountancy, audit and tax on a diverse range of clients. Linhao graduated from Wuhan University of Technology, China with a Bachelor degree in Management. He is a CFA Charterholder. 15

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