LONDON (HedgeWorld.com)–The UK’s Financial Services Authority has proposed a sweeping change in the system by which it regulates investment funds–a change that would introduce some hedging strategies to the retail market.
The proposal, announced May 21, would simplify a very complicated regulatory structure. There are at present eight distinct categories of retail collective investment scheme. The FSA now proposes two broad types. One would consist of undertakings for collective investments in transferable securities, pursuant to the requirements for such UCITS established by the European Union. The other, under the catchall title non-UCITS funds, will invest in a broader range of assets than the EU would allow, including property. It would also be allowed to limit opportunities for redemption, so long as they are no more than six months apart.
The reform also would create a new category of non-retail schemes; in effect, U.K.-registered hedge fund, aimed at “institutional and expert investors only” that will nonetheless be subject to rules “robust enough to distinguish them from unregulated schemes.”
Furthermore, the FSA will allow performance fees for unit trusts and open-ended investment companies, which will bring U.K. practice in accord with that of the rest of Europe, the FSA statement said.