The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

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By Topic: Market Abuse

  • From Vol. 9 No.10 (Mar. 10, 2016)

    ESMA Provides Hedge Fund Managers With Plan for Supervisory Convergence

    The European Securities and Markets Authority (ESMA) recently published its Supervisory Convergence Work Programme for 2016 (2016 SCWP), which supplements its Annual Work Programme for 2016. See “ESMA Work Programme Provides Hedge Fund Managers With Key Guidance About E.U. Financial Services Legislation” (Oct. 15, 2015). Describing steps ESMA will take in 2016 to “promote sound, efficient and consistent supervision in the E.U.” and describing ESMA’s priorities in the context of the wider work programme and environment, the 2016 SCWP provides hedge fund managers and other industry participants with detailed insight into the regulator’s areas of focus for the coming year, along with planned activities and initiatives. This article highlights the fundamental points from the 2016 SCWP. For more about supervisory convergence, see “ESMA Chair Calls for Increased Transparency and Regulatory Convergence As Interest Rates Rise” (Jan. 28, 2016). See also “FCA Director Summarizes 2015 Regulatory Initiatives Applicable to Hedge Fund Managers and Financial Markets” (Jan. 7, 2016).

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  • From Vol. 9 No.1 (Jan. 7, 2016)

    FCA Director Summarizes 2015 Regulatory Initiatives Applicable to Hedge Fund Managers and Financial Markets

    In a recent speech delivered at the Investment Company Institute Global Trading and Market Structure Conference in London, David Lawton, Director of Markets Policy and International at the U.K. Financial Conduct Authority (FCA), reflected on what 2015 meant for the regulation of wholesale markets and the funds industry. Noting that change has come from several sectors (new technology, market players, innovation and regulation), Lawton highlighted some of the “more important” market policy developments and how they might contribute to the “core of timeless, immutable goals which policy and regulators are pursuing” – namely, the goal of “fair and effective markets.” This article summarizes Lawton’s speech, outlining his comments on the revised Markets in Financial Instruments Directive (MiFID II), dealing commissions, market abuse regulation, capital markets union and various U.K. market reviews. Lawton’s remarks are pertinent to hedge fund managers as they provide valuable insight into the FCA’s priorities and anticipated directions for the upcoming year, especially relating to MiFID II. For additional insight from Lawton, see “FCA Urges Hedge Fund Managers to Prepare for MiFID II” (Oct. 29, 2015).

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  • From Vol. 8 No.49 (Dec. 17, 2015)

    E.U. Market Abuse Scenarios Hedge Fund Managers Must Consider

    With regulatory authorities in the E.U. and elsewhere increasingly focused on market conduct, managing market abuse risks within hedge fund managers has become central to a firm’s culture of compliance.  For hedge fund managers trading on a cross-border (particularly a U.S.-E.U.) basis, divergent regimes make managing such risks more difficult.  In a guest article, Leonard Ng, co-head of the E.U. financial services regulatory group at Sidley, sets out some common scenarios faced by hedge fund managers and addresses how managers might wish to deal with them under the E.U. market abuse regime.  For additional insight from Ng, see “Sidley Austin, Ivaldi Capital and Advise Technologies Share Lessons for U.K. Hedge Fund Managers from the January 2015 AIFMD Annex IV Filing,” The Hedge Fund Law Report, Vol. 8, No. 12 (Mar. 27, 2015).  For insight from Ng’s partner, Will Smith, see “Potential Impact on U.S. Hedge Fund Managers of the Reform of the U.K. Tax Regime Relating to Partnerships and Limited Liability Partnerships,” The Hedge Fund Law Report, Vol. 7, No. 10 (Mar. 13, 2014); and our two-part series, “U.K. Disguised Fee Rules May Result in Increased U.K. Taxation of Investment Fees to Individuals Affiliated with Hedge Fund Managers”: Part One, Vol. 8, No. 15 (Apr. 16, 2015); and Part Two, Vol. 8, No. 16 (Apr. 23, 2015).

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  • From Vol. 8 No.11 (Mar. 19, 2015)

    Ten Practical Consequences for Hedge Fund Managers of the FCA’s Thematic Review of Asset Managers and the EU Market Abuse Regulation

    Over the next eighteen months, compliance officers at UK hedge fund managers will be facing significant additional regulatory burdens.  In the context of market abuse, there is going to be significant legislative change coming from Europe.  Whilst the core market abuse offences will largely be unchanged, the market abuse regime across the EU will be significantly strengthened and broadened by the EU Market Abuse Regulation (MAR) that will replace the Market Abuse Directive with effect from July 3, 2016.  At the same time, there have been a number of regulatory enforcement actions that have shown a more assertive approach by regulators to the regulation of markets across the EU.  In February, the UK Financial Conduct Authority issued a thematic review into asset management firms and the risk of market abuse in equity markets.  This review made clear that the UK regulator considers that firms need to do further work to clarify and extend their compliance procedures to comply with current rules.  These changes will be required in addition to the new detailed obligations and processes under MAR.  For these reasons, compliance teams will have considerable work to undertake in relation to market abuse compliance policies, procedures and monitoring.  For many asset management firms, this will create a significant additional administrative burden and may have an impact on how managers interact with issuers.  In a guest article, Douglas Armstrong, a partner and Head of Funds and Financial Services for Dickson Minto W.S., offers a detailed discussion of MAR and the FCA thematic review, then identifies ten practical consequences of both for UK and global hedge fund managers.  See also “U.K. Financial Conduct Authority Issues Feedback Statement Supporting Proposed E.U. Limits on Soft Dollars,” The Hedge Fund Law Report, Vol. 8, No. 9 (Mar. 5, 2015).

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