UCITS IV Management Company Diagnostic

Starting July 2011, UCITS IV implementing measures will introduce MiFID-like organisational and conduct of business rules and bring all Management Companies (ManCos) on the fast track to European harmonisation.

Although the European legal text is still under preparation, the Commitee of European Securities Regulators’s (CESR) guidelines in relation to the Management Company Passport should end up to a large extent in the final implementing measures. These measures potentially imply a deep reset of ManCos governance and internal control mechanisms while MiFID-like transparency requirements (inducement rules) indirectly impact ManCos’ tax models, remuneration and distribution arrangements.

PwC has developed a focused approach to quickly identify and address regulatory, compliance issues and potential revenues impacts. This will allow you to adapt your organisation to the new requirements in the most efficient manner. Our Diagnostic Tool will provide you with a comprehensive assessment of where your organisation stands as to the new requirements and will provide insight on what alternatives exist to achieve compliance with minimum pain.

The Challenges

Besides offering a comprehensive pan-European framework for attracting and managing assets, the new regulation poses several challenges for ManCos:

Reinforced oversight duty

Oversight duty on delegated service providers which will have to fulfill UCITS IV requirements in relation to the activity to be carried out

Reshaped Risk Management

Reshaped risk management framework and procedures for OTC valuation

Arrangements with depositaries

Detailed contractual arrangements between ManCos and UCITS depositaries

KID

Content and update management, controls and distribution challenges

MiFID Conduct of business

Conduct of business rules (documented and effective arrangements, strengthened controls for direct sales, appropriateness tests, client reporting, Best Execution etc.)

MiFID inducements

Strict rules and transparency requirements for payments made or received of fees, commissions or non-monetary benefits, as a main source of conflicts of interests

MiFID organisation

Additional organisational requirements (independent compliance and audit functions, effective procedures to handle complaints, personal transactions and record keeping, conflicts of interests management, etc.)

The PwC Diagnostic

The PwC approach aims at identifying key gaps between your organisation’s current situation and future requirements, enabling you to start maturing adequate strategic decisions.

The tool is a catalogue of over 180 critical aspects, offering a to-the-point assessment of your organisational framework.

Questions are ranked according to priorities and themes, enabling you to:

• Focus on identifying specific regulatory, tax and organisational priorities;
• Leave secondary requirements for a later stage;
• Benefit from an "A la carte" tailored diagnostic that fits budget constraints.

What are the objectives of the PwC Diagnostic?

• Assessment of risks and gaps in your ManCo’s organisational framework;
• Mitigating your risks;
• Prioritising essential requirements;
• Proposing solutions for optimisation;
• Identifying key areas for improvement and key opportunities.

A focused approach

Further services

Other issues which are connected with additional UCITS IV implementation challenges may come out of the discussion during the workshop. Should the need arise, PwC will commit other dedicated UCITS IV tax and regulatory experts to provide you with further assistance on topics like:

• Strategic rationalisation of products and operations using UCITS IV Directive opportunities;
• Assistance in the structuring of a service offer in relation to the production and the dissemination of the Key Information Document (KID);
• Implementation of transparency rules (Inducements) and their impact on ManCo’s remuneration model and related tax consequences and opportunities;
• Outline review of depositary and custodian processes from a risk, regulatory and operational point of view;
• Project Management Assistance.

To download the text as pdf, click here.
 

Why PwC Luxembourg?

PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with over 2100 people employed from 57 different countries. It provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. It helps its clients create value by giving comfort to the capital markets and providing advice through an industry focused approach.

PwC Luxembourg is a member firm of PwC International Limited ("PwC IL"). The PwC network is the largest global professional services network with more than 169,000 people working in 158 countries. PwC is the brand under which each member firm operates and provides services. All PwC member firms are separate legal entities which deliver their services locally and internationally without engaging in any way PwC IL' responsibility or liability.