Financial Services Quarterly Report: Fourth Quarter 2018

December 28, 2018

A review of recent developments in the international financial services industry, including:

  • U.S. SEC Focus Areas in the Registered Funds Industry
  • French Taxation of Carried Interest: A New Opportunity for Foreign Fund Managers
  • A New Fund Vehicle for Singapore
  • Thinking of a UCITS? – Points to Consider
  • Hong Kong Regulation of Crypto-Related Investments
  • Dechert’s World Compass
  • Dechert's Brexit Resources
  • Cryptocurrency and Blockchain Tracker


U.S. SEC Focus Areas in the Registered Funds Industry

In November of last year, the SEC’s Office of Compliance Inspections and Examinations issued an alert announcing a series of risk-based examinations focused on mutual funds and exchange-traded funds. The alert not only highlights OCIE’s focus areas in the registered funds industry, but also signals the issues that might be the subject of future enforcement activity in the industry. It should be noted that the alert’s focus on mutual funds and ETFs – primary investment vehicles for retail investors – is consistent with SEC Chairman Clayton’s focus on protecting the long-term interests of retail investors.

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French Taxation of Carried Interest: A New Opportunity for Foreign Fund Managers

A parliamentary amendment, introduced in Finance Bill 2019 and adopted on December 28, 2018, completes the favorable tax framework offered to foreign fund managers considering relocation to France, by allowing them to benefit from a 30% tax rate on the carried interest they hold in foreign funds. This measure is part of a series of tax incentives introduced by the French government to facilitate the potential relocation of foreign management teams to France, especially in the context of Brexit.

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A New Fund Vehicle for Singapore

Singapore passed a law on 31 October 2018, introducing a new type of Singapore fund vehicle, the Variable Capital Company (VCC), which will now serve as an alternative to other types of vehicles such as companies, partnerships and unit trusts. On the face of it, the VCC appears to be an attractive vehicle for Singapore fund managers, as it offers several of the advantages of a partnership (in terms of flexibility, privacy, relaxed capital repatriation restrictions and less-stringent corporate governance requirements), while at the same time retaining certain features of a company (including for Singapore tax purposes).

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Thinking of a UCITS? – Points to Consider

With close to EUR 10 trillion in net assets, UCITS are an attractive proposition for managers. The UCITS brand is globally recognised and is firmly established as a product of choice for retail investors and institutions requiring a highly liquid investment. However, UCITS have a large number of moving parts and costs associated with their ongoing operations. As such, it is important to “think it through” before taking the leap to launch a UCITS.

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Hong Kong Regulation of Crypto-Related Investments

In light of growing investor interest in gaining exposure to crypto-related investment products, regulators are seeking to provide guidance as to the marketing and distribution of these products. On 1 November 2018, the Hong Kong Securities and Futures Commission issued circulars setting out the regulatory standards relating to virtual asset portfolio managers and fund distributors, as well as the conceptual framework for the potential regulation of virtual asset trading platform operators.

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World Compass: Dechert Announces the Launch of New Compliance Tools Module

As part of the ongoing development to make World Compass as relevant and helpful as possible to subscribers, Dechert plans to introduce a number of tools and applications within this Compliance-focused module. The Fly-in Quick Reference Guide is the first of these applications, and is designed to assist in-house Compliance and Legal teams in addressing day-to-day questions on typical cross-border activities.

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Dechert’s Brexit Resources

Lawyers in Dechert’s International Trade and EU Law practice bring a uniquely valuable perspective to the legal and commercial analysis of the impact of Brexit.

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Dechert’s Brexit Impact Analysis is an online tool that draws on your responses to a series of multiple-choice questions to provide your business with a tailored printable overview of your exposure to the main risks of Brexit.

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Cryptocurrency and Blockchain Tracker

Cryptocurrencies and the encrypted, decentralized blockchain protocol that underpins them have grown from abstract theories to a transformational force that is disrupting the way many industries will operate for decades to come. To assist our clients around the globe in navigating this rapidly evolving space, Dechert has launched a Cryptocurrency and Blockchain Technology website. Subscribe to Tracker updates.

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