International Investment Funds

July 01, 2018
Financial Product Fundamentals: Law, Business, Compliance | Practising Law Institute

The investment management or financial services firm of the twenty-first century is likely to be global in operations and scope. It may invest assets on behalf of itself and its clients in a wide range of markets around the world, and may have established branches or operating subsidiaries in foreign countries to facilitate access to local market intelligence and company information. It is also likely to offer a wide range of investment products to its customers, in the form of investment funds, managed or private accounts, or currency or commodity trading vehicles. Investment products it offers may be created under the laws of numerous individual jurisdictions and offered within particular national markets, within regional markets, such as the countries of the European Union (EU), or to a global market without regard to the country of origin of customer funds.

The global reach and demands of the modern investment firm lead to special challenges and complexities in the design of investment products. In many ways, the globalization of the investment management marketplace offers special opportunities to create new and exciting products with features that would not be possible if one were limited to structural opportunities existing only under the laws of one country. On the other hand, dealing in the world of global investment products requires additional knowledge of, and sensitivity to, the different legal systems and structures applicable to a firm’s global investment operations. This has never been more apparent than today when global regulation is changing at a rapid pace in the wake of the worst financial crisis in more than seventy years. In this effort, it is essential to maintain a keen eye on the avoidance of potential fiscal, regulatory, or practical pitfalls.

The most recent updates to this chapter describe the impact of the U.S. Jumpstart Our Business Startups Act (JOBS Act), CFTC regulatory developments, the Volcker Rule and related regulations, the UCITS V directive, the Markets in Financial Instruments Directive (MiFID) and the Directive on Alternative Investment Fund Managers (AIFMD), among others.

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