Investment management update

Welcome to the July 2020 edition of our investment management update. This publication has been tailored to highlight topical news, cases and changes in the law impacting the investment management sector.

Key things to keep an eye out for in this month's update include:

  • European Commission publishes draft delegated acts incorporating ESG considerations;
  • the FCA’s discussion paper on the new investment firms prudential regime;
  • regulatory responses to the impact of the Covid-19 pandemic;
  • amendments to the Benchmarks Regulation; and
  • the UK’s approach to implementing regulatory reforms before the end of the Brexit transition period.

Explore the entire update below:


European Commission publishes draft delegated acts incorporating ESG considerations

On 8 June 2020, the European Commission (EC) published a suite of draft Level 2 directives and regulations which propose to amend the UCITS Implementing Directive (2010/43/EU), the AIFMD Delegated Regulation ((EU) 231/2013), the MiFID Organisational Regulation ((EU) 2017/565) and the MiFID Delegated Directive relating to product governance ((EU) 2017/593).

The draft measures are a further development of the EU’s action plan on sustainable finance, and seek to ensure investors are given clear information on environmental, social and governance (ESG) risks involved in their investments.  This is in the context of the broader aim of the action plan to shift capital flows towards activities which are socially responsible.

For investment firms and asset managers, internal organisational, risk management and conflicts of interest policies and procedures will need to take into account sustainability risks.

For fund managers, due diligence on investments will now need to include sustainability and any principal adverse impact of investment decisions on sustainability factors. Fund managers will also need to ensure they have the necessary resource to integrate sustainability risks and that senior management is responsible for such integration.

For MiFID firms, the draft measures extend the scope of investment objectives (of a client or target market) to include any sustainability preferences, and accordingly make certain additions to the rules on suitability and product governance.

If the draft measures are implemented in substantively the same form as published, firms will be required to:

  • update internal organisation and risk management policies and procedures;
  • update conflicts of interest policies and procedures;
  • conduct enhanced reviews of investment due diligence processes;
  • introduce special training and/or new staff hires to bolster ESG expertise;
  • review information-gathering process to assess suitability; and
  • update product governance processes to include sustainability preferences of the target market.

It is possible that the UK may decide not to onshore these measures as part of the post-Brexit onshoring of legislation. However, given: (i) the UK will be onshoring the Disclosure and Taxonomy Regulations; (ii) the ongoing political discussions around regulatory equivalence; and (iii) the increasing prevalence of ESG awareness, we would expect the requirements of the draft delegated acts to be implemented in the UK.

If adopted, the draft delegated acts will be subject to scrutiny by the European Parliament and the Council. The amended rules will apply from 12 months after their publication in the Official Journal of the EU. Nevertheless, in the meantime, and given the expectation that these requirements will be implemented in the UK, it would be prudent for firms to take a proportionate approach, and consider the requirements imposed by the draft measures.  This will give firms a better idea of the amount of resource that will need to be devoted to ESG, ensuring that any changes needed to procedures is consistent and appropriate in the context of the business’s financial and non-financial goals.

Firms have until 6 July 2020 to provide responses to the consultation.

EU adoption of the Taxonomy Regulation

On 18 June 2020, the European Parliament adopted the regulation on the establishment of a framework to facilitate sustainable investment (2018/0178(COD)) (known as the Taxonomy Regulation).  It lays down six environmental objectives and allows economic activity to be labelled as environmentally sustainable if it contributes to at least one of the following objectives without significantly harming any of the others:

  • climate change mitigation and adaptation;
  • sustainable use and protection of water and marine resources;
  • transition to a circular economy, including waste prevention and increasing the uptake of secondary raw materials;
  • pollution prevention and control; and
  • protection and restoration of biodiversity and ecosystems.

The adoption of the Taxonomy Regulation follows a letter dated 28 May 2020 from John Glen, Economic Secretary to the Treasury, to Sir William Cash, Committee Chair, regarding the UK’s approach to implementation.  In the letter, Mr Glen confirmed that as the Taxomomy Regulation was due to be published during the implementation period, the UK will retain the taxonomy framework, including its high-level environmental objectives. However, the disclosure requirements contained in the proposed Taxonomy Regulation only apply after 31 December 2021. Therefore, these requirements will not form part of retained EU law.

Mr Glen stated that the government cannot comment at this stage on the extent to which the UK will align with the EU after the implementation period. He explained that this was because the delegated legislation containing technical standards had not yet been published by the European Commission.

For further background, on 10 June 2020, the European Commission published a set of FAQs about its work and that of the EU technical expert group on sustainable finance on taxonomy and the EU green bond standard.

FCA consultation on permanent ban on mass-marketing of speculative illiquid securities

On 18 June 2020, the Financial Conduct Authority (FCA) published a consultation paper detailing its proposals to make its temporary rules on marketing certain high-risk investments (including speculative mini-bonds) permanent, and extend them to some similar securities.

The FCA's temporary product intervention (TPI) for speculative illiquid securities (SISs), came into force on 1 January 2020 for a period of 12 months. It restricts speculative mini-bonds and preference shares from being mass-marketed to retail investors, which means that such products can only be marketed to sophisticated or high net worth investors and promotions will have to include a specific risk warning. It also improves disclosure of key risks and costs to those certified high net worth and sophisticated retail investors who are still eligible to receive promotions for these types of securities.

The FCA’s concerns with SISs has arisen following an increasing prevalence of other types of high-risk investments being marketed to consumers. The FCA is now proposing to:

  • make the TPI rules for debentures and preference shares (that are currently subject to them) permanent;
  • expand the scope of the TPI rules so that they apply to any listed bonds with similar features to SISs that are not regularly traded;
  • exclude certain securities from the TPI rules where they relate to single-company investments;
  • make clarifications to the TPI rules, including so that the existing exemptions operate as intended; and
  • clarify how financial promotions are restricted for SISs and for non-mainstream pooled investments.

Once the FCA has considered the feedback, it plans to publish final rules in a policy statement before the end of 2020. Subject to any changes arising from consultation feedback, it intends that rules making the TPI permanent will come into effect on 1 January 2021, so that the measures currently in force continue to apply as permanent rules, along with the additional changes proposed.

The consultation closes on 1 October 2020.

FCA finalised guidance on framework for assessing adequate financial resource

On 11 June 2020, the FCA published finalised guidance (FG20/1) setting out a framework explaining the purpose, and its approach to the assessment, of adequate financial resources, and providing further guidance on the meaning of "adequate financial resources".  It follows the FCA’s “Consultation Paper 19/20: Our framework – assessing adequate financial resources in which the FCA consulted on the same matters.

The guidance is relevant to all FCA solo-regulated firms subject to the Threshold Conditions or the Principles for Businesses (or both). It sets out, and aims to provide clarity on:

  • the role of assessing adequate financial resources;
  • what the FCA looks for from firms when assessing adequate financial resources; and
  • the FCA's expectations regarding the practices firms should adopt in their assessment of adequate financial resources.

The FCA expects firms to assess their adequate financial resources commensurate to the risk of harm and complexity of their business. This starts with considering whether they have enough assets to cover their debts and liabilities. For firms with limited potential to cause harm, meeting debts as they fall due may be enough to show they have adequate financial resources. For firms with potential to cause significant harm, a more in-depth assessment is likely to be required.

The FCA notes that the Covid-19 pandemic has arisen during the development of the guidance. Therefore, the guidance does not place specific additional requirements on firms because of Covid-19, but the crisis underlines the need for all firms to have adequate resources in place.

EBA roadmap for implementation of the new regulatory framework for investment firms

On 4 June 2020, the European Banking Authority (EBA) outlined its roadmap for the implementation of the new regulatory framework for investment firms and launched a public consultation on its first set of regulatory deliverables on prudential, reporting, disclosures and remuneration requirements. The roadmap outlines the EBA’s work plan for each of the mandates laid down in the Investment Firms Regulation ((EU) 2019/2033) (IFR) and the Investment Firms Directive ((EU) 2019/2034) (IFD) and clarifies the sequencing and rationale behind their prioritisation.

A significant number of mandates were given to the EBA under the IFD and the IFR. The mandates cover a broad range of areas related to the prudential treatment of investment firms. These include 18 regulatory technical standards (RTS), three implementing technical standards (ITS), six sets of guidelines, two reports and the requirement for the EBA to maintain a list of capital instruments and a database of administrative sanctions, and a number of notifications in various areas.

The first consultation paper on prudential requirements includes three draft RTS on the reclassification of certain investment firms to credit institutions, five draft RTS on capital requirements for investment firms at solo level and one draft RTS on the scope and methods of prudential consolidation for investment firms at group level.

The second consultation paper on reporting requirements and disclosures, includes draft ITS on the levels of capital, concentration risk, liquidity, the level of activities as well as disclosure of own funds; and draft RTS specifying the information that investment firms have to provide in order to enable the monitoring of the thresholds that determine whether an investment firm has to apply for authorisation as credit institution.

The third and fourth consultation papers on remuneration requirements include one draft RTS on the criteria to identify all categories of staff whose professional activities have a material impact on the firm’s risk profile or assets it manages (“risk takers”); and one draft RTS specifying the classes of instruments that adequately reflect the credit quality of the investment firm as a going concern and possible alternative arrangements that are appropriate to be used for the purposes of variable remuneration of risk takers.

The deadline for responses to the consultation is 4 September 2020.

FCA discussion paper: new UK investment firms prudential regime

On 23 June 2020, HM Treasury published a policy statement providing detail on its legislative approach for prudential standards in the Financial Services Bill. The Bill establishes, among other things, prudential standards for a new Investment Firms Prudential Regime (IFPR), derived from the IFR and IFD. On the same date, the FCA published its discussion paper on the new UK prudential regime for MiFID investment firms, detailing its approach to implementation of the requirements for firms.

In the discussion paper, the FCA sets out details of the new EU prudential regime for investment firms and seeks feedback on the approach it should take to the design of the IFPR. Where relevant, the FCA has also set out in each chapter its initial views on the intention and implication of the IFR and the IFD and its interpretation of it.

The discussion paper will be of interest to all investment managers authorised under the rules implementing MiFID and governed by the FCA’s BIPRU and IFPRU rules. It will also be relevant to those managers classified as Collective Portfolio Management Investment Firms and those classified as exempt-CAD firms.

For more information, see our in-depth article “New prudential regime: time for investment managers to focus”.

The deadline for responses is 25 September 2020.

Phased move to FCA’s new data collection platform RegData replacing Gabriel

On 22 June 2020, the FCA published a press release on its new data collection platform for gathering regulatory data from firms that will replace its current system Gabriel. The FCA notes that since April 2020, firms have been registering for RegData through a one-off activity when accessing Gabriel.

The FCA intends to move firms and their users to RegData in groups to minimise the impact it has on them, and as such firms' moving dates will be determined by the nature of their reporting obligations and reporting schedules. Firms will be unable to access RegData until the firm’s and their users' data have been moved from Gabriel.

The FCA will email firms' principal user and associated users three weeks before their moving date, with reminders of five days and one day to go. Compliance consultants will receive reminders for every firm their user account is currently associated with in Gabriel.

In advance of their moving date, firms are asked to ensure that they have:

  • up-to-date contact details in Gabriel;
  • nominated the correct principal user and assigned administrator rights correctly in Gabriel; and
  • accurate information in Gabriel about all other active users, with any non-active users disabled.

Firms should continue to use Gabriel, using their existing login details, until they have been moved to the new platform.

European Commission speech: legislative proposals for crypto-assets and digital operational resilience

On 24 June 2020, the EC published a speech on digital finance that was delivered by Valdis Dombrovskis, European Commissioner for Financial Stability, Financial Services and Capital Markets Union, at the Digital Finance Outreach 2020 closing conference.

In his speech, Mr Dombrovskis confirms that the EC intends to adopt legislative proposals for crypto-assets and digital operational resilience later in 2020.


Mr Dombrovskis states that Europe is in a position to lead the way on regulation and thus a common approach which supports and stimulates innovation is needed. The EC intends to adjust existing rules for crypto-assets that are currently covered by EU legislation to ensure that the relevant rules remain fit for purpose. In the area of distributed ledger technology, it will propose a pilot scheme to allow some regulatory flexibility for experimentation. It will also create a bespoke regime and a passport for markets in crypto-assets for those assets that are not covered by EU legislation. The aim of which is to make sure that risks are addressed, and that investors and users have a clear understanding of them. Its approach is to be proportionate, with lighter rules for less risky projects. However, it will impose stronger rules on those crypto-assets that potentially have a systemic role, such as “global stablecoins”.

Digital operational resilience

Mr Dombrovskis also states that the EC is working on legislation for all financial institutions to comply with standards of operational resilience. Among other things, it will set out channels for reporting cyber incidents and identify tools for testing the cyber-resilience of financial institutions. The EC also intends to create a financial oversight mechanism for third-party ICT providers, such as cloud services. It will also consider rules to deal with concentration risks arising from reliance on a small number of external providers.

Climate Financial Risk Forum publish guide to climate-related financial risk management

The Climate Financial Risk Forum (CFRF) was launched in 2019, co-chaired by the FCA and the Prudential Regulatory Authority (PRA). Its aim is to share best practice across financial regulators and industry to advance the financial services sector responses to the financial risks from climate change.

On 29 June 2020, the FCA issued a press release to share that the CFRF published their guide to climate-related financial risk management. The guide aims to help financial firms understand the risks and opportunities that arise from climate change, and provides support for how to integrate them into their risk, strategy and decision-making processes. As part of this, the guide considers how firms can plan for the impact of climate policies over different time horizons and assess their exposure to climate-related financial risks so that they can adapt their businesses in response.

The guide contains four industry-produced chapters (disclosures, innovation, scenario analysis and risk management) and one summary co-produced by the FCA and PRA. The PRA and FCA have made clear that the views expressed in the guide do not necessarily represent the view of the regulators and do not constitute regulatory guidance. However, given the regulator’s role in facilitating the CFRF discussions, firms should take note of the guide in their approach to climate-related financial risk management.


FCA speech: expectations for 2020 for wealth management and advice industry in response to Covid-19

On 4 June 2020, Megan Butler, FCA Executive Director of Supervision, Investment, Wholesale and Specialists, delivered a speech at the Personal Investment Management and Financial Advice Association’s (PIMFA) Virtual Festival on the FCA's response to the Covid-19 pandemic and its expectations for 2020.

Key takeaways from the speech include:

  • FCA areas of focus: operational resilience in light of coronavirus, financial resilience and acting with integrity.
  • In respect of operational resilience, firms were reminded of the importance of the FCA’s proposals in the consultation paper “CP19/32: Building operational resilience: impact tolerances for important business services” published December 2019. This set out the following expectations for firms:
    • to identify their important business services, by considering how disruption to the business services they provide can have impacts beyond their own commercial interests;
    • to set a tolerance for disruption for each important business service and ensure they can continue to deliver their important business services. They must ensure that they are able to remain within their impact tolerances during severe but plausible scenarios; and
    • to map and test important business services to identify vulnerabilities in their operational resilience and drive change where it is needed.
  • Firms must maintain their focus on operational resilience as circumstances change, government guidance is updated and, as things return to some form of "new normal", consider how those changes will affect their resilience and their services.
  • In considering the future of regulation in the UK, the FCA continues to focus on an outcomes-based approach, viewed from the perspective of end users of financial services.
  • The FCA wants all firms to take consumer and market outcomes into greater account when they design and deliver services. To that end, the outcomes the FCA will continue to pursue include requiring that:
  • Firms maintain adequate arrangements to protect client money and custody assets in line with the FCA’s requirements.
  • Firms provide suitable advice and discretionary investment decisions irrespective of any changes to service propositions and customer behaviours.
  • Firms continue to act with integrity. This includes charging appropriate fees for services delivered and preventing fraud.
  • Firms continue their efforts to prevent financial crime and market abuse through adequate controls and governance.
FCA speech: a financial system to support the recovery

The FCA published a speech by Charles Randall, Chair of the FCA and Payment Systems Regulator, to a virtual roundtable of bank chairs hosted by UK Finance on 16 June setting out ambitions for future regulation.

The speech addressed the following issues.

  • Following the Covid-19 pandemic, the need for the FCA to reassess its approach to consumer debt, high risk retail investments and financial exclusion. In particular, Mr Randall noted that it was an inescapable fact that some of the debt that businesses have incurred in the crisis will turn out to be unaffordable and a robust framework for dealing with these will be needed. This would require a shared understanding of how to treat borrowers in difficulty and for lenders to scale their arrears handling functions quickly, and invest in training and controls. 
  • The need to make it easy for people to save into simple products that meet their needs. Mr Randall notes that we need to be open to redesigning the system so that it better protects ordinary retail investors from investments which are highly unlikely to be suitable for them.
  • The need to prevent circumstances where firms which market unsuitable investments pass the bill for their misconduct on to well-run firms through the Financial Services Compensation Scheme (FSCS). Mr Randall noted that the FSCS compensation costs levy is already at an unacceptable level and that it is likely to increase, as some firms will fail during this crisis.

Mr Randall reiterated that the FCA and firms should focus more on consumer outcomes. He set out that to achieve this, the FCA will need to ensure it collects the right data from firms, and join it up with a cross-organisational intelligence strategy to intervene more promptly. His ambitions also included redesigning the system to ensure that the polluting firms in the financial sector pay, not those who have behaved well. Accordingly, capital requirements and professional indemnity insurance for firms need to be proportionate to the risks they present to consumers. 

Accepting that these aims would take significant investment and time to implement, Mr Randall considered that the Covid-19 pandemic presented opportunities to reshape our financial system to make it fit for the recovery and provide more sustainable investment in the future. 

Extension of SM&CR implementation periods for solo-regulated firms

On 30 June 2020, the FCA issued a press release announcing that, in the light of the Covid-19 pandemic, the deadline for solo-regulated firms to undertake the first assessment of the fitness and propriety of their certified persons under the Senior Managers and Certification Regime (SM&CR) has been delayed. HM Treasury has agreed to delay the deadline from 9 December 2020 until 31 March 2021.

To ensure SM&CR deadlines remain consistent, and to provide extra time for firms that need it, the FCA intends to consult on extending the deadline for the following requirements from 9 December 2020 to 31 March 2021:

  • the date the conduct rules come into force for conduct rules staff;
  • the deadline for submission of information about directory persons to the register. However, the FCA will still publish details of certified employees of solo-regulated firms on the financial services register from 9 December 2020. Where firms can provide this information before March 2021, they are encouraged to do so; and
  • references in the FCA's rules to the deadline for assessing certified persons as fit and proper.

To give solo-regulated firms certainty, the FCA intends to consult alongside the parliamentary process to allow it to finalise its policy as soon as possible.

The FCA makes clear that firms should continue with their programmes for Conduct Rules staff training. Additionally, the FCA states that if firms are able to certify staff earlier than March 2021, they should do so. Firms should not wait to remove staff who are not fit and proper from certified roles.

ESMA renews decision lowering reporting threshold for holders of net short positions

In our April edition, we reported that the European Securities and Markets Authority (ESMA) published a decision to temporarily require holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority (NCA) if the position reaches or exceeds 0.1% of the issued share capital. On 10 June 2020, ESMA published a decision renewing the measure for an additional three months.

ESMA is required to review the requirement, which was first imposed in a decision published in March 2020, at appropriate intervals and at least every three months. It carried out its review based on an analysis of performance indicators, including prices, volatility, credit default swaps spread indices, as well as the evolution of net short positions, especially those between 0.1% and 0.2%, which has steadily increased since the entry into force of the original decision.

As previously reported, the temporary transparency obligations apply to any natural or legal person, irrespective of their country of residence. They do not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.

The decision entered into force on 17 June 2020 and applies for a period of three months until 17 September 2020.


Amendments to the Benchmarks Regulation

On 23 June 2020, the House of Commons published a written statement, made by Rishi Sunak, Chancellor of the Exchequer, on proposals to amend the retained EU law version of the Benchmarks Regulation ((EU) 2016/1011) (the UK BMR).

The key measures which the Government plans to take forward in the Financial Services Bill 2019-21 are to:

  • amend the UK's existing regulatory framework for benchmarks to ensure it can be used to manage different scenarios before a critical benchmark's eventual cessation. The government will introduce amendments to the UK BMR to ensure that FCA powers are sufficient to manage an orderly transition from LIBOR;
  • extend the circumstances in which the FCA may require an administrator to change the methodology of a critical benchmark and clarify the purpose for which the FCA may exercise this power. New regulatory powers would enable the FCA to direct a methodology change for a critical benchmark in circumstances where it has found that the benchmark's representativeness will not be restored, and where action is necessary to protect consumers or to ensure market integrity;
  • strengthen existing law to prohibit use of an individual critical benchmark where its representativeness will not be restored, while giving the regulator the ability to specify limited continued use in legacy contracts; and
  • refine ancillary areas of the UK's regulatory framework for benchmarks to ensure its effectiveness in managing the orderly wind down of a critical benchmark, including that administrators have adequate plans in place for such situations.

The FCA has published a statement welcoming the announcement. The FCA will publish statements of policy on its approach to potential use of these powers following further engagement with UK and international stakeholders.

The FCA will continue to work closely with other UK authorities, the Working Group on Sterling Risk-Free Rates and other market participants, and international counterparts, to help manage an orderly end to the LIBOR benchmark. The work will inform the FCA's thinking on the factors affecting where and whether a change to LIBOR's methodology could be appropriate and feasible, and what form any such change might take.

At this stage, it is intended that the UK BMR will apply in the UK from the end of the Brexit transition period. For further information, see our Passle "FCA powers for LIBOR transition: firms beware". See further below EU Benchmarks Regulation – new categories of benchmarks.


UK approach to implementing regulatory reforms before end of Brexit transition period

On 23 June 2020, the House of Commons published a written statement, made by Rishi Sunak, Chancellor of the Exchequer, on the UK's approach to implementing financial services regulatory reforms before the end of the Brexit transition period.

The statement sets out the UK’s approach to the certain financial services legislation.

  • The Central Securities Depositories Regulation – the UK will not be implementing the EU's new settlement discipline regime, set out in the Central Securities Depositories Regulation (909/2014), due to apply in the EU in February 2021. UK firms should instead continue to apply the existing industry-led framework. It was stated that any future legislative changes will be developed through dialogue with the financial services industry with sufficient time provided to prepare for the implementation of any new future regime.
  • The Securities Financing Transactions Regulation – the UK will not be incorporating the reporting obligation of the Securities Financing Transactions Regulation ((EU) 2015/2365) for non-financial counterparties, which is due to apply in the EU from January 2021, into UK law.
  • The European Market Infrastructure Regulation Refit Regulation– HM Treasury will publish legislation to complete the implementation of the Regulation amending EMIR ((EU) 2019/834)) to improve trade repository data and ensure that smaller firms are able to access clearing on fair and reasonable terms.
  • The Benchmarks Regulation– HM Treasury plans to make changes relating to the Benchmarks Regulation ((EU) 2016/1011) to ensure continued market access to third country benchmarks until the end of 2025 (see Amendments to the Benchmarks Regulation above).
  • The Market Abuse Regulation – HM Treasury intends to make amendments relating to the Market Abuse Regulation (596/2014) to confirm and clarify that both issuers, and those acting on their behalf, must maintain their own insider lists, and to change the timeline issuers have to comply with when disclosing certain transaction undertaken by their senior managers.
  • PRIIPs – HM Treasury plans to publish legislation to improve the functioning of the UK's packaged retail and insurance-based investment products (PRIIPS) regime and address potential risks of consumer harm. It will publish more information in July 2020.

For more information, see our in-depth article “Brexit and financial regulation – update on the UK’s post-Brexit approach”.

EU Benchmarks Regulation – new categories of benchmarks

On 30 June 2020, the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020 (SI 2020/628) were published. This included amendments to The Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019 (SI 2019/657), to make sure that the UK continues to have an effective regulatory framework for benchmarks after the end of the Brexit transition period.

Since the UK onshored the BMR, the EU has amended its regime to include new categories of low carbon benchmarks (“climate transition benchmarks” and “Parisaligned benchmarks”) and extended existing rules on benchmark transparency in relation to ESG factors. In particular, the legislation aims to enhance the transparency and comparability of low carbon benchmarks to enable investors to make more informed decisions. It also increases the length of time that national competent authorities can compel administrators to publish, and supervised contributors to submit to, a critical benchmark from two years to five years.

The amendments to the UK BMR align it with these EU amendments. This is to ensure that UK BMR will continue to be effective over new categories of climate benchmark.

Temporary Permissions Regime notification window to reopen in September

On 1 July 2020, the FCA updated its webpage on the temporary permissions regime (TPR) for inbound passporting EEA firms and funds. The FCA confirmed that on 30 September 2020 it will re-open the notification window for firms which wish to use the TPR.

The TPR will now take effect at the end of the transition period. The TPR enables passporting firms and investment funds to continue their business with minimal disruption at the end of the transition period when the passporting regime will fall away. It will allow inbound firms to continue operating in the UK within the scope of their current permissions for a limited period after the end of the transition period, while seeking full UK authorisation if necessary. It will also allow investment funds with a passport to continue temporarily marketing in the UK.

The window for firms and fund managers to notify the FCA that they want to use the TPR is currently closed. Firms and fund managers that have already submitted a notification need take no further action at this stage. The FCA will re-open the notification window on 30 September 2020. This will allow firms and fund managers that have not yet notified the FCA to do so before the end of the transition period. There will also be an opportunity for fund managers to update their previously submitted notifications, if necessary.

The FCA has stated that it will communicate further on this in September.