On 16 October 2024, the draft Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024 (the draft Regulations) were published on legislation.gov.uk, along with a draft explanatory memorandum.
The draft Regulations contain provisions to:
- Support the operationalisation of the Government’s first equivalence decision under the Overseas Funds Regime (OFR).
- Amend the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (the CCP Regulations).
Supporting operationalisation of OFR equivalence
The draft Regulations are intended to support the operationalisation of the Government’s equivalence decision regarding the EEA states for the purposes of the OFR. They do this by extending the temporary marketing permissions regime (TMPR) for a further year, to allow sufficient time for funds in scope of the Government’s equivalence decision to transition to the more permanent marketing arrangements provided by the OFR and avoid any cliff-edge risks.
In addition to this, the draft Regulations also make technical amendments to the TMPR to ensure that sub-funds are able to transition smoothly to the OFR on direction by the Financial Conduct Authority (where they are in scope of the equivalence decision) or alternatively apply for recognition under the section 272 of the Financial Services and Markets Act 2000. There are also other technical changes relating to how the TMPR accounts for different types of sub-funds.
Amending the CCP Regulations
The draft Regulations amend the CCP Regulations, which established a temporary recognition regime (TRR) in the UK for overseas central counterparties (CCPs) that were recognised by the EU, and therefore had market access to the UK, before the end of the transition period. Under the UK’s current regime, a CCP automatically loses its temporary recognised status if its EU recognition is withdrawn; the draft Regulations will amend the TRR so that this is no longer the case.