On 19 November 2020, the German Regulator (BaFin) issued a notice on UK investment funds and their status in light of the imminent expiry of the transition period and the UK qualifying as a third country after 31 December 2020.
Currently, UK UCITS and AIFs benefit from the EU-passport regime, which facilitates marketing of EU-UCITS and EU-AIF in Germany. From 1 January 2021 onward, each UK investment fund intended for marketing in Germany needs to be bilaterally notified pursuant to the German provisions for incoming third country AIF. The specific notification procedure depends on the targeted investor category, i.e. retail or (semi-)professional investor, of the respective then third country investment fund.
The mandatory marketing notification procedures applying to UK investment funds going forward are not comparable to a German passporting application under the EU-passport regime. Instead, a significant number of documents are needed for filing with BaFin. If the intention is to market to retail investors, any kind of foreign-language documents need to be translated into the German language. From our experience, such marketing notification for third country AIFs is quite an elaborate process.
In its notice, BaFin emphasizes that:
- Any existing marketing authorization held by a UK investment fund provider based on the EU-passport regime will become void after 31 December 2020.
- Marketing notifications for UK investment funds for the period following 1 January 2021 are possible even prior to 31 December 2020 to ensure continuous marketing of these investment funds.
Thus, any UK investment fund provider may now start the marketing notification procedure irrespective their current qualification as an EU management company.
In addition, BaFin has added 10 UK trading venues to the list of authorized exchanges and other organized markets, namely London Stock Exchange, NEX Exchange, Euronext London, Aquis MTF, Cboe Europe Equities MTF, UBS MTF, Turquoise, Liquidnet Europe, London Stock Exchange Non-AIM MTF und MarketAxess Europe MTF.