20 June 2014

The UCITS V Directive: what are the key changes and what will this mean for fund managers?

Ucitsindes.com sat down with Kees Groffen to discuss the changes to come under UCITS V and what this will mean for fund managers.

Mr. Groffen, the final text of the UCITS V Directive now has been agreed. Could you sum up the key changes for UCITS managers? Kees Groffen: UCITS V introduces rules on remuneration for identified staff of UCITS managers. A UCITS manager must adopt a remuneration policy and apply the policy to identified staff: senior management, risk takers, control functions and employees receiving the same remuneration. Restrictions apply with respect to the type of variable remuneration (in principle units in the UCITS or equivalent instruments) and part of the variable remuneration (40 – 60%) must be deferred for at least three years. Information on remuneration must be disclosed in the annual report and the key investor information (KIID). What are the next steps regarding UCITS V? Groffen: The implementation of UCITS V into national law is expected by mid-2016. In July 2012 the European Commission launched a consultation on a number of issues which could result in further amendments to the UCITS Directive, referred to as UCITS VI. Issues include an EU passport for depositaries allowing them to provide their services on a cross border basis, shadow banking, eligible assets and the use of derivatives – in particular, whether it is necessary to limit the scope of eligible derivatives and the use of derivatives generally to those traded on multilateral platforms and cleared by a central counterparty and liquidity management rules. The regulatory environment for UCITS will keep changing for the next years and it will remain a challenge for managers to keep up with the developments. Click here to read the full interview with Kees Groffen.