Webinar: What fund managers will have to do differently under UCITS V (and possibly UCITS VI)


Date: Monday, 11 May, 2015
Starting at: 2:00pm (BST), 3:00pm (CET), 9:00am (EDT)
Location: London
Contact: Dan Stevens

Video Replay:


To access a copy of the slides addressed by Dominic Hobson at the beginning of the webinar, please contact HFR via www.hedgefundresearch.com


This webinar explored the changes imposed on managers of UCITS funds by the latest iteration of the Directive, with a focus on the practical, day to day consequences of the new depositary, cash flow monitoring, compliance and remuneration rules.


Key points from the webinar discussion

  • Alternative UCITS continues to grow. Hedge Fund Research data indicates the asset class has grown from €44 billion to €188 billion at present. While UCITS have historically been invested in vanilla instruments and strategies, there are some creative strategies being developed which are facilitating increased investor interest.

  • There is strong interest in UCITS from Asia and Latin America in addition to Europe. However, there are various pan-Asian passport schemes being developed (ASEAN and APEC) that are generating interest in those regions and this could threaten the stranglehold UCITS has in Asia.

  • The core benefit of UCITS is the pan-EU distribution passport which allows managers to distribute their funds across the EU. A core attraction of UCITS in the post-2008 environment is the transparency it affords underlying investors. AIFMD affords similar benefits such as its pan-EU distribution passport, and it is hoped there will be similar interest too.

  • Another benefit of UCITS is that they are onshore (usually Ireland or Luxembourg) and this appeals to conservative institutional investors in the EU, many of whom are nervous or contractually prohibited from investing into offshore fund structures due to their perceived lack of regulatory oversight.

  • There is a somewhat bizarre situation where investors into AIFMs under AIFMD have more protections than those investing into UCITS despite the former being overwhelmingly institutional and the latter geared towards retail. There is likely to be an alignment of these two regulations over time.

  • One of the core differences between AIFMD and UCITS surrounds depositary liability. Both directives require the appointment of a depositary to provide safekeeping of assets, cash-flow monitoring and oversight and subjects them to strict liability for loss of assets at the sub-custodian. AIFMD depositaries, however, have negotiated contracts and indemnifications discharging liability to the sub-custodian under a handful of circumstances. Under UCITS V, this is not permitted.

  • UCITS V also makes the depositary liable for assets lost at the central securities depository, something that AIFMD does not. As such, depositaries must be fully aware of the market events and issues in emerging, higher risk markets. They need to demonstrate to regulators they have been monitoring those markets.

  • Depositary banks have been monitoring events in Greece and some have expertise in getting assets out of markets during times of panic or crisis. As such, depositaries feel they are well prepared to face market crises.

  • Bank-owned asset managers could be forced to undertake a review demonstrating the depositary at the parent company is the best depositary for the role. However, it must demonstrate there is a functionally and hierarchically separate management structure and no conflict of interests.

  • In terms of remuneration, UCITS V rules are similar to AIFMD insofar as managers have to defer around 40 per-cent of their remuneration and pay it out in approved financial instruments.

  • UCITS VI – whenever it comes into fruition – is likely to clamp down on the asset eligibility criteria of UCITS amid concerns managers are shoehorning exotic  strategies into the asset class. However, ESMA did try to clamp down on UCITS Commodity Trading Advisors only to find these managers started using exchange traded notes to circumvent the rules.  The simplification of asset eligibility in UCITS is part of the regulator’s efforts to make AIFMD an institutional product and UCITS strictly retail.

  • UCITS V outlines sanctions for non-compliance including the ability to temporarily ban or permanently ban bad actors. It also introduces a mechanism to publicly name individuals accused of wrongdoing and impose fines of up to €5 million and/or 10 per-cent of annual turnover. It has created a whistleblowing functionality too. Typical sanctions will be levelled at misbehaviour such as style drift, for example.


Sponsored by

"SuMi TRUST" is the international marketing name of the Sumitomo Mitsui Trust Group and its affiliated companies



The webinar will be moderated by COOConnect founding partner Dominic Hobson, and will include the following panellists:


Opening and closing remarks by Dominic Hobson, Founder of COOConnect.


Charles Bathurst is a consultant to the board of SuMi TRUST Global Asset Services. Charles graduated from the Royal Military Academy Sandhurst in 1974 serving as an Officer in the British Army before leaving to spend eight years in the engineering industry, initially with GKN on their military vehicle division. In 1988 Charles moved to the City of London where he worked in international financial and commodity markets for GNI and moved to Credit Agricole in 1995 to found their alternative investment management group. In 1998 he established Credit Agricole Asset Management in London becoming Managing Director. In 2004 Charles moved to Old Mutual Asset Managers becoming International Sales and Marketing Director and in 2008 joined J O Hambro Investment Management Limited as Director and Head of their internal Fund Management Group. During his career Charles has been responsible for initiating and managing to profitability new businesses, multiple product launches and building distribution channels in more than 40 countries globally. Today he is a consultant to the board of SuMi TRUST Global Asset Services to build their commercial growth globally ex Japan.


David O’Keeffe is CEO of SMT Trustees (Ireland) Ltd, a subsidiary of SuMi TRUST, which provides the Trustee, Custodian and Depositary services to Irish and, through a wholly owned Cayman subsidiary, funds domiciled there.  He has been with SuMi TRUST (formerly the Daiwa Securities Group) since 1999, having worked in various roles in fund administration including Head of Shareholder Services, Head of Risk and Head of the Internal Audit function, amongst other roles. Prior to this he worked for a number of years in the fund administration subsidiary of Dresdner Bank AG, Dresdner Bank (Ireland) plc, and also for Rudolf Wolff Fund Management Limited, including the position of Director for a CTA futures trading program subsidiary company.



Robert Hennessy is the Director of Risk and Compliance for SMT Fund Services (Ireland) Limited. Prior to joining SuMi TRUST, Robert was Head of Fiduciary Services for Citibank International plc, Ireland Branch. He also served as a Director and Head of Legal and Compliance for RBS Fund Services (Ireland) Limited. Previously he was a managing director with AIG Global Investment Group and was responsible for the establishment of the legal and compliance functions. Robert has been involved in the mutual funds industry in Dublin’s International Financial Services Centre since 1992 and has particular expertise in the trustee, legal and compliance areas.  He holds a Bachelor of Commerce Degree from University College Dublin and is a member of the Law Society of Ireland having qualified as a solicitor in 1989.


Roger Fishwick is a Director at Thomas Murray, and Chief Risk Officer in the Data Services business. Roger is a Cambridge University Natural Sciences graduate, with a Masters in Management Sciences from Manchester.  His first working decade was in the oil industry, where Roger qualified as an accountant and treasurer. In 1987, Roger joined Prudential Portfolio Managers, the global investment management arm of Prudential plc, establishing the treasury, then as Client Services Director, setting up the client accounting/reporting unit.  Subsequently, he became PPM Group Treasurer, responsible for the back office, treasury and securities lending functions, reselecting the global custodian, outsourcing UK custody, centralising futures clearing and integrating Scottish Amicable Investment Managers. In 2000, Roger moved from PPM to Thomas Murray.  He is a director of the firm, and is Chief Risk Officer in the Data Services business. Previously, he had responsibility for Institutional business, selecting service providers on behalf of major institutional investors as well as doing ratings of global custodians.

Nicole Suignard is an Associate at Sidley Austin LLP. Nicole focuses her practice on transactional and advisory work for asset managers and other firms operating in the financial services sector. She has represented a broad range of fund sponsors on the establishment and ongoing operation of investment funds, with an emphasis on openended products including Undertakings For The Collective Investment In Transferable Securities (UCITS) in Luxembourg, Ireland and the United Kingdom, as well as hedge funds in offshore jurisdictions. She also advises clients on a range of regulatory matters associated with investment companies and investment advisory services.






Each panel discussion will be broadcast live online. Attendees will be able submit questions online that can be put to the panellists during the webinar.


Webinar Review

Access to the recording of the webinars will be made available online in both audio and video format.