Overview

This bill aims to remove listed investment companies from the definition of "alternative investment funds" under UK regulations. This change simplifies regulations for these companies and aligns UK rules with how they are treated in other jurisdictions.

Description

The Alternative Investment Fund Designation Bill amends several pieces of existing legislation related to the regulation of investment funds. The key change is to exclude closed-ended investment companies (those with a fixed number of shares), whose shares are traded on a UK recognised exchange, from the Alternative Investment Fund Managers Regulations 2013. This means these companies will no longer be subject to the more stringent regulations applying to Alternative Investment Funds (AIFs).

The bill makes consequential amendments to:

• Commission Delegated Regulation (EU) 2017/565: This clarifies that costs and charges related to these exempted closed-ended investment companies are not included in investment firm reporting requirements.
• Commission Delegated Regulation 2017/653: Costs of these exempted companies are excluded when calculating the costs of packaged retail and insurance-based investment products.
• Commission Regulation (EU) 583/2010: This ensures that charges related to these exempted companies are not presented in Key Investor Information Documents (KIIDs) as entry/exit charges or charges of the underlying UCITS fund itself.

Government Spending

The bill is not expected to have a significant direct impact on UK government spending. The changes primarily relate to regulatory simplification and reducing the administrative burden on certain investment companies, potentially leading to cost savings for the firms affected, rather than a direct effect on government finances.

Groups Affected

The main groups affected are:

• Closed-ended investment companies: Listed on UK recognised exchanges will benefit from reduced regulatory burden.
• Investment firms: These companies will have a simplified reporting process concerning costs and charges.
• Investors: May benefit from simplified information on investment products as a result of the changes made in Key Investor Information Documents (KIIDs).
• Regulators: The Financial Conduct Authority (FCA) will likely have a reduced administrative workload related to the supervision of these investments.

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