“Modernising the UK’s client categorisation framework will help increase capital flows, expand investor choice, and drive economic growth.” – Jillien Flores, MFA Chief Advocacy Officer
London, UK – MFA recommended reforms to streamline the UK’s client categorisation framework in a letter submitted to the Financial Conduct Authority (FCA) today. The letter is in response to the FCA consultation paper on the Markets in Financial Instruments Directive (MiFID) Organisational Regulation, which examines the rules that determine who can access alternative asset classes and alternative investment funds (AIFs).
“Modernising the UK’s client categorisation framework will help increase capital flows, expand investor choice, and drive economic growth,” said Jillien Flores, MFA Chief Advocacy Officer. “Ensuring that sophisticated investors can invests in AIFs is in line with the UK’s growth and competitiveness agenda and will strengthen London’s position as a global financial services centre.”
The letter encourages the FCA to update outdated and inconsistent client categorisation rules. The rules prevent sophisticated investors who would qualify to invest in alternative asset classes in other jurisdictions from being able to invest in AIFs in the UK. The rules also increase costs and burdens on AIFs, lessening the attractiveness of the UK for financial services companies and harming economic competitiveness.
To modernise the regulatory framework in a manner that will increase capital flows, reduce costs and burdens for investors and managers, and drive economic growth, MFA recommends right-sizing the rules by:
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Establishing a single unified professional client opt-up process for investor categorisation for both MiFID and non-MiFID activities
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Modernising the professional client opt-up criteria to more reliable indicators of investor qualification in today’s capital markets.
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Harmonising the definition of large undertakings that qualify as per se professional clients for MiFID and non-MiFID business.
Read the full letter here.
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
