Gaining a passport into Luxembourg for its UCITS ManCo permissions will see third-party administrator Maitland attain Super ManCo status.
A Super ManCo utilises the EU passporting regimes under UCITS IV and AIFMD to provide management company services in financial jurisdictions across Europe.
Maitland, a global fund administration firm with capabilities in 12 countries and $210 billion of assets under administration, is helping a UK-based fund manager launch into the Luxembourg funds market under UCITS IV. While not an unusual event in itself, the move is achieved with the ‘passporting’ of Maitland’s UK UCITS management permissions into Luxembourg.
Funds setting up in Luxembourg usually require the services of a local ManCo. However, under UCITS IV, ManCo’s regulated in any EU country can apply to their home state regulator to passport regulatory permissions into another EU state.
This passport allows them to set up, operate and wind up UCITS structures in the host state and provide most of the administration from their home state.
Maitland is one of the first fund administrators to make use of the UCITS IV passporting regime. The firm already has AIFM ManCo permissions in Luxembourg for alternative investment funds regulated under the AIFMD.
Patric Foley-Brickley, Head of Institutional Business Development at Maitland, says Maitland’s move into UCITS stems from its acquisition of Phoenix Fund Services in June 2015. Phoenix Fund Services (UK) Ltd. is an FCA authorised ‘Authorised Corporate Director’ (UK UCITS ManCo) and a full scope AIM in the UK.
“Combining the capabilities of Maitland and Phoenix has enabled us to leverage Phoenix’s UCITS permissions and Maitland’s existing and substantial presence in Luxembourg to set up a Luxembourg SICAV structure for our client under the Luxembourg UCITS regime,” Foley-Brickley says.
A cross-border UCITS ManCo is relatively rare. “In the past, driven primarily by a desire not to be at the bleeding edge, fund sponsors have been wary of appointing a non-Luxembourg ManCo, despite the UCITS IV regulations making this a viable option, but this has not been the case for alternative managers,” says Foley-Brickley.
“Under AIFMD a number of fund manager sponsors have successfully used the passporting regime to set up funds in Luxembourg, demonstrating that passporting does work and giving UCITS fund sponsors greater confidence in the process.
“An AIFMD ManCo and a UCITS ManCo are governed and legislated under separate legislation. However, the responsibilities are, to all extents and purposes, the same,” he says.
Maitland’s UK permission to set up, operate and wind up a collective investment scheme under UCITS IV is regulated by the FCA. When a ManCo passports into another EU state, the host regulator (in this case Luxembourg’s CSSF) will rely on the FCA to oversee the passporting entity from a regulatory perspective.
However, the fund structure itself will be set up under the specific UCITS regulations of the host state. Under CSSF guidelines, a fund will need to appoint a Luxembourg-based Depositary Bank and Custodian, as well as independent directors; and will need to comply with Luxembourg reporting and oversight requirements for the NAV and the shareholder register.
Maitland’s 40-year presence in Luxembourg and a Luxembourg AIFMD ManCo means that it can demonstrate knowledge and experience of the expectations of the CSSF, giving both clients and the regulator greater confidence in the passporting process.
However, much of the core fund administration can be provided from the ManCo’s home state, eliminating the need for operational duplication.
Maitland will now compete for more cross-border UCITS business against other ManCo’s and administrators. Maitland’s ‘Super ManCo’ status, and its ability to service both AIFMD-regulated funds and mainstream funds under UCITS, will be a significant differentiator when competing for new business.
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