TMPR — Key Brexit Action for Investment Funds

Written by Mike Dalmiras

The UK left the EU on 31 January 2020. Since then, EEA financial services firms in the UK have operated under existing regulatory rules in a Transition Period that expires on 31 December 2020. To ease the risk of a cliff edge break at 31 December, the UK Government introduced a Temporary Permission Regime (TPR) to allow EEA financial services firms to register with the Financial Conduct Authority (FCA) and continue to trade after 31 December 2020 until they had obtained authorisation by the FCA. The UK Government has also established a similar regime for investment funds, known as the Temporary Marketing Permissions Regime (TMPR).

The Temporary Marketing Permissions Regime (TMPR)1

The TMPR will allow funds that are marketed in the UK under a UCITS passport or AIFMD passport to continue to be marketed in the UK for a limited time after the end of the Transition Period. During that time, the fund must either register with the FCA under the UK funds regulatory regime or wind up its UK marketing activity.

Funds that can use the Temporary Marketing Permissions Regime (TMPR):

The following investment funds will be able to use the TMPR:

  • EEA-domiciled UCITS and any notified sub-funds; and
  • UK and EEA-domiciled Alternative Investment Funds (including EuVECAs, EuSEFs, ELTIFs and AIFs authorised as MMFs) managed by EEA authorised managers.

Eligibility & Notification process:

Fund managers that want to use the TMPR must use the FCA’s Connect system to notify the regulator of which of their passported funds they want to continue to market in the UK. The notification must be made to the FCA before the end of the transition period (30 December 2020). The FCA has published a guide for inbound passporting EEA investments funds on how to use Connect.

The FCA informs fund managers to note the following directions:

  • Direction under regulations 64(1) and 71 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (PDF)
  • Direction under regulation 78A (6) and (7) of the Alternative Investment Fund Managers Regulations 2013 (as amended, in particular by the Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 (PDF)

Additionally, fund managers should consider the following:

  • There will be no fee for fund managers who wish to notify the FCA of the passported funds they wish to continue to temporarily market in the UK.
  • Where fund managers believe that more funds will be added to their notification they should wait until they have a complete list of funds prior to submitting a notification.
  • Where no notification has been made by a fund manager for a fund that is passported into the UK, and the deadline is passed, the fund will be unable to use the TMPR and will not be able to be marketed in the UK.
  • Funds which have not been passported into the UK cannot enter the TMPR. This includes EEA AIFs managed by UK AIFMs and third-country AIFs or EEA AIFs which are feeders for a third-country master AIF, managed by EEA AIFMs. The FCA intends to apply the Temporary Transitional Power (TTP) in relation to the provisions which govern how such AIFs can be marketed in the UK after the end of the transition period. Thus, these funds will be able to be marketed in the UK on the same basis as they were before the end of the transition period for a temporary period of 15 months, from 11pm 31 December 2020 until 31 March 2022.
  • More information on how funds will exit the TPR will shortly be released by the FCA.

How to update previously submitted notification(s)

Fund Managers that want to update their previously submitted notification(s), should email by the end of 9 December 2020 to confirming this and including their FRN.

Information regarding sub-funds of EEA UCITS

If an EEA UCITS is divided into sub-funds, the Fund Manager must notify the FCA of each of the sub-funds that it wants to enter the regime. Only these sub-funds will keep their marketing rights.

To satisfy the requirements of the TMPR, a sub-fund which is authorised by the relevant home state regulator before the end of the transition period must, amongst other things, be a recognised scheme under section 264 of the Financial Services and Markets Act 2000 and must be notified to the FCA in accordance the directions given under regulation 64 of the Collective Investment Schemes (Amendment, etc.) (EU Exit) Regulations 2019 (SI 2019/310).

Information regarding sub-funds of EEA or UK AIFs

New sub-funds of EEA or UK AIF umbrella schemes which have entered the TMPR cannot be added to the TMPR after the end of the transition period. New sub-funds will need to be marketed via the National Private Placement Regime (NPPR) procedure.

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