The UK's Financial Conduct Authority is proposing to amend rules and guidelines in its client assets sourcebook (CASS) and collective investment schemes sourcebook (COLL) because of European Union policy towards undertakings for collective investment in transferable securities.

The FCA says that the EU's UCITS V 'legislative package' includes a ‘Level 1 Directive’, enshrined in national law two months ago, which amends that governmental club's existing UCITS directive, and a ‘level 2 regulation’, which sets out more rules on the same subject. The contents of the former are already included in FCA rules and the current proposals relate to the FCA's desire to include the contents of the latter. The target audience is UCITS management companies and depositaries. Somebody, somewhere, has 'adopted' the regulation, although the FCA does not say who.

The FCA has been 'gold plating' the EU's UCITS rules in order to protect investors from sharp practice and it intends to keep these safeguards in place. It writes in its proposal: "to maintain the level of protection provided by the current handbook provisions for investors in UCITS, we propose to retain existing standards that do not duplicate or conflict with the Level 2 measures."

The FCA proposes to copy the text of another regulation into its rules: the Securities Financing Transactions Regulation, which came into force in January. This piece of EU legislation applies to firms without HM Government having to enshrine it in national law, which suggests that other regulations - perhaps even the 'level 2' one - might.

This second regulation requires managers of UCITS and alternative investment funds to tell the regulator about their use of securities financing transactions and total return swaps in the funds’ pre-contractual documents and to send periodic reports to investors. These requirements are part of the proposals for new FCA rules. The first requirement begins on 13 July next year and the second on 13 January next year.