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Press Release

Tuesday 14 February 2012

The Investment Management Association (IMA) has submitted its response to the proposed Volcker Rule, part of the US Dodd Frank legislation due to be implemented in July this year. 
The main aim of the Volcker Rule is to prohibit US banks from engaging in proprietary trading while also owning private equity or hedge funds. It seeks to achieve this by banning any banking entity from investing in ‘covered funds’. IMA has concerns that the current definition of ‘covered funds’ is too wide.

Commenting, Julie Patterson, Director of Authorised Funds and Tax at the IMA said:

"Currently, all regulated non-US funds - including unit trusts and OEICs - could be considered ‘covered funds’. This would unreasonably limit investment into non-US funds.  The definition of covered funds needs to be revised to ensure that UK authorised funds are treated in the same way as US mutual funds. 

"Also, the exception for activities undertaken solely outside the USA is drawn so tightly that it does not reflect what has been widely understood for many years under US securities law. Therefore, as drafted, the exception will in practice not be available to many activities. And even where it is available, the current drafting might imply that the affected entities are still subject to certain requirements.

"There is a specific issue for unit trusts. Trustees of such funds have safe-keeping and oversight duties but should not be regarded as 'sponsors' of the funds. Again, the current wording in relation to trustee services might imply that is the case. This would bring all unit trusts - both authorised and unauthorised - under the rules, which cannot be the intention."

- ENDS -

Notes for Editors
See the IMA comments on the proposed Volcker Rule here.

For further information, please contact:

Mona Patel, Head of Communications, IMA, 020 7831 0898 or 07834 089332
Christina Bridge, Press Assistant, IMA, 020 7831 0898
Clare Murphy-McGreevey, Media Relations Manager, IMA, 020 7831 0898 or 07843 517618

About the Investment Management Association
The IMA is the trade body for the UK's £4 trillion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Our purpose is to support and promote a commercially successful and growing UK investment management industry as we seek to improve the financial outcomes for customers - savers and investors.

Investment management association