Access to Financial Services Markets Overseas funds regime
Collective investment schemes are defined in section 235 under Part 17 of FSMA, and Part 17 also makes provision for the promotion of collective investment schemes in the UK.
	Presently, authorised persons, as defined by section 31 of FSMA, are restricted from promoting participation in a collective investment scheme under section 238 of FSMA unless an exemption applies. There is an exemption for "recognised schemes" which are those overseas collective investment schemes recognised under either section 264 or section 272 of FSMA. Both section 264 of FSMA and section 272 therefore provide the current basis for authorised persons to promote participation in overseas collective investment schemes in the UK.
	Section 264 of FSMA implemented the passporting regime under the UCITS Directive so that an EEA UCITS could be recognised to market in the UK, provided that the appropriate notice had been given to the FCA.
	With the end of the Transition Period, section 264 of FSMA is repealed by the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/325) (Collective Investment Schemes (EU Exit) Regulations). EEA UCITS recognised under section 264 are no longer recognised schemes and the restriction on promotion under section 238 of FSMA applies.
	However, Part 6 of the Collective Investment Schemes (EU Exit) Regulations provides for temporary recognition for EEA UCITS (or sub-funds of EEA UCITS) already marketing in the UK under section 264, including MMFs which use a UCITS structure, which will last for five years from the end of the Transition Period.
	Temporary recognition can be granted to EEA UCITS which have given notice to the FCA and that satisfy the applicable conditions. If the applicable conditions are satisfied, an EEA UCITS will be a "recognised scheme" for the purposes of Part 17 of FSMA and therefore the exemption to the restriction on marketing under section 238(4) will continue to apply for the temporary period.
	The Act contains a new category of recognised scheme which will be contained within Part 17 of FSMA for overseas collective investment schemes, established in both EEA and non-EEA, countries or territories.
	The Act creates a new power for HM Treasury to make regulations approving a country or territory and to specify a description of schemes, subject to certain conditions. Collective investment schemes within those regulations can then apply for recognition to the FCA, following which they will be recognised schemes. The exemption to the restriction in marketing under section 238(4) will apply to these schemes as the definition of ‘recognised schemes’ under section 237(3) will be expanded to include schemes recognised through this new process.
	Under the current legislative framework, overseas MMFs, which are a type of collective investment scheme, are not permitted to market in the UK unless the scheme falls within one of the exemptions set out in Article 4(1)(a) to (c) of Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (‘MMFR').
	This Act inserts Article 4(1)(aa) into the MMFR to provide an exemption to overseas MMFs from a country or territory that have been approved by HM Treasury under the new Article 4A of the MMFR.
	Article 4A sets out the test for equivalence, whereby HM Treasury by regulations under paragraph 1 determines that the law and practice of a country or territory imposes requirements on MMFs which have equivalent effect to the requirements imposed by the MMFR.
	An individual MMF that is authorised and supervised in a country or territory that has been approved under Article 4A of the MMFR will be permitted to market in the UK once the financial promotion restriction under section 238 of FSMA has been lifted by recognition under section 271A or 272 or notification under the NPPR.
	Section 272 allows the FCA to recognise individual schemes. This Act makes some amendments to the process for collective investment schemes recognised under section 272.