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Fund managers will need over £80,000 in reserves

Capital reserve requirements for fund managers will be significantly

enhanced under the latest amendments to the European Union&#39s Ucits


Although the FSA is consulting on the implementation of the directive, the

new levels will take effect from February 2007.

The directive requires all UK Oeic and unit trust managers to hold

£81,237 or e125,000 initially and then an additional 0.02 per cent of

the value of the manager&#39s portfolio. This is a noticeable increase from

the minimum of £5,000fund managers must currently hold.

The FSA is also consulting on other amendments, including the capital

reserves and changes to investment perspectives, which were agreed by

member states in January last year. The legislation behind the amendments

must be in place by November 2003.

In other European countries, capital reserves can come half in the form of

bank guarantees but the FSA will not allow this unless individual firms

petition to do so.

The changes are targeted at firms currently offering or have aspirations to

market their products in Europe but will affect all UK fund managers by

2007. Firms wanting to break into Europe earlier will have to have the

reserves in place by 2004.

Liontrust marketing director Jonathan Harbottle says: “You&#39ve got to pay to

play. An increase of £5,000 to £81,000, while substantial, is

still within the realm of one&#39s resources.”


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