COLL 15.9 Operational requirements for feeder LTAFs

This section applies as follows:

1. (1)

   COLL 15.9.2R to COLL 15.9.6R apply to the authorised fund manager of a feeder LTAF;

2. (2)

   COLL 15.9.6R also applies to:

   1. (a)

      an ICVC that is a feeder LTAF; and

   2. (b)

      any person acting on behalf of either the feeder LTAF or the authorised fund manager of the feeder LTAF; and

3. (3)

   COLL 15.9.7R applies to the authorised fund manager of a long-term asset fund which operates as a qualifying master LTAF to a feeder LTAF.

Before investing in the qualifying master LTAF, the authorised fund manager of the feeder LTAF must:

1. (1)

   be satisfied on reasonable grounds that it can obtain from the qualifying master LTAF all the information necessary to comply on an ongoing basis with the rules in COLL;

2. (2)

   having consulted with the depositary of the feeder LTAF, be satisfied on reasonable grounds that the depositary of the feeder LTAF can obtain from the qualifying master LTAF, the operator of the qualifying master LTAF or the depositary of the qualifying master LTAF all the information necessary to comply with its duties under COLL 15.7.6R and COLL 15.7.7R (Duties of the depositary); and

3. (3)

   inform the authorised fund manager of the qualifying master LTAF of the date on which the feeder LTAF will begin to invest into the qualifying master LTAF as a feeder LTAF.

The authorised fund manager of a feeder LTAF must take reasonable care to ensure that its units are not owned, including beneficially owned, by the qualifying master LTAF or any other scheme in which the qualifying master LTAF invests.

1. (1)

   Where the operator or the authorised fund manager of a qualifying master LTAF imposes any charge which is, or is equivalent in effect to, a preliminary charge or redemption charge on the feeder LTAF for the acquisition or disposal of units in the qualifying master LTAF, the authorised fund manager of the feeder LTAF must pay to the feeder LTAF an amount equal to such charge within four business days following the relevant acquisition or disposal.

2. (2)

   In this rule, where the operator or authorised fund manager of a qualifying master LTAF requires any addition to or deduction from the consideration paid on the acquisition or disposal of units in the qualifying master LTAF which is, or is equivalent in effect to, a dilution levy made in accordance with the instrument constituting the fund and the prospectus, it is to be treated as part of the price of the units and not as part of any preliminary charge or redemption charge referred to in (1).

The authorised fund manager of a feeder LTAF must take appropriate measures to co-ordinate the timing of the feeder LTAF’s valuation points and dealing days with those of its qualifying master LTAF, including the publication of dealing prices, in order to avoid market timing of their units, and prevent arbitrage opportunities.

Where, in connection with an investment in the units of the qualifying master LTAF, a distribution fee, commission or other monetary benefit is received by:

1. (1)

   a feeder LTAF;

2. (2)

   an authorised fund manager of a feeder LTAF; or

3. (3)

   any person acting on behalf of (1) or (2),

   that fee, commission or other monetary benefit must be paid into the scheme property of the feeder LTAF within four business days of receipt of that fee, commission or other monetary benefit.

Where the qualifying master LTAF is an authorised fund, the authorised fund manager of the qualifying master LTAF must not, if it would unfairly prejudice the interests of unitholders of the qualifying master LTAF other than the feeder LTAF, provide or make available information to the authorised fund manager of the feeder LTAF without at the same time also providing or making available that information to the unitholders of the qualifying master LTAF other than the feeder LTAF.