IMAS Lunchtime Talk - PwC De-Mystifying the Hows and Whats ... · Denmark Belgium Netherlands Norway Finland Portugal 10% 20% 30% 40% 50% 60% 70% 80% A U M / G D P PwC Source: PwC

IMAS Lunchtime Talk Series

De-Mystifying the Hows andWhats of Retail FundDistribution in Europe

www.pwc.com

5 June 2012

Agenda

The European funds marketplace

Cross-border fund distribution in EuropeCross-border fund distribution in Europe

Mechanics of fund distribution

- Access to the market

- Notification and maintenance process

- Documentation (KIID, marketing and tax reporting)

Distribution channels and models - what exists and what works?

PwCDe-Mystifying the Hows and Whats of Retail Fund Distribution in Europe

2June 2012

The information contained herein is for presentation purposes only. It may not be circulated or used in any external material, or shared or distributed to parties outside of theintended party without the express permission of PricewaterhouseCoopers S.a.r.l. ("PwC"). It is not meant to be comprehensive and does not constitute the rendering of anylegal, tax or other professional advice or service by PwC.

TheTheEuropean funds

marketplace

PwC

marketplace

The outlook on European asset management

Regulatory burden increasing business costs and complexity, butopportunities for Asian managers are positive


• The regulatory tsunami: impact of regulations on the cost of compliance(and doing business) ..... UCITS IV & V, AIFMD, Dodd-Frank and FATCA,Financial Transactions Tax, MiFID etc

• Single market: The harmonised framework and ease of access to multiplemarkets remains a key advantage and pull factor

• Product innovation and new markets: Private equity, microfinance,

PwC

• Product innovation and new markets: Private equity, microfinance,Latin America and Asia

• European assets looking for safer havens and better returnopportunities: Asian emerging markets are still attractive and currenciesundervalued or stable

4June 2012

Overview of the European marketThe attractiveness of Europe

Strategic market

• 500 million plus consumers;

and Luxembourg is in the heart of it

The European market


• 500 million plus consumers;

• 27 member states composing a vastsingle market;

• 17 member states using the euro ascurrency;

• Goods free circulation within theEuropean Market.

PwC

Source: CIA estimates, Science and Engineering Indicators 2010

5June 2012

Overview of the European marketGlobal overview of the fund industry: a worldwide marketof EUR 19.97 trillion (Q4 2011)

Region Fund assets (bn EUR)Market share: countries/regions of


Region Fund assets (bn EUR)

USA 9,792

Europe* 5,634

Brazil 1,145

Australia 1,113

Japan 776

Market share: countries/regions ofworldwide investment fund assets

(Q4 2011)

USA, 49.0%

Brazil, 5.7%

Australia,5.6%

Japan, 3.9%

Canada,3.6% China, 1.3% Others,

2.7%

PwC

Source: EFAMA, 2012.

Canada 709

Others 801

Total 19,970Europe,28.2%

*UCITS

6June 2012

Overview of the European marketKey developments

• French market isparticularly heavily

90%

100%

State of the European asset management market


particularly heavilypenetrated

• Norway has theopportunity to growfaster than thebroader economygiven its low AUMto GDP ratio and

France

GermanyUK

Switzerland

Italy Spain

Sweden

Austria

Denmark

Belgium

Netherlands

Norway

Finland

Portugal

10%

20%

30%

40%

50%

60%

70%

80%

90%

AU

M/G

DP

PwC

Source: PwC Analysis, EFAMA, World Bank data.

to GDP ratio andhigh savings ratePoland

0%

10%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Gross Savings (% of GDP)

June 20127

International fund distribution hubs: Luxembourg and Dublinhave AUM / GDP ratios above 5,000% and 600% respectively

Overview of the European marketNet assets of the European fund industry as of Q4-2011

UCITS – net assets

Allocation of UCITS’ assets


UCITSEUR 5,634 bn (approx. 71%)

UCITS – net assets

Country ofdomiciliation

EURmn

Share

Luxembourg 1,760,155 31.2 %

France 1,068,141 19.0 %

Ireland 820,041 14.6 %

UK 648,406 11.5 %

Germany 226,456 4,0%

Switzerland 211,037 3.7%

PwC

Source: EFAMA, 2012.

8

Total UCIS7,920

Spain 150,877 2.7%

Sweden 147,042 2.6%

Italy 139,697 2.5%

Belgium 79,131 1.4%

Austria 74,329 1.3%

...

June 2012

6,594

7,552 7,9097,060

8,150 7,9208,000

9,000

European investment funds: net assets (EUR bn)

Overview of the European marketEvolution of net assets in Europe


953 1054 1,156 1,405 1,601 1,749 1,545 1,745 2,140 2,286

3,2883,763

4,192

5,1895,951 6,160

4,5425,315

6,010 5,6344,2414,817

5,348

6,5946,087

7,060

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Non-UCITS UCITSSource: EFAMA, 2012.

PwC

Non-UCITS UCITSSource: EFAMA, 2012.

• European fund assets decreased by 2.8% between 2010 and 2011; at thesame time there was a decrease in number of funds available for sale inEurope due to mergers/liquidations

• Decline less sharp compared to crisis years (2008/09); by the end of 2011European fund assets reached pre-crisis levels again

9June 2012

New funds launched by country of domicile inEurope (2011)

AuM (EUR mn) # funds

AuM in new funds (EUR million) and number offunds launched YTD as at end of 2011 (UCITS)


34,484

13,212 13,04711,495

7,855

852

155221

307

235181

300

400

500

600

700

800

900

10,000

15,000

20,000

25,000

30,000

35,000

40,000

PwC

7,855

4,2473,418 2,858

818 730

84181

132

51125

0

100

200

0

5,000

10,000

Luxembourg Ireland Spain France Other Switzerland Belgium UK Germany Austria

AUM (EUR million) # funds

Source: PwC MRI based on Lipper data

June 201210

1,400

New fund launches:Equity asset class tops number

Evolution of # of new funds launched by asset class in Europe(UCITS & Non-UCITS)


541

460430

417

219

400

600

800

1,000

1,200

2007 2008 2009 2010 2011

PwC

12763 51

200

Absolute return includes HF and FoHF

Source: PwC MRI based on Lipper data

11June 2012

New fund launches:Equity funds also attract the highest AuM

Breakdown of AuM of new funds launched at the end of each year of launch(UCITS & Non-UCITS)

40%

45%

2007 2008 2009 2010 2011


24%

21%

8%

23%

7% 7% 7%10%

15%

20%

25%

30%

35%

40%2007 2008 2009 2010 2011

PwC

7% 7% 7%

3%

%

5%

12June 2012

UCITS

The European Asset Management marketAsset Allocation by investment type (AUM)

UCITS, Non-UCITS andmandates


Bond27%

Other21%

UCITS

Bond, 44%

MoneyMarket,

14%

Other, 10%

mandates

PwC

Source: EFAMA

Equity33%

MoneyMarket

19%

13June 2012

Equity,32%

The European Asset Management marketInvestor composition

Breakdown of total AuM, by type of investors


Retail, 32%

25%

45%Institutional,68%

Pension funds

Insurancecompanies

PwC

Sources : EFAMA

30%

Other Institutionals

14June 2012

Rank Country Assets (EUR bn)

1 UK 2,589

Top locations of institutional assets in Europe

Top 15 locations of institutional assets in Europe*


1 UK 2,5892 France 1,9403 Germany 1,7954 Netherlands 1,0805 Switzerland 7276 Italy 6097 Norway 6028 Sweden 5539 Denmark 496

PwC

Denmark 49610 Spain 30511 Finland 25812 Belgium 24913 Luxembourg 14914 Ireland 13815 Austria 120

•Assets of leading pensions funds,insurers’ portfolios and funds of

funds at end 2010

Source : PwC Analysis

15June 2012

501000

Evolution of the Alternative UCITS marketA fast growing segment for innovative strategies

Number of Alternative UCITS1,002


370

483

114

121

127 131

132

117

39

47

55

6883

112

126

37

47

60

73

84

98

111

13

16

25

30

45

76

115

10

21

25

30

40

39

50

200

300

400

500

600

700

800

900

267

646

357

450

560

827

PwC

77112

164232 263

370

9111439

0

100

2005 2006 2007 2008 2009 2010 2011

Luxembourg Spain France Other Ireland UK

Source : Lipper -UCITS Absolute return according to Lipper category

16June 2012

European ETF industry:The success story of this decade

284.0 1,400300

# ETFsAssets USD bn

Market continues to boomETFs assets more than doubled since 2008


54.9

89.7

128.5142.7

226.9

284.0266.6

423

636

827

1,072

1,232

400

600

800

1,000

1,200

1,400

100

150

200

250

300

PwC

0.7 5.7 10.720.4

34.0

54.9

671

118104

114165

273

0

200

0

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

AUM (USD bn) # ETFSource: BlackRock

17June 2012

Cross-borderCross-borderfund

distribution inEurope

PwC

Europe

Hotspots for distribution The heat map indicates the total numberof cross-border registrations at the end of2011

Cross-border fund distribution in Europe

Over 3,000

Total number of cross-borderregistrations as at December 31,2011

PwC 19

Over 3,000

1,000 – 2,999

500 – 999

100 – 499

Less than 100

Source: Lipper LIM and PwC analysis, December 31, 2011

June 2012

Region of Total Total Total # new registrations

Global breakdown of distributionEvolution since December 2009


Region ofdistribution

Totalregistrations

Dec 2009

Totalregistrations

Dec 2010

Totalregistrations

Dec 2011

# new registrationsover the period

Europe 49,956 54,441 57,650 3,209

Asia Pacific 5,307 5,434 5,614 180

Americas 2,154 1,922 1,775 -147

Middle East 894 797 640 -157

PwC

Africa 233 218 252 34

TOTAL 58,544 62,812 65,931 3,119

[Source: Lipper LIM and PwC analysis]

20June 2012

Cross-border fund distributionDistribution of foreign funds in Europe

Penetration of cross-border funds on selected European markets

Cross-border vs. domestic funds


Country Cross-border Domestic

France 43% 57%

Germany 82% 18%

Ireland 41% 59%

Italy 85% 15%

Luxembourg 11% 89%

Netherlands 93% 7%

Cross-border vs. domestic funds

• Increase in number of fundsand assets

• More promoters offer a greatervariety of cross-borderproducts

• Majority of cross-borderfunds domiciled in

PwC

Poland 52% 48%

Spain 65% 35%

Sweden 85% 15%

Switzerland 83% 17%

UK 65% 35%

Source: Lipper Hindsight 31/12/2011.

21June 2012

funds domiciled inLuxembourg

Cross-border fund distributionNumber of cross-border funds and registrations

8,511 9,00080,000

Luxembourg Ireland UK France Germany Other Number of truex-border funds


3,2603,750

4,5294,875

5,170

5,907

6,525

7,366 7,4417,907

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Num

ber

ofcro

ss-b

ord

er

reg

istr

ations

Num

ber

ofcro

ss-b

ord

er

funds

PwC

Source: Lipper LIM/PwC analysis, data as at 31/12/2011.

0

1,000

0

10,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Averageregistrationsper true cross-border fund

7.0 7.2 5.7 5.8 7.1 7.3 7.6 7.8 7.9 7.9 7.7

Num

ber

ofcro

ss

22June 2012

Distribution footprint of cross-border funds

647


2,944(34%)

1,349(16%)

933(11%)

647(8%)

Distribution in 3 to 4 markets




Distribution in 20+ markets

PwC 23

2,638(31%)

Total number of cross-border funds as at end of 2011: 8,511 (100%).

June 2012

Domicile share of cross-border distribution

LuxembourgGermany

1%

Other6%

Top 5 destinations ofleading fund domiciles

Luxembourg continues to dominate


Luxembourg

Registrations in:

Germany 4,035

Austria 3,559

Switzerland 3,511

Spain 2,973

Netherlands 2,735

Ireland

Registrations in:

Luxembourg72%

Ireland15%

France3%

UK3%

1%

PwC

Source: Lipper LIM and PwC analysis, December 31, 2011.

Registrations in:

United Kingdom 1202

Germany 1003

Switzerland 796

Austria 714

Netherlands 707

24June 2012

Cross-border fund distributionGrowth in Luxembourg cross-border fund groups

452

Total number of cross-border groups


255

339

452

PwC

70

2001 2008 2010 2011

Source: Lipper LIM/ PwC analysis , data as at 31/12/2011.

25June 2012

Distribution channels

Distribution trends & developments


• Increasing selectivity by distributors – pressure on open architecture model

• Compliance & risk management are now “sales tools”

• MIFID II will change distribution relationships

• Retail is difficult – many new entrants try an institutional approach first

Products

• Increasing selectivity by distributors – pressure on open architecture model

• Product transparency & support – key focus by distributors

PwC

• 35% of new cross-border UCITS since mid-2010 are “sophisticated”

• Increasing number of emerging market funds – MM out of favour

• Growth in equity & ETF but regulatory changes for ETF & sophisticated UCITS?

AM industry in Europe26

June 2012

Criteria to take into account before targeting EUcountries

What are the most efficient distribution


What are the most efficient distributionchannels ?

Any Tax reporting ?

PwC

What are the local arrangements required forthe marketing of UCITS ?

27June 2012

Mechanics ofMechanics offund

distribution

PwC

distribution

Access to market

A Step-by-Step approach


Access to market

Public distribution: Notification andmaintenance process

Documentation

PwC 29June 2012

Documentation

Two options are available

Access to MarketAccess to market


Two options are available

• Private placement

• Public distribution

PwC 30June 2012

► Based on the “Call For Evidence regarding the Private Placement Regimes in

Private PlacementDefinition


► Based on the “Call For Evidence regarding the Private Placement Regimes inthe EU” issued by the European Commission on September 24th, 2007

► Private placement is “a set of exemptions from rules that would normallyapply in the event of public offer/sale of financial instruments” (i.e.investment funds)

► Consequently, private placement is generally defined by opposition to publicdistribution

PwC

distribution

► A less regulated way to offer/sell the units/shares of an investment fund andusually used when a fund is targeted only at institutional investors

31June 2012

Austria

Overview of the private placement regime inEurope

Netherlands


Belgium

France

Germany

Luxembourg

Spain

Sweden

PwC

Ireland

Italy

Switzerland

UnitedKingdom

32June 2012

► Public offer/sale of financial instruments (ie investment funds) to the public

Public DistributionDefinition


► Public offer/sale of financial instruments (ie investment funds) to the public

► This is a requirement when a UCITS targets retail investors in Europe

► Public distribution is governed by the articles 91 to 96 of Chapter XI“SPECIAL PROVISIONS APPLICABLE TO UCITS WHICH MARKETTHEIR UNITS IN MEMBER STATES OTHER THAN THOSE IN WHICHTHEY ARE ESTABLISHED” of the UCITS IV Directive 2009/65 /EC dated13 July 2009.

PwC

13 July 2009.

► Now governed under UCITS IV which came into effect on 1 July 2011

33June 2012

Public Distribution: Notification andmaintenance process

• Transposition of UCITS IV into national law at individual EU country level


• Transposition of UCITS IV into national law at individual EU country levelhas not been simultaneous

• Luxembourg was the first European country to transpose Directive2009/65/EC “UCITS IV Directive” into national Law relating to undertakingfor collective investments (the “2010 Law”)

• Work-in-progress, but “business as usual” following phased implementationin other countries

PwC 34June 2012

in other countries

Overview of the transposition of the UCITS IVDirective in the main countries of the EU


PwCAM industry in Europe

35June 2012

UCITS III vs UCITS IV: What has changed?

UCITS III UCITS IV

• UCITS to Host regulator • Home to Host regulator


• UCITS to Host regulator

• Simplified prospectus

• 2 months approval

• Ex-ante controls

• Translation required

• Home to Host regulator

• KIID

• 10 working days market access

• Ex-post controls

• Translation of KIID only

PwC

• Translation required • Translation of KIID only

36June 2012

UCITS IV: three objectives and five topics

ReduceAdministrative

Burden NotificationProcedure


Key InformationDocument

Procedure

IncreaseInvestor

Protection

PwC

IncreaseMarket

Efficiency

Fund Mergers

Master-Feeder

ManCoPassport

June 201237

• Key Investment Information Document (“KIID”)

Documentation


• Key Investment Information Document (“KIID”)

• Marketing documents

• Tax reporting

PwC 38June 2012

• What are the costs ofthis investment?

• What is included in thecosts and how are they

Charges3

KIIDOverview - Content

Objectives andInvestment Policy

1


costs and how are theycalculated?

3

• How has theinvestment performedin the past?

• How is the pastperformancecalculated?

Past Performance4

4

• What is the aim of thisinvestment / what willthe investment consistof?

• What else is there toknow about the aim andinvestment content?

Investment Policy1

1

Risk and Reward2

2

PwC

• What is the risk of thisinvestment?

• What are the additionalrisks of thisinvestment?

Risk and Reward

• Who is responsible for theinvestment / Where can Iget further usefulinformation?

• Investment structurespecific useful information?

Practical Information5

5

39

KIIDMain challenges

Dissemination ofthe KIIDs to the


KIID

Dissemination ofthe KIIDs to thelocal distributor

PwC

KIIDUpdate ofthe KIIDs

Active / notactiveshare

classes

40June 2012

Local arrangements required for the marketing ofUCITS

• Local rules apply, not harmonized by the UCITS IV Directive;

• Requirements for the contents, format and manner of presentation of


• Requirements for the contents, format and manner of presentation ofmarketing communications;

• Any additional information required to be disclosed to investors;

• Facilities to unit/shareholders;

• Publication requirements.

PwC 41June 2012

Your challengesFund Tax Reporting


Even if there were severaladvantageous developments in theadvantageous developments in therecent past, fund tax reporting willbe still a considerable barrier forcross border distribution withinthe European Union

Especially Austria, Belgium,Germany, Switzerland and theUnited Kingdom have introduced

PwC 42June 2012

United Kingdom have introducedvarious tax reporting regimes andhighly complex frameworks forinvestment funds

Case study

• A Luxembourgish UCITS wants to market the shares of


Initialnotification

• A Luxembourgish UCITS wants to market the shares ofSub-Fund X in Germany

Maintenanceof the

• Change of the investment policy of Sub-Fund X• Amendment of the prospectus

PwC

Maintenanceof the

notification

43June 2012

Initialnotification

• A Luxembourgish UCITS wants to market the shares ofSub-fund X in Germany


PwC 44June 2012

Home country :Luxembourg

Initial notification process

• UCITS to Home Regulator toHost Regulator

Host country :Germany


Description of the process (initial and subsequentnotification)


AuthorisedUCITS

Notification file(content harmonised)

UCITS transmitsnotification file &

translations to its home

Info

rm

sU

CIT

S

Host Regulator

• 10 working days process

• UCITS can immediatelyaccess the market afternotification

GermanyGermany

CSSF informs UCITS oftransmission date for

the notification file• Confirmation by Home

regulator

• Controls ex-post by Hostregulatortranslations to its home

authority

CSSF checksnotification file

for completeness

Regulator-to-regulatornotification (no laterthan 10 working daysafter the receipt of the

notification letter)

Bafin reviews - ex-post

Yes

Info

rm

sU

CIT

S

Co-operation mechanism

No

45June 2012

PwC

regulator

Maintenanceof the

notification

• Change of the investment policy of Sub-Fund X

• Amendment of the prospectus


notification

PwC 46June 2012

Maintenance of the public distribution

• Notification of any amendments in the Fund documents (Full prospectus,Management Regulation/Articles of Association, and KIIDs, the audited


Management Regulation/Articles of Association, and KIIDs, the auditedannual report and the semi-annual reports);

• Notification of any change in the way to market the units /shares of theUCITS in a local EU market, and of any change regarding the shares to bemarketed;

• Subsequent notification of any new or not yet distributed sub-funds.

PwC 47June 2012

• UCITS to Host Regulator

• Where update of marketing arrangements and/orchanges in share classes, UCITS must inform hostcountry before implementing changes

Home country :Luxembourg

Description of the notification of anyamendments


country before implementing changes

• Once notified, the documents can be used directlyin the host country

AuthorisedUCITS

Modified documents

UCITS transmits tothe host authority

directly

Info

rm

sm

ar

ke

tin

ga

rr

an

ge

me

nt

be

for

eim

ple

me

nta

tio

n



directly

Host Authority

Info

rm

sm

ar

ke

tin

ga

rr

an

ge

me

nt

Up

da

teb

efo

re

48June 2012

PwC

Distribution inDistribution inEurope

PwC

Distribution in Europe-

Distribution in Europe- Think European, Act Local

May 2012

Agenda

European distribution market

Country focus Country focus

Q&A

51

European distribution market

Total Mutual Funds Distribution– Source Cerulli, 2011

Cross-Border Funds Distribution– Source Cerulli, 2011

• Investors do not buy funds, funds are being sold to investors

• Cross border funds are usually designed to be distributed beyond parent-company distribution network

52

company distribution network

• Institutional is growing, as building a retail distribution takes time toestablish

• Current economic context is pushing for safety and search for globalstrategies allowing better performance

Local distribution requirements

Your additional requirements

Fund strategy

Identify which funds are going to succeed in eachdistribution market

Registration for distribution to local authorities

Compliance with legal obligations regardingnotification, publication and investor information

Your local distribution responsibilities

distribution market

Distribution channel

Identify which distribution channel is best suited topenetrate each market

Distribution Monitoring

Monitor performance of the sales team

Monitor the remuneration of the distribution channel

notification, publication and investor information

Management of transactions and payments withinvestors as and when required

Registration

Marketpactice

Notification

Local

53

PublicationInformation

distributionneeds

Costs of the distribution

Sales charges retained by distributors are up to 5% (according to fundprospectus and share class)

Trailer fees are playing a central role when establishing a distributionstrategy

60%

0%

20%

40%

60%

Retained byFund Manager

Retrocession todistributor

54

Marketing costs (training of sales forces, translation of documents,advertising)

Registration for distribution to the local regulator

0%Banks IFAs/Advisors Platforms Insurance

Regulatory environment of the Distribution country

Tax

TIS form Germany, Switzerland, Luxemburg, Belgium

DDI, AG, … for Germany, Austria

Local Tax Agent for Italy Local Tax Agent for Italy

…

Marketing arrangements

Appointment of local representative agent

Appointment of a local paying agent

Appointment of an information agent

Appointment of a local distributor

55

Appointment of a local distributor

Investor information as required by the local regulator for the sub-funds available for sale in the country

Country specific information for regulator

Legal package and pricing structure of localrepresentation services

Legal package Agreement with an agent in each distribution country SLA if operational services

Pricing principlesPricing principles

Regulatory representation: Minimum fee plus additional fee per sub fund covering (between 10k€ and 15k€

per annum)

Additional fees for operational services (when required) Maintenance of distribution agreements Register or issuing account maintenance Fund characteristics maintenance

56

Fund characteristics maintenance Clients data and account maintenance Operation processing Dividend or corporate action processing Position keeping fees Cash payment fees …..

European distribution countries

United KingdomDistribution Channel :

IFAs(56%)Insurance/Pension (12%)Institutional/corporates (13%)

Notification process with FSA Facilities Agent Application to get the Reporting

GermanyDistribution Channel : Retail Banks (44%),

Insurance/Pension (16%),Private Banks (14%)

Notification process with BAFIN Information and Paying Agent Tax status (transparent, semi-

transparent), TIS, AG, ZG…

SwedenDistribution Channel : Retail Banks (59%)

Pension funds (26%) Paying Agent Notification process with FSA

Application to get the ReportingFund Status (HMRC)

France Distribution Channel :

Institutional/corporates (34%),Retail Banks (21%),Insurance/Pension (14%),

Notification process with AMF Agent centralisateur et

financier

transparent), TIS, AG, ZG…

ItalyDistribution Channel :Spain

Austria

Notification process with FMA Information and Paying Agent Tax status (white, brighter then

white), TIS, DDI, OeKB…

57

Distribution Channel :Retail Banks (54,3%),Insurance/Pension (13,5%),Private banks (13%)

Notification process withCONSOB

Paying Agent andDistributor/Investor relationmanager, Tax agent

Tax percentage

SpainDistribution Channel : Retail Banks (63%),

Insurance/Pension (12%),Private banks (8%)

Notification process with CNMV Entidad designada Operational support to

distributors

SwitzerlandDistribution Channel : Private Banks (52%), Retail Bank (18%)

Insurance/Pensions (15%) Notification process with FINMA Fund representative and Paying Agent TIS, regulatory reporting (TER, PTR)

Source: Cerulli

IFAs

Supermkts/

Wrappers

Direct

Switzerland

Market overview

Distributed funds’ domiciles

Distribution Channels

Domestic 59%

Ireland 11%

UK 2%

Germany 2%Liechtenstein 3%

Others 2%

Banks

Wrappers

Requirements

A local fund representative must be appointed for each sub fund with the following main duties and responsibilities:• Collect, control and publish the funds legal documents submitted in one of the national Swiss languages• Communicate to FINMA any modifications in the funds’ life within 1 month after the approval of the home regulator as well as annual and semi-annual reportswithout delay

Source: Lipper, December 2011Sources: Lipper FMI 2009

Luxembourg 58%

58

without delay• Ensure that funds publish their NAV at least twice a month in a newspaper or on electronic media• Make sure that the funds’ marketing materials as well as their homepages comply with FINMA rules• Approval and due diligence of new distributors, follow up and control of distributors’ homepages and marketing material• Sign new distribution agreements and check they comply with the requirements of the SFAA local paying agent must be appointed for each sub fund

NAV publication

Information to shareholders

Regulatory reporting to the FINMA

Tax reporting

United Kingdom

Market overview



Domestic 40%

Ireland 17%

Jersey 1% Isle of Man 1% Others 3%

Banks

IFAs

Direct

Requirements

A local facilities agent must be appointed for each fund.Documents and information to be available at UK facilities agent:• The instrument constituting the scheme and any instrument amending the instrument constituting the fund• The latest prospectus and the KIID


Luxembourg 38%

IFAs

Supermkts/ Wrappers

59

• The latest prospectus and the KIID• The latest annual and half-yearly reports, notices and documents for shareholders sent by operators and depositaries to and from the United Kingdom• Details of how investors can redeem• Correspondence address for complaints about operation of scheme for forwarding to scheme operator• Information about fund unit prices


Regulatory reporting•The Supervisory Authority must be informed of any amendments to the sales documentation without undue delay

Tax

Germany

Market overview



Domestic 19%

Ireland 9%France 3%

IFAs

Supermkts/ Direct

Requirements

A local information agent must be appointed for each sub fund to make available information and documents related to the Funds.A local paying agent, a German credit institution or the German branch of a foreign domiciled credit institution, must be appointed if some of the fund’s unitsare issued as printed individual certificates, to undertake the payments to investors.The paying agent can also act as the information agent.


Luxembourg 57%Banks

Wrappers

60

The paying agent can also act as the information agent.

NAV publication


Regulatory reporting to the BaFin• The supervisory authority must be informed of any amendments to the sales documentation

Tax transparency under the InvTaxAct

IFAs

Supermkts/

Wrappers

Direct

Italy

Market overview



Domestic 17%

Ireland 10%

France 5% UK 1%Austria 1%

Banks

Wrappers

Requirements

A local paying agent must be appointed for each sub fund, reporting the performance of payments for the investment to the fund, by shareholder.

Investor relations manager / correspondent bankThe fund has to enter into an agreement with an agent who shall care for the offering in Italy (ie order capture, management, routing and execution, trade


Luxembourg 66%

61

The fund has to enter into an agreement with an agent who shall care for the offering in Italy (ie order capture, management, routing and execution, trademanagement, transfer management, corporate actions, official communications/reporting to final client, cash and stock reconciliation, tax & fee management).

NAV publication

Information to shareholders• Confirmation of each trade and, if required by the fund, the statement of account on a yearly basis

Regulatory reporting to Bank of Italy• Statistical reporting to Bank of Italy

Tax

Spain

Market overview



Domestic 38%

Ireland 8%

France 4% UK 1% Direct

Wrappers

IFAs

/Supermkts

Requirements

A local, entidad designada, must be appointed for each sub fund, represent each sub fund and submit relevant documentation to the CNMV

Information to shareholders• The entidad designada, as well as all the distributors, must maintain in their head office for a minimum period of 6 years, the successive economic reports,


Luxembourg 47%

Banks

62

as well as the annual reports which are prepared following registration with CNMV• The official distributors in Spain shall provide each shareholder, prior to subscribing a copy of the simplified prospectus/ KIID and copy of the latest publishedeconomic report

Payment of the fees to CNMV

Regulatory reporting to CNMV• Inform the CNMV of any amendments to the marketing arrangements communicated in the notification letter within seven days of the modification beingmade• Communicate the number of shareholders, assets and the maximum percentage of a shareholding in a company in accordance with article 52 of the personalincome tax regulation, by electronic means• Statistical reporting: the entidad designada or each distributor included in the CMNV Registry must supply information on the distribution activity on aquarterly basis

France

Market overview


Ireland 6%

UK 2%Belgium 1%

Others 1%


IFAs

Supermkts/

Wrappers

Direct

Requirements

A local financial and centralising agent must be appointed for each sub fund assuming the following responsibilities:• Collection of subscription and redemption orders received from financial intermediaries acting on behalf of investors established in France• Payment of dividends

Source: Lipper, December 2011

Domestic 59%

Luxembourg 31%

Sources: Lipper FMI 2009

Banks

Wrappers

63

• Payment of dividends• Provision of documents related to the funds to shareholders established on French territory• Communication to shareholders of information originating from a clients special request, via Euroclear France• Payment of the annual charge to the AMF

NAV publicationInformation to shareholders• All information required by French law must be made available to shareholders

Regulatory reporting to the AMF• Annual, semi-annual and any modification affecting the fund or the prospectus

The information contained within this document (‘information’) is believed to be reliable but BNP Paribas Securities Services does not warrantits completeness or accuracy. Opinions and estimates contained herein constitute BNP Paribas Securities Services’ judgment and are subjectto change without notice. BNP Paribas Securities Services and its subsidiaries shall not be liable for any errors, omissions or opinionscontained within this document. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Forthe avoidance of doubt, any information contained within this document will not form an agreement between parties. Additional information isavailable on request.

BNP Paribas Securities Services is incorporated in France as a Partnership Limited by Shares and is authorised by the ACP (Autorité deContrôle Prudentiel) and supervised by the AMF (Autorité des Marchés Financiers). BNP Paribas Securities Services' London branch issubject to limited regulation by the Financial Services Authority for the conduct of its investment business in the United Kingdom and is amember of the London Stock Exchange. BNP Paribas Trust Corporation UK Limited and Investment Fund Services Limited are wholly ownedsubsidiaries of BNP Paribas Securities Services, incorporated in the UK and are authorised and regulated by the Financial Services Authority.Details on the extent of our regulation by the Financial Services Authority are available from us on request.

The services described in this document, if offered in the U.S., are offered through BNP Paribas and its subsidiaries and its affiliates.Securities products are offered through BNP Paribas Securities Corp., a subsidiary of BNP Paribas, a broker-dealer registered with theSecurities and Exchange Commission and a member of SIPC, the Financial Industry Regulatory Authority, New York Stock Exchange andother principal exchanges.

SummarySummary

PwC

Summary

• Europe is ripe for accessing assets looking todiversify into Asian exposurediversify into Asian exposure

• Distribution can seem daunting, but not toodifficult to overcome

• Understand the mechanics well to properlyaccess your cost-benefit analysis

• Find good partners to work with you!

PwCJune 2012

66

Q&A

67