Regulation 45 Index tracking funds

United Kingdom

(1)

This regulation applies if—

(a)

an investment trust has an interest in a non-reporting fund,

(b)

the conditions in paragraph (2) are met throughout the relevant period.

(2)

The conditions are that—

(a)

in accordance with the instrument constituting the investment trust, the aim of the investment trust's policy is to replicate the performance of a qualifying index,

(b)

the main purpose of the investment in the non-reporting fund is to represent the composition of the qualifying index, and

(c)

the capital and income returns of the investment trust replicate as closely as practicable the returns of the investment comprised in the qualifying index.

(3)

For the purposes of paragraph (2) an index is a “qualifying index” if—

(a)

it is based solely on the value of securities listed on a recognised stock exchange or admitted to trading on a regulated market,

(b)

either F1the Financial Conduct Authority or an authority responsible for regulating offshore funds recognises the index on the basis that—

(i)

its composition is sufficiently diverse,

(ii)

it represents an adequate benchmark for the market to which it refers, and

(iii)

it is published in such a way that it is widely available, and

(c)

it is calculated and published by a body which is managed independently from the management of the investment trust.

(4)

Regulation 17 of the Offshore Funds Regulations does not apply in respect of a disposal by the investment trust of the interest in the non-reporting fund.

(5)

In this regulation the “relevant period” means the period—

(a)

starting with the day on which the investment trust acquires the interest in the non-reporting fund (or any part of it), and

(b)

ending with the day of the disposal of the interest.

(6)

In this regulation—

F2(a)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3(b)

“regulated market” means—

(i)

a UK regulated market within the meaning given by Article 2.1(13A) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments,

(ii)

an EU regulated market within the meaning given by Article 2.1(13B) of that Regulation, and

(iii)

F4a Gibraltar regulated market within the meaning given by Article 26(11)(b)(i) of that Regulation.

Annotations

Textual amendments

F1: Words in reg. 45(3)(b) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 32(2)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
F2: Reg. 45(6)(a) and word omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 32(2)(b)(i) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
F3: Reg. 45(6)(b) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 32(2)(b)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
F4: Reg. 45(6)(b)(iii) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) (No. 2) Regulations 2019 (S.I. 2019/818), regs. 1(3), 11(2); 2020 c. 1, Sch. 5 para. 1(1)