The structure of a transaction shall not constitute an additional exposure if the transaction meets both of the following conditions:
the legal and operational structure of the transaction is designed to prevent the manager of the transaction or a third party from redirecting any cash flows which result from the transaction to persons who are not otherwise entitled under the terms of the transaction to receive these cash flows;
neither the issuer nor any other person can be required, under the transaction, to make a payment to the institution in addition to, or as an advance payment of, the cash flows from the underlying assets.
The condition in point (a) of paragraph 1 shall be considered to be met where the transaction is one of the following:
a UK UCITS as defined in under section 237 of the Financial Services and Markets Act 2000;
an undertaking established in a third country, that carries out activities similar to those carried out by a UK UCITS and which is subject to supervision pursuant legislation of a third country which applies supervisory and regulatory requirements which are at least equivalent to those applied in the UK to UK UCITS.
Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.