The UK government is launching a consultation on broadening the scope of the Sustainable Disclosure Regulation (SDR) to include overseas funds.
The announcement came after the Treasury granted equivalence for UCITS ETFs under the Overseas Fund Regime (OFR) earlier this week in a move likely to be warmly welcomed by European asset managers.
In a statement, Bim Afolami, economic secretary to the Treasury, said: “The government intends to consult on whether to broaden the scope of SDR to include funds recognised under the OFR.
“The government will ensure that there is adequate time for industry to adapt to any future requirements.”
Overseas funds marketed in the UK – such as those domiciled in Ireland and Luxembourg – were left out of scope in the FCA’s rules, creating uncertainty for the European ETF market.
The final SDR framework includes an anti-greenwashing rule for all authorised firms, four investment labels, and new rules and guidance for firms marketing investment funds on the basis of their sustainability characteristics.
In December, the FCA launched a consultation on its OFR and how products should be recognised under a post-Brexit framework, noting ETFs’ unique distribution methods versus other fund types will be considered during the process.
The Overseas Fund Regime (OFR) is planned to be introduced in April 2024 and is set to remove a key post-Brexit barrier for EU-domiciled ETFs entering the UK.
Aswell as announcing equivalence would be granted for all UCITS vehicles in the European Economic Area (EEA), including EU-member states, the government also confirmed it would be extending the FCA’s current Temporary Permissions Regime (TPR) by a year to the end of 2026 “to ensure funds can smoothly transition to the OFR”.