optimising of business functions and processes;

cost saving;

expertise of the delegate in administration or in specific markets or investments;

access of the delegate to global trading capabilities.

management companies authorised under F8FSMA;

investment firms authorised under F9FSMA with permission under Part 4A of that Act to carry out the regulated activity of managing investments under article 37 of the Regulated Activities Order 2001;

credit institutions authorised under F10FSMA with permission under Part 4A of that Act to carry out the regulated activity of managing investments under article 37 of the Regulated Activities Order 2001;

external AIFMs authorised under F11the Financial Services and Markets Act 2000;

third country entities authorised or registered for the purpose of asset management and effectively supervised by a competent authority in those countries.

a written arrangement shall exist between the F13FCA and the supervisory authorities of the undertaking to which delegation is conferred;

with respect to the undertaking to which delegation is conferred, the arrangement referred to in point (a) allows the F14FCA to:

1. (i)

   obtain on request the relevant information necessary to carry out their supervisory tasks as provided for in F15the UK provisions which implemented Directive 2011/61/EU;

2. (ii)

   obtain access to the documents relevant for the performance of their supervisory duties maintained in the third country;

3. (iii)

   carry out on-site inspections on the premises of the undertaking to which functions were delegated. The practical procedures for on-site inspections shall be detailed in the written arrangement;

4. (iv)

   receive as soon as possible information from the supervisory authority in the third country for the purpose of investigating apparent breaches of the requirements of F16the UK provisions which implemented Directive 2011/61/EU and its implementing measures;

5. (v)

   cooperate in enforcement in accordance with the national and international law applicable to the supervisory authority of the third country and the EU competent authorities in cases of breach of the requirements of F17the UK provisions which implemented Directive 2011/61/EU and its implementing measures F18....

where the AIFM and the delegate are members of the same group or have any other contractual relationship, the extent to which the delegate controls the AIFM or has the ability to influence its actions;

where the delegate and an investor in the relevant AIF are members of the same group or have any other contractual relationship, the extent to which this investor controls the delegate or has the ability to influence its actions;

the likelihood that the delegate makes a financial gain, or avoids a financial loss, at the expense of the AIF or the investors in the AIF;

the likelihood that the delegate has an interest in the outcome of a service or an activity provided to the AIFM or the AIF;

the likelihood that the delegate has a financial or other incentive to favour the interest of another client over the interests of the AIF or the investors in the AIF;

the likelihood that the delegate receives or will receive from a person other than the AIFM an inducement in relation to the collective portfolio management activities provided to the AIFM and the AIFs it manages in the form of monies, goods or services other than the standard commission or fee for that service.

persons engaged in portfolio management tasks are not engaged in the performance of potentially conflicting tasks such as controlling tasks;

persons engaged in risk management tasks are not engaged in the performance of potentially conflicting tasks such as operating tasks;

persons engaged in risk management functions are not supervised by those responsible for the performance of operating tasks;

the separation is ensured throughout the whole hierarchical structure of the delegate up to its governing body and is reviewed by the governing body and, where it exists, the supervisory function of the delegate.

the AIFM ensures that the delegate takes all reasonable steps to identify, manage and monitor potential conflicts of interest that may arise between itself and the AIFM, the AIF or the investors in the AIF. The AIFM shall ensure that the delegate has procedures in place corresponding to those required under Articles 31 to 34;

the AIFM ensures that the delegate discloses potential conflicts of interest as well as the procedures and measures to be adopted by it in order to manage such conflicts of interest to the AIFM which shall disclose them to the AIF and the investors in the AIF in accordance with Article 36.

the AIFM no longer retains the necessary expertise and resources to supervise the delegated tasks effectively and manage the risks associated with the delegation;

the AIFM no longer has the power to take decisions in key areas which fall under the responsibility of the senior management or no longer has the power to perform senior management functions in particular in relation to the implementation of the general investment policy and investment strategies;

the AIFM loses its contractual rights to inquire, inspect, have access or give instructions to its delegates or the exercise of such rights becomes impossible in practice;

the AIFM delegates the performance of investment management functions to an extent that exceeds by a substantial margin the investment management functions performed by the AIFM itself. When assessing the extent of delegation, F26the FCA shall assess the entire delegation structure taking into account not only the assets managed under delegation but also the following qualitative criteria:

1. (i)

   the types of assets the AIF or the AIFM acting on behalf of the AIF is invested in, and the importance of the assets managed under delegation for the risk and return profile of the AIF;

2. (ii)

   the importance of the assets under delegation for the achievement of the investment goals of the AIF;

3. (iii)

   the geographical and sectoral spread of the AIF’s investments;

4. (iv)

   the risk profile of the AIF;

5. (v)

   the type of investment strategies pursued by the AIF or the AIFM acting on behalf of the AIF;

6. (vi)

   the types of tasks delegated in relation to those retained; and

7. (vii)

   the configuration of delegates and their sub-delegates, their geographical sphere of operation and their corporate structure, including whether the delegation is conferred on an entity belonging to the same corporate group as the AIFM.