EU Fund Manager Pay, Speed Trading, Barclays: Compliance

Fund managers will face tougher European Union pay rules as part of a package of financial-services regulations approved by lawmakers yesterday.

The European Parliament backed measures limiting guaranteed bonuses for managers of funds known as Undertakings for Collective Investment in Transferable Securities, or UCITS, and requiring payment of at least 40 percent of variable pay to be deferred for a minimum of three years. The move is part of votes on topics ranging from high-frequency trading to bank account fees, as lawmakers clear the decks before adjourning for May elections.

The fund manager pay rules are a key part of a draft law targeted at boosting regulation of the UCITS industry and preventing fraud similar to that orchestrated by Bernard Madoff, who pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. The fallout included the liquidation of four UCITS funds, a type of retail investment vehicle allowed to operate across the EU.

Under the draft law, banks and other institutions that act as depositories for UCITS would face limits on their ability to delegate responsibility for the safekeeping of assets.

The draft law also includes a requirement for half of bonuses for UCITS managers to be paid in the fund’s own shares, or similar securities. Guaranteed bonuses would be banned, with an exception for first-year staff.

The European Securities and Markets Authority will draft pay guidelines covering staff at UCITS management companies.

Separately, the parliament approved a bill yesterday that may force senior unsecured creditors in European Union banks to take losses before public money can be injected to prop up a lender. Lawmakers have vowed to prevent a recurrence of the bailouts that followed the collapse of Lehman Brothers Holdings Inc.

The bill requires 8 percent of a failing bank’s liabilities to be wiped out before recourse can be made to industry-financed resolution funds and other backstops. The rules must be passed by the EU’s 28 national governments.

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Compliance Action

MAS Says Mermaid Maritime Penalized for Contravening SFA

Mermaid Maritime Pcl (MMT) was late in disseminating information to the market on changes in interest in its securities, according to a statement on the website of the Monetary Authority of Singapore.

The company provides drilling and sub-sea engineering services for the offshore oil and gas industry, with clients in South East Asia, the North Sea, the Middle East and South America.


HFT Rules Needed to Regain Confidence, McCaughan Says

James McCaughan, chief executive officer of Principal Global Investors (PIFHYAC), talked about high-frequency trading.

He spoke with Tom Keene, Adam Johnson and Peter Orszag on Bloomberg Television’s “Surveillance.”

For the video, click here.

Comings and Goings/Executive Pay

Barclays Picks Crawford Gillies as a Director to Oversee Pay

Barclays Plc (BARC) moved to appease investor anger over pay by replacing John Sunderland as director responsible for employee compensation.

Crawford Gillies, a director of Standard Life Plc (SL/), will join the bank’s compensation committee on May 1 and become chairman to oversee pay at a date to be agreed on, London-based Barclays said in a statement yesterday.

Chief Executive Officer Antony Jenkins is set to face investors at a meeting on April 24. The bank is seeking shareholder backing to award bonuses twice as much as basic pay, as it’s required to do under European Union rules that start this year. The U.K.’s Local Authority Pension Fund Forum called on shareholders last month to oppose Barclays’s pay plans, citing the “awful performance” of its investment bank.

To contact the reporter on this story: Carla Main in New York at

To contact the editors responsible for this story: Michael Hytha at Stephen Farr, Andrew Dunn

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