COLL 8.2.16 Dilution—QFC Retail Schemes

(1) In issuing or redeeming units in a QFC retail scheme, the operator must include in the unit price the dilution adjustment the operator considers necessary to reduce the effect of dilution.

Note 1 Issue, redemption, dilution adjustment and dilution are defined in the glossary.

Note 2 See the independent entity's duties under r 8.2.17 (Particular duties of independent entity in relation to dilution—QFC retail schemes).
(2) In issuing or redeeming units in a QFC retail scheme, the operator may, in exceptional circumstances, require the payment or deduction of a dilution levy for the purpose of reducing the effect of dilution if the independent entity has agreed that the levy should be required.

Note Dilution levy is defined in the glossary.
(3) In applying a dilution adjustment or dilution levy, the operator must act in a fair way to reduce dilution and solely for that purpose.

Note Dilution is defined in the glossary.
(4) A dilution adjustment is made—
(a) as part of the calculation of the unit price for the purpose of reducing dilution in the scheme; or
(b) to recover any amount the scheme has paid, or the operator reasonably expects it to pay, in relation to the issue or redemption of units.
(5) A dilution levy is payable at the same time as payment or transfer of property is required for the issue or redemption.
(6) As soon as practicable after a valuation point, the operator must tell the independent entity the rate or amount of any dilution adjustment or dilution levy.

Note Valuation point is defined in the glossary.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)