Background: An ill-fitting regulatory framework for cost disclosures has generated significant headwinds for the closed-end industry in recent years. When combined with the most challenging of macro environments, this has created a perfect storm. This has seen discounts collapse to the widest level since the global financial crisis; and while there has since been a modest recovery, they remain at stressed levels. Moreover, the elevated discount volatility has led to some investors questioning their future involvement in the sector. Against this backdrop, we were hugely encouraged by the announcement yesterday by HMT and the FCA confirming their commitment to replacing the EU-inherited consumer disclosure regulation (PRIIPs) with a new framework tailored to UK markets and firms. Importantly for our industry, the announcement also confirmed that investment trusts would effectively be taken outside the ambit of the current PRIIPS regime until such time as the new Consumer Composite Investments (CCI) regime has been finalised and implemented. The Government will in H2 2024 lay legislation to exempt closed-ended UK-listed investment funds from the requirements of the PRIIPs Regulation and Articles 50-51 of the MiFID Org Regulation and, in the meantime, regulatory forbearance will be applied so that such funds may choose not to follow those requirements. This means that in the interim period, investment companies are no longer required to publish a KID, and a “zero” can be inserted in the European MiFID Template. The Capital Markets Industry Taskforce recently described this as a “quick and easy win” for the UK and we applaud the Economic Secretary to the Treasury, Tulip Siddiq MP, for her swift action in securing an effective solution. The intention is for the new CCI regime to incorporate bespoke arrangements in respect of investment trusts to address concerns that have been raised with current disclosure requirements. Investec view: We can now see light at the end of what has been a long tunnel, but there is no room for complacency. The FCA will shortly launch a consultation period regarding the new CCI regime, giving stakeholders the opportunity to provide feedback on the new regime. With the closed-end industry facing unprecedented pressures, this opportunity must be taken. Earlier this year, the LSE submitted a joint response to an HM Treasury note on CCI that included more than 300 signatories, put together in just a couple of days, and this record-breaking response sent an incredibly powerful message – no doubt contributing to the decision to temporarily release investment trusts from PRIIPs requirements. The press release notes that ensuring retail investors can make informed investment decisions is an important part of healthy capital markets; and it adds that the new CCI regime is intended to better cater for a variety of products, including investment trusts, while still ensuring that consumers receive appropriate information to allow them to make meaningful choices between investment opportunities. We fully support this initiative, and strongly believe it is critical that disclosures are fair, clear, and not misleading – the key now is to ensure that an appropriate bespoke solution is formulated and implemented for closed-ended UK-listed investment funds. Continued overleaf