New US withholding tax rules on dividend equivalents take effect from 1 January 2017 – see new regulations. Some guidance has been released in notice 2016-76 which also provides transitional relief so that the provisions will apply to delta-one transactions (such as transactions that replicate direct ownership, e.g., a total return swap) in calendar year 2017, and to non-delta-one transactions beginning in calendar year 2018. We would like to draw to the attention of members a recent EY briefing article Section 871(m): Pressing issues in the asset management space  and we are aware of other initiatives in the industry which we will report as they develop. Funds with derivative exposure to US equities should assess the action required to ensure compliance as of 1 January 2017 including working in conjunction with brokers dealers and other counterparties to ensure s.871(m)-compliant procedures are in place. For further information, please contact Paul Hale or Enrique Clemente.