Investment Funds Update – Europe: Legal and regulatory updates for the funds industry from the key asset management centres and primary European fund domiciles - Issue 3, 2019: Ireland

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Bond Connect applications

The Central Bank of Ireland confirmed on 21 March 2019 that it would begin to accept applications from Irish authorized investment funds to participate in China Bond Connect ("Bond Connect"). The Central Bank’s confirmation follows a submission by Irish Funds on behalf of the funds industry in December 2018 ("the Submission"). The purpose of the Submission was to inform the Central Bank of how Bond Connect operates to facilitate investment in the Chinese bond market and in particular how a depositary ensures that the manner in which bonds are held, when acquired through Bond Connect, allows the depositary to meet its safe-keeping legal obligations under the UCITS Regulations and the AIFMD and any conditions imposed by the Central Bank. 

Read: CBI Greenlights Irish UCITS and AIFs to Invest via Bond Connect

Central Bank update on Brexit planning

Philip R. Lane, Governor of the Central Bank of Ireland addressed the European Financial Forum in Dublin to discuss the potential impact of Brexit on the Irish economy on 13 February 2019.

He noted that the Irish economy expanded at a strong pace in 2018, supported by the strength of activity on the domestic side of the economy and a still-favourable international environment. However, discussing the impact of Brexit he said, "a sudden, no-deal scenario would have immediate disruptive effects that would permeate almost all areas of economic activity." He further noted that because the work that the Central Bank and others have undertaken, the immediate cliff-edge risks of a hard Brexit have been largely addressed.

Read: Governor of the Central Bank of Ireland addressed potential impact of Brexit on the Irish economy

Central Bank review of 2000-plus UCITS funds

In Q1 2019 the Central Bank began its themed inspections on a number of UCITS funds. Previously, in December 2018 the Central Bank’s Director General for Financial Conduct, Derville Rowland stated that the Central Bank had initiated an analysis of locally domiciled UCITS funds in order to weed out potential closet trackers. The Central Bank is probing 2,000-plus UCITS funds to check for closet trackers – vehicles that hug their benchmarks despite being marketed as actively managed.

She stated that the Central Bank is seeking to ensure that "investors are not disadvantaged by funds operating in a manner that is not consistent with the way in which they have presented their objectives, policies and charges in the fund documentation."

Read: Director General Derville Rowland speaking at the EY ‘Funds Forum’

Irish Data Protection Commission update on data transfers if "no-deal" Brexit

The Irish Data Protection Commissioner issued on 21 December 2018 an update for organizations or bodies that transfer personal data to the UK, including Northern Ireland. The guidance is relevant for any Irish entities that have data processing operations that involve transfers of personal data to the UK. In the event of a no-deal Brexit, those entities will require a transfer mechanism to be in place from 30 March 2019 in order to continue to lawfully transfer personal data to the UK.

Read: DPC issues important message on personal data transfers to and from the UK in event of a 'no deal' Brexit

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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