Investment Funds Update - Europe: Legal and regulatory updates for the funds industry from the key asset management centres and primary European fund domiciles - Issue 9 2018: Ireland

Dechert LLP

Dechert LLP

Central Bank publishes the fifth edition of its investment firms Q&A   

The Central Bank of Ireland published the fifth edition of its Investment Firms Questions and Answers (the “Q&A”) on October 8, 2018, containing an additional question ID 1039 which relates to the scope of the term “transferable securities” and addresses circumstances where securities have restricted transferability, for example, loan notes and shares in private companies. 

The response to question ID 1039 reiterates the understanding of the term “transferable securities” set out in the European Commission’s Q&A on the Markets in Financial Instruments Directive. The response also indicates that investment firms should consider whether securities with restricted transferability are “transferable securities” for the purposes of the definition of investment instruments in Section 2 of the Investment Intermediaries Act 1995. 

Read: The Q&A

CBI publishes revised guidance on the use of financial indices by UCITS

The Central Bank of Ireland (the “Central Bank”) published updated guidance on the use of financial indices by UCITS on October 8, 2018. It clarifies Central Bank requirements and introduces a certification process regarding the use of financial indices by UCITS I.

Read: The updated guidance

Exchange Traded Funds: Central Bank of Ireland feedback statement  

The Central Bank of Ireland (the “Central Bank”) published their ETF Feedback Statement on  September 14, 2018, on the back of Discussion Paper 6, May 2017 (“Feedback Statement”). 

In relation to exchange traded share classes of mutual funds, the Central Bank has confirmed they will allow listed and unlisted share classes within an investment fund and they will produce guidance on the appropriate disclosure requirements to apply to both share classes in order to avoid investor confusion. 

With regard to dealing cut-off times for hedged and unhedged share classes, the Central Bank will extend the current approach with respect to cash / in-kind share classes to include unhedged and hedge share classes within an ETF.

The Central Bank will continue to consider portfolio transparency and will engage on this topic at European and international regulatory forums.

Read: The feedback statement

Central Bank Introduces Changes to Review Process Conducted in the Context of UCITS Authorisations, Approvals and Post-Authorisation

The Central Bank of Ireland (the “Central Bank”) published a letter outlining changes introduced, with immediate effect, to the review process conducted in the context of UCITS authorisations, approvals and post-authorisation amendments on October 9, 2018.

Subject to receipt of the relevant Central Bank application form and written confirmations, the Central Bank will no longer carry out a prior review of the following:

  1. The establishment of new Share Classes
  2. Depositary Agreements
  3. Trust Deeds, Deeds of Constitution
  4. Investment Limited Partnership Agreements
  5. UCITS Financial Indices

The Central Bank will continue to carry out quality assurance checks, selected on a random basis, in relation to the above documentation following authorisation of a UCITS or Retail AIF.

Read: Dechert OnPoint

Central Bank of Ireland speeches – Brexit, CP86 and substance

Recent speeches from Martina Kelly, Gerry Cross and Michael Hodson of the Central Bank of Ireland provide the key insights from the regulator in areas such as CP86 and substance requirements for fund management companies in Ireland and Brexit.

Martina Kelly’s speech points towards existing entities requiring equal substance to new entities; Gerry Cross’ speech focused on inter alia the continuing growth of the fund industry in Ireland, Brexit, the need for new alliances for Ireland post Brexit, the need for supervisory consistency across the EU and the importance of the capital markets union; and Michael Hodson spoke about a number of topics such as Brexit, culture and Fund Management Company Effectiveness, otherwise known as CP86.

Read: The full speeches Martina Kelly, Gerry Cross, Michael Hodson

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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