Asset Management & Investment Funds: Irish Practice Developments: January 2019
Asset Management & Investment Funds: Irish Practice Developments: January 2019
Some approaching compliance deadlines
31 January 2019. UCITS ManCo ownership confirmation – UCITS management companies need to file the Annual Ownership confirmation by 31 January 2018.
31 January/28 February 2019. Fitness & Probity. - management companies, AIFMs, self-managed/internally-managed UCITS/AIFs and other regulated financial service providers (RFSPs), where they have not already done so, will need to obtain their annual certification from persons performing PCFs (e.g. directors) and CFs (e.g. money laundering reporting officer and company secretary) to demonstrate that they are aware of the Fitness and Probity Standards and agree to continue to abide by those Standards. They will also have to notify the board if they no longer comply with these standards. This forms part of ongoing performance monitoring set out in Section 22 of the Guidance on Fitness and Probity Standards.
The submission due date for the Annual PCF Confirmation Return (for the year ending 31/12/18) for UCITS Management Companies and for AIF Management Companies is 31 January 2019. The submission due date for the Annual PCF Confirmation Return (for the year ending 31/12/18) for Investment Funds will likely be 28 February 2019. The deadline for each entity will be detailed on the ONR system.
The Annual PCF Confirmation Return (which is made via the ONR system) involves a mandatory declaration to confirm that the CEO or equivalent, has confirmed in writing that:
the RFSP has brought the Standards to the attention of all PCFs
the RFSP is satisfied on reasonable grounds that all PCFs comply with the Standards
the written agreement of all PCFs to abide by the Standards has been obtained
all necessary due diligence has occurred
the RFSP will investigate any fitness and probity concerns, take appropriate action and notify the Central Bank of any action taken without delay.
19 February 2019. ESG refinements to the UCITS and AIFMD regimes. ESMA has requested responses to its consultation on integrating sustainability risks and factors in the UCITS Directive and AIFMD (discussed in our December bulletin) by 19 February 2019.
19 February 2019. UCITS KIID - A UCITS must update its key investor information document (KIID) on an annual basis for each sub-fund/standalone fund within 35 business days of the end of each calendar year. For 2019, the annual update of the KIID must be filed no later than 19 February 2019 (where required). Any update to the KIID filed with the Central Bank must be translated (as necessary) and filed in any other host jurisdictions where the UCITS is registered to market its shares and uploaded on the UCITS' website.
21 March 2019. MMFs. MMFs are required to notify CBI that they have ceased using the reverse distribution mechanism by 21 March 2019.
28 March 2019. UK FCA TPR Notifications - The UK FCA has advised that TPR notifications must be made before the end of 28 March 2019.
UK temporary Permissions Regime - Notification window opens
The UK Government has issued draft statutory instruments which create regimes allowing fund managers to continue to market funds in the UK for a limited period after exit day in the event of a no-deal Brexit. This is called the Temporary Permissions Regime (TPR).
The TPR will allow EEA-domiciled investment funds that currently market in the UK under a passport to continue temporarily marketing in the UK in the event of a no-deal Brexit. The TPR will only come into force if the UK leaves the EU in a no-deal Brexit scenario. UCITS and AIFs who wish to avail of the TPR must opt in to the TPR by notifying the FCA. Notifications must be made by submitting the TPR Form using the FSA's Connect system. The form must contain the required information and be made before the notification window closes at the end of 28 March 2019.
The FCA set up a TPR webpage which is a valuable source of information. The FCA warns that once the notification window has closed, firms that have not submitted a notification will not be able to use the TPR.
The draft Statutory Instruments envisage that the TPR will be available for new sub-funds which are launched by UCITS after 29 March 2019 where the UCITS can demonstrate that at least one other sub-fund in their umbrella was registered with the FCA and had opted into the TPR before 29 March 2019.
The TPR also allows EEA domiciled firms which currently passport into the UK to continue business for a temporary period while they seek full FCA authorisation, again in the event of a no-deal Brexit.
The statement follows recent EU clarification that the practice of cancelling shares under a reverse distribution mechanism (RDM) was to be prohibited under the MMF Regulation.
The statement notes the requirements under Article 44 of the MMF Regulation for:
existing MMFs to submit an application for authorisation by 21 January 2019 and
for the competent authority to notify the MMF of its decision within two months of the application.
On that basis, the Central Bank and the CSSF will require MMFs using RDM to confirm in writing by no later than 21 March 2019 that they have ceased using RDM. This is a tight deadline, given the operational considerations and the practicalities of transition under the MMF Regulation.
Prior to issuing the statement, both the Central Bank and the CSSF had written to impacted MMF managers requesting plans to bring their funds into compliance in light of the EU Commission’s letter of October 2018.
The Central Bank has issued bespoke application forms for MMFs, and these are available on its website.
Central Bank consultation on new draft AML/CTF Guidelines for the Financial Sector
A summary of the key themes of the Scheme and the amendments proposed to the CJA is available here.
Michael Hodson, Central Bank Director of Asset Management and Investment Banking speech on Asset Management after Brexit: Responding to the New Reality
Michael Hodson, Central Bank Director of Asset Management and Investment Banking delivered a speech on Asset Management after Brexit: Responding to the New Reality to the British Irish Chamber of Commerce: Financial Services Seminar.
Mr Hodson gave useful insights on the following asset management sector specific topics:
Sustainable Finance / ESG Investing
Exchange traded funds
The new prudential regime for investment firms
The stress testing of investment funds- (ESMA consultations on MMFs and liquidity stress testing)
Central Bank's UCITS Regulations, noting that the Central Bank will shortly publish a revised set of the Central Bank UCITS Regulations.
Mr Hodson also gave valuable insights in respect of Brexit and considering, in particular, in the event of a no-deal Brexit, the possible impact on:
Central Security Depositary Services
Central Bank engagement with existing supervised entities
As regards passporting, Mr Hodson noted that
"Specifically, in the context of the asset management sector, the loss of the passport would mean that UK fund managers could no longer act on behalf of Irish funds. There is also the risk that Irish AIFMs, UCITS management companies and Irish funds would no longer be able to delegate portfolio management to UK investment managers.
This matter is a live matter at a European level as outlined by ESMA's Chair, Steven Maijoor, in a keynote address last year and in the EBA's 2019 Work Programme . Moreover, in a recent address, the Central Bank's Deputy Governor, Ed Sibley, noted that it was "reasonable for firms to plan on the basis that MoUs will be in place by 29th March". In my mind, all of these communications should now give industry sufficient confidence on this matter. "
The Central Bank published the sixth edition of the Investment Firms Q&A
CFDs and Binary Options – Central Bank product intervention powers
FCA announces window for notifications under their temporary permissions regime
The Markets Update also details developments in respect of the European Securities and Markets Authority (ESMA), the European Commission and the International Organization of Securities Commissions (IOSCO).
AEOI (FATCA and CRS) Reporting
The Irish Funds FATCA and CRS Working Group updated Irish Funds members with feedback from the Irish Revenue Commissioners and the IRS on the 2018 AEOI (FATCA and CRS) reporting cycle and plans for 2019 AEOI reporting and compliance programs.