Asset Management & Investment Funds: Irish Practice Developments - January 2018
Asset Management & Investment Funds: Irish Practice Developments - January 2018
Some approaching compliance deadlines
28 February 2018. Fitness & Probity. The Annual PCF Confirmation Return due date (for the year ending 31/12/17) for Investment Funds and Fund Service Providers (including AIFMs and UCITS management companies) is 28 February 2018. The Annual PCF Confirmation Return (which is made via the ONR system) involves a mandatory declaration that the CEO, or equivalent, has confirmed in writing that:
the RFSP has brought the Fitness and Probity Standards to the attention of all PCFs
the RFSP is satisfied on reasonable grounds that all PCFs comply with the Fitness and Probity Standards
the written agreement of all PCFs to abide by the Fitness and Probity 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 2018. 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. This year this annual update of the KIID must be filed no later than 19 February 2018 (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.
25 May 2018. GDPR. The General Data Protection Regulation will come into force on 25 May 2018 and will introduce a sweeping new data protection regime. Please speak with your usual contact on the ALG Asset Management & Investment Funds team to discuss the steps you need to take to prepare for the new regime.
26 June 2018. AML/CTF- ESA joint guidelines on simplified and enhanced due diligence. The Central Bank expects firms to comply with the ESA joint guidelines on simplified and enhanced due diligence by 26 June 2018.
1 July 2018. CP86. Existing Fund Management Companies (UCITS ManCos, AIFMs, self-managed UCITS and internally managed AIFs) must comply with the new rules which derive from CP86 by 1 July 2018. Please speak with your usual contact on the ALG Asset Management & Investment Funds team to discuss the steps you need to take to prepare for the new regime.
21 July 2018. MMF Regulation. The MMF Regulation must be implemented by EU member states by 21 July 2018. The MMF Regulation introduces new requirements for MMFs in particular, portfolio composition, valuation of assets, diversification, liquidity management and credit quality of investment instruments. Existing UCITS and AIF MMFs must comply with the new rules by 21 January 2019.
30 November 2018. Filing annual accounts of Variable Capital Companies with the CRO. The Companies (Accounting) Act 2017 obliges UCITS investment companies and AIF investment companies to file annual accounts for financial years commencing on or after 1 January 2017 with the CRO within eleven months of the relevant financial year end. By 30 November 2018 we will see the first such accounts being filed.
1 January 2019. Benchmarks Regulation. Prospectuses of UCITS and of AIFs which are subject to the Prospectus Directive, which reference a benchmark and which have been approved prior to 1 January 2018, will need to be updated at the next update and in any event by no later than 1 January 2019 to include specific information on the relevant benchmark.
UCITS and AIFs which reference a benchmark should have "robust written plans" that set out the actions they would take should the benchmark materially change or cease to be produced. Existing UCITS and AIFs will need to ensure that the benchmarks they use are working to comply with the Benchmarks Regulation or find an alternative.
The above list does not cover tax, FATCA or CRS filings, ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include annual FDI Return) and semi-annual accounts or other similar returns which deadlines will vary to reflect the particular entity's year end.
The application of safe harbour is limited under the MiFID II Regulations to the provision of investment services to eligible counterparties and all professionals (which includes UCITS and AIFs). It will not apply where:
a firm provides investment services to retail clients in Ireland (and potentially elect up professionals)
a firm is a third country firm whose home country is on the FATF list of non-cooperative jurisdictions and which is not subject to authorisation and supervision for providing investment services to wholesale clients in Ireland
a firm is a third country firm whose home country who is not a signatory to the IOSCO Multilateral Memorandum of Understanding concerning consultation and cooperation and the exchange of information
The safe harbour regime will not apply if a firm is registered by ESMA, following an equivalence decision by the Commission under MiFIR.
The Central Bank may make rules requiring those who avail of the safe harbour exemption to notify it as it deems necessary, to ensure that the conditions of the exemption are being met. This is a new requirement under the MiFID II Regulations. The Central Bank may also issue a direction to a third country firm whose registration with ESMA has been withdrawn that it may not provide investment services, irrespective of the fact that it might otherwise fall within the safe harbour regime.
Commission Delegated Regulation (EU) 2018/63, which amends Delegated Regulation (EU) 2017/571 supplementing the MiFID II Directive with regulatory technical standards on the authorisation, organisational requirements and the publication of transactions for data reporting services providers will enter into force on 6 February 2018.
Central Bank Markets Updates
The Central Bank published Issue 1 of its 2018 Markets Update which covered (among other items), the following Central Bank developments:
Q&A 1126 of the Central Bank AIFMD Q&A clarified that the Central Bank is likely to require AIFs which are in scope of the PRIIPs Regulation to file KIDs on an ex post basis. This will include periodic updates to existing KIDs. Once requirements in this regard are in place the Central Bank will advise accordingly.
Q&A 1087 of the Central Bank UCITS Q&A clarified that UCITS are exempt from the obligations to produce a PRIIPS KID until 31 December 2019. The Central Bank will not require UCITS to produce a PRIIPs KID in advance of that date. The UCITS KIID requirements continue to apply.
Q&A 1086 of the Central Bank UCITS Q&A clarified that for a UCITS, which makes use of a benchmark as referred to in Article 3(1)(7)(e) of the Benchmark Regulation, the disclosure in the UCITS prospectus pursuant to Article 29 (2) of the Benchmarks Regulation does not require the name of the benchmark administrator to be identified. Article 29(2) of the Benchmark Regulation requires that the [UCITS] prospectus shall include clear and prominent information stating whether the benchmark is provided by an administrator included in the register referred to in Article 36 of the Benchmarks Regulation.
Q&A 1127 of the Central Bank AIFMD Q&A clarified the Central Bank's understanding that there is no obligation on an Irish authorised AIFM managing AIFs which reference a benchmark in the prospectus to comply with the disclosure requirements set out in Article 29(2) of the Benchmark Regulation unless the AIF is subject to the Prospectus Directive.
33 Bills that are expected to undergo Pre-Legislative Scrutiny
74 pieces of legislation at earlier stages
Bills of interest include:
Criminal Justice (Money Laundering & Terrorist Financing) (Amendment) Bill (to give effect to 4AMLD)
Data Protection Bill (to transpose the Police and Criminal Justice Authorities Directive and give full effect to GDPR)
Market in Financial Instruments Bill (part of the transposition of MiFID II)
The Investment Limited Partnership and Irish Collective Asset-management Vehicle (Amendment) Bill is expected to undergo Pre-Legislative Scrutiny this session.
Central Bank Appointments
The Central Bank announced three appointments at director level in its Financial Conduct pillar. The directors will report to Director General, Financial Conduct, Derville Rowland.
Grainne McEvoy is appointed Director of Consumer Protection
Seána Cunningham is appointed Director of Enforcement and Anti-Money Laundering
Colm Kincaid is appointed Director of Securities and Markets Supervision
Irish Funds - GDPR
The Irish Funds GDPR Working Group published a bulletin outlining the scope and key impacts of the GDPR. The bulletin also outlines the objectives of the Working Group. The Working Group will be publishing Q&A-style guidance and arranging a GDPR information event for Irish Funds members. Please speak with your usual contact on the ALG Asset Management & Investment Funds team if you would like to see a copy of the bulletin.
The regulation of crowdfunding in Ireland
The Department of Finance (DoF) recently published a Feedback Paper on the Regulation of Crowdfunding in Ireland. As the DoF noted, crowdfunding is not currently a regulated activity in Ireland. Consequently, there are no formal consumer protections available for those using crowdfunding platforms to provide funds. However it was noted that most of the respondents who provided feedback were of the view that some legislation does apply to this area, including data protection laws and the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Click here for more details.