Financial Services Regulation & Compliance - Funds Feb 2018

DOMESTIC

Improvements to Central Bank rules for Loan Originating Qualifying Investor AIFs

The Central Bank of Ireland (Central Bank) announced its intention to broaden the scope of what a Loan Originating Qualifying Investor AIF (LO-QIAIF) may invest in to include "investment in debt/credit instruments". This change will be effective from 7 March 2018 when the Central Bank will publish a revised AIF Rulebook. This will allow LO-QIAIFs to engage in broader credit related strategies.

Benchmarks Regulation – Updated ESMA Q&As

ESMA published an updated version of its Q&As on Benchmarks Regulation with two new Q&As concerning commodity benchmarks and what types of investment funds are considered to be using an index.

EUROPEAN

EU Commission notices on the consequences of Brexit on Asset Management

The EU Commission published a notice setting out the consequences that the UK withdrawal from the EU will have on Asset management. The EU Commission explains that, unless a ratified withdrawal agreement establishes another date, all EU primary and secondary law will cease to apply to the UK from 30 March 2019. The UK will then become a third country.

MMF Regulation - EU Commission letter to ESMA on share cancellation

On 2 February 2018, ESMA published a letter from the, EU Commission Director-General, DG FISMA, to the ESMA Chair, on the implementation of the Regulation on money market funds (MMF Regulation). The Commission agrees with ESMA's analysis that the practice of share cancellation is not compatible with the MMF Regulation. ESMA's website states that it is considering possible next steps with a view to promoting convergent application of the Benchmark Regulation across the EU.

CIS liquidity risk management - IOSCO recommendations and good practices

The International Organization of Securities Commissions (IOSCO) published a final report on recommendations for liquidity risk management for collective investment schemes (CIS). As well as a report on good practices and issues for consideration for open-ended fund liquidity and risk management.

ESRB recommends that ESMA and the EU Commission develop legislation and guidance on leverage and liquidity in investment funds

The European Systemic Risk Board (ESRB) recommended that ESMA and the EU Commission develop legislation and guidance on leverage and liquidity in investment funds in 2019 and 2020.

ESMA interactive single rulebook

ESMA launched a new interactive single rulebook to help facilitate the consistent application of the EU single rulebook in the securities markets area. The new tool aims to provide a comprehensive overview of and easy access to all level 2 and level 3 measures adopted in relation to a level 1 text. This includes all relevant delegated and implementing acts adopted by the EU Commission including regulatory technical standards and implementing technical standards developed by ESMA and endorsed by the Commission, as well as guidelines, opinions and Q&As issued by ESMA.

Users are advised to refer to the Official Journal of the EU for the authentic version of EU legislation. ESMA launched the first rulebook with the level 1 text of the UCITS IV Directive and plans to provide an interactive version for each key level 1 text under its remit over time, with the next texts being the Credit Rating Agencies Regulation, the MiFID II Directive and MiFIR.

EU Commission survey on the functioning of the AIFMD

The EU Commission has contracted KPMG to carry out research on how the AIFMD has worked in practice and to what extent its objectives have been met. This survey is an important part of the KPMG research. Its aim is to gather the views of stakeholders on the AIFMD's requirements, their experience in applying them and the market impacts of the directive.

For more information please contact a member of the Financial Regulation team.

Date published: 15 March 2018