The Front Page, Asset Management & Investment Funds: Irish Practice Developments
Some Approaching Deadlines
- 30 June 2017. Sub-Fund Profiles. Deadline for filing the Investment Funds Annual Sub-Fund Profile Return on the Central Bank's ONR.
- 30 June 2017. FATCA/ CRS. Original deadline for FATCA and CRS reporting for 2016. Revenue may grant extensions in respect of FATCA reporting on a case-by-case basis. The CRS reporting date has been extended to 18th August 2017.
- 13 July 2017. SFTR. Deadline for prospectus/supplement updates to include disclosures under the Regulation on reporting and transparency of securities financing transactions (SFTR). Umbrella investment funds which use Securities Financing Transactions (SFTs) and total return swaps and which have been authorised since 12 January 2016 should have the requisite disclosures in their prospectus. Sub-funds have until 13 July 2017 to update their prospectus or supplement. UCITS and RIAIFs should allow sufficient time for the Central Bank to review documentation in advance of the deadline.
- 11 August 2017. ETF Discussion Paper. Deadline for responses to CBI discussion paper on Exchange Traded Funds.
This list does not cover ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include the annual FDI Return) and semi-annual accounts because these dates will vary to reflect the particular year end.
Revised Central Bank Guidance on Share Classes and updated Central Bank UCITS Q&A
The Central Bank of Ireland (Central Bank) has revised its guidance entitled "UCITS and AIF Share Classes" in order to ensure that the guidance is consistent with the ESMA Opinion which issued on 30 January 2017 on “Share Classes of UCITS”.
The Opinion sets out four high-level principles a UCITS should follow when setting up share classes in the a UCITS or sub-fund, in the case of an umbrella UCITS. These are:
- Common Investment Objective (ESMA is of the opinion that derivatives-based hedging arrangements at share class level, other than currency risk hedging, are not compatible with this principle).
In addition, and in order to provide clarity for stakeholders, the Central Bank has published some additional Q&As in the eighteenth edition of the UCITS Q&A document.
Below are new Questions ID 1077 and ID 1078:
Q 1077: "I am a UCITS with one or more share classes, approved by the Central Bank on or prior to 30 January 2017. Such share class(es) do not comply entirely with the principles set out in paragraph 9, Section 3.1 of ESMA’s Opinion ‘Share classes of UCITS’, dated 30 January 2017 and implemented in full by the Central Bank. Am I required to make any amendments to such share classes?"
A 1077: No. You are not required to make any amendments to share classes approved by the Central Bank on or prior to 30 January 2017. However, any such share classes should be closed for investment by new investors on or before 30 July 2017, and for additional investment by existing investors on or before 30 July 2018.
Q 1078: "I am a UCITS with one or more share classes, approved by the Central Bank on or prior to 30 January 2017. The UCITS employs derivatives in order to engage in currency hedging at the level of the share class. Am I required to make any amendments to these share classes?"
A 1078: You must determine if you meet with the provisions of the ESMA Opinion on Share Classes as reflected in the Central Bank’s guidance “UCITS and AIF Share Class Hedging”. If not and if you intend to continue to offer these share classes to investors you should make any necessary amendments at the earliest opportunity. Any amendments to your documentation arising out of such process should be made at the time of the next update of your prospectus and/or supplement(s), if applicable in the case of sub-fund(s).
Finally, the Central Bank notes that the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 (as amended) (the Central Bank UCITS Regulations) may be amended in the future to reflect the Opinion.
Central Bank Markets Update
The Central Bank issued a Markets Update on 28 June 2017:
Central Bank of Ireland
- Central Bank publishes second edition of its Investment Firms Regulations Q&A containing amendments to existing questions, ID 1005, 1006 and 1010, and new questions, ID 1022-1025.
- Central Bank publishes 18th Edition of the UCITS Q&A containing new questions, ID 1077 and ID 1078 and revised guidance in relation to share classes (see above)
- Central Bank response to the public consultation on the operations of the European Supervisory Authorities
- "MiFID II - Are you Ready?" - Denise Murray, Head of Asset Management: Authorisations and Inspections Division
- Protecting and enhancing the Single Market for financial services: a regulatory perspective - Gerry Cross, Director of Policy & Risk
- Central Bank issues warning on MiFID II Unauthorised Businesses
- Central Bank publishes a Consultation Paper (CP 110) on the Implementation of Competent Authority Options and Discretions in the European Union (Capital Requirements) Regulations 2014 and Regulation (EU) No. 575/2013
- Regulatory challenges in the “New Normal” - Gerry Cross, Director of Policy & Risk
- Brexit Developments - Gerry Cross, Director of Policy & Risk
- Central Bank updates Fund Administrator Guidance (to reflect the best practices outlined in the Central Bank's recent letter to the industry following a themed review of the outsourcing of fund administration activities).
ESMA Recommendations and Guidelines
- MiFID II: ESMA issues final guidelines on trading halts
- ESAs publish AML/CFT Guidelines
- ESMA consults on draft standards for trading obligation for derivatives under MiFIR
- ESMA publishes framework for mandatory benchmarks contributions
- ESMA consults on Money Market Funds rules
- ESMA updates list of recognised third-country CCPs
- ESMA announces launch of reference data submission under MAR
- ESMA issues principles on supervisory approach to relocations from the UK
- MiFID II: ESMA clarifies transparency and position limit regimes for instruments traded on non-EU trading venues
- ESMA updates its MiFID II Q&As
- ESMA consults on measures for CCPs to manage conflicts of interest
- ESMA publishes final report on product governance guidelines to safeguard investors
- ESMA issues guidelines on relevant currencies and the substantial importance of a CSD for a host Member State
- ESMA updates MiFID II/ MIFIR Investor Protection Q&A (see below)
- ESMA issues positive opinion on short selling ban by Spanish CNMV
- ESMA publishes updated AIFMD and UCITS Q&As (see May Front Page)
- ESMA clarifies traded on a trading venue under MiFID II
- ESMA calls experts to join post-trading panel
- ESMA issues standards on regulatory cooperation regarding market abuse
- ESMA statement to ECON Hearing on CRA Regulation
- ESMA issues risk dashboard for first quarter of 2017
- ESMA updates its MAR Q&As
- ESMA responds to Commission consultation on Fintech
- ESMA publishes response to consultation on the operation of the ESAs
- ESMA publishes official translations of Guidelines under CSDR
- ESMA publishes 2016 Annual Report
International Organization of Securities Commissions (IOSCO)
- IOSCO’s Objectives and Principles of Securities Regulation
- Methodology for Assessing Implementation of the IOSCO Objectives and Principles of Securities Regulation
European Banking Authority (EBA)
- EBA to hold public hearing to update on progress over investment firms new prudential regime
- EBA consults on scope of its draft guidelines on connected clients under Article 4 (1) (39) of Regulation (EU) No 575/2013
- ESMA publishes official translations of Guidelines under CSDR
As noted in May Front Page, as and from Monday 12 June all suspicious transaction reports (STRs) are to be submitted to the Financial Intelligence Unit (FIU) of an Garda Siochána by way of a new software solution, namely GoAML. GoAML is a software solution developed by the UN office of drugs and crime which allows rapid and secure exchange of information between the Financial Intelligence Unit (FIU), reporting entities and law enforcement and intelligence authorities. From 12 June, all communications (including STRs) between the FIU and reporting entities will be conducted through the message board function within the GoAML application. GoAML is expected to improve information flow on trends, typologies, alerts etc. Reporting Entities should register as a user so that they are prepared for filing STRs and so that they receive any alerts and communications on trends and typologies as soon as they issue. Helpfully, an Garda Siochána have also issued a Go-AML Fund Manager Go-live pack.
Dual reporting of STRs remains a requirement and all Reporting Entities must submit STR’s to both the FIU and the Office of the Revenue Commissioners. The Office of the Revenue Commissioners will accept a printed copy of the STRs submitted on GoAML and this printed copy can be posted to the Office of the Revenue Commissioners directly.
Companies (Accounting) Act 2017
The Companies (Accounting) Act 2017 came into operation on the 9 June 2017. The below provisions (including mandatory CRO filing of UCITS and AIF annual accounts) apply to any financial year which commenced on or after 1 January 2017. The main purpose of the Companies (Accounting) Act 2017 is to transpose the EU Accounting Directive 2013/34/EU (as amended) into Irish law. The provisions which are of particular interest to Investment Funds are set out below.
- Filing of financial statements by an investment company. Section 86 of the Accounting Act 2017 amends the Companies Act, 2014 by the insertion of a new section 1401A(1) which obliges AIF investment companies to file financial statements and directors' reports with the CRO.
- Amendments to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011. Section 100 of the Accounting Act 2017 amends the 2011 UCITS Regulations by the insertion of a new Regulation 42A which obliges UCITS investment companies to file financial statements and directors' reports with the CRO. Moreover, section 100 also substitutes a new Regulation 93 so that the auditors' report should comply with section 336 of the Companies Act, 2014 and the Statutory Audit Regulations 2016.
- Amendments to the European Union (Alternative Investment Fund Managers) Regulations 2013. Section 101 of the Accounting Act 2017 amends Regulation 23 of the 2013 Regulations, by inserting a new paragraph 4(A) after Regulation 23(4) so that the auditors' report should comply with s. 336 of the Companies Act, 2014 Act and the Statutory Audit Regulations 2016.
Heretofore, investment companies (whether UCITS or AIFs) have not been obliged to file accounts with the CRO in addition to their filing obligations with the Central Bank. This exemption from filing is not available under the EU Accounting Directive 2013/34/EU (as amended). Some investment funds which are constituted as investment companies may consider converting to an ICAV which is not obliged to file annual accounts in CRO.
Speech by Derville Rowland, Central Bank Director of Enforcement to the Banking Payments Federation of Ireland
Derville Rowland, Central Bank Director of Enforcement delivered an address to the Banking Payments Federation of Ireland which looked at the Central Bank AML supervisory framework, supervisory engagement, expectations, opportunities and challenges.
Pan European Personal Pension products
Irish Funds published a White Paper on the Pan European Personal Pension product (PEPP). The development of a common European framework for personal pensions forms part of the EU’s Capital Markets Union (CMU) agenda and the European Commission advised in its mid-term review of the CMU Action Plan that a legislative proposal on the PEPP is planned for the end of June. The Irish Funds White Paper aims to help inform policy discussions on the PEPP by providing a funds industry perspective. The White Paper sets out:
- How the PEPP will benefit the EU
- Key enabling factors fundamental to the PEPP’s success
- Proposed key features of the PEPP
- How the PEPP will work
- The importance of consumer education and awareness
- How to build on the positive experience of UCITS
- The role of taxation
Please speak with your usual contact on the A&L Goodbody Asset Management & Investment Funds team if you wish to see the Irish Funds White Paper on the PEPP.
Irish Funds Response to Commission Consultation on FinTech
Irish Funds responded to the European Commission’s recent consultation paper on FinTech: "A more competitive and innovative European financial sector". This consultation is intended to determine whether the EU regulatory and supervisory framework fosters technological innovation in line with the core principles of the Commission. The responses to the consultation will help the Commission to gauge how FinTech can make the Single Market for financial services more competitive, inclusive and efficient.
For more information please contact a member of the Asset Management & Investment Funds Team.
Date published: 29 June 2017