Tracker, Financial Services Regulation & Compliance - Funds


Central Bank issues Consultation on Amendments to the AIF Rulebook

On 30 November 2015, the Central Bank issued a consultation paper (CP99) setting out details of proposed policy amendments and technical changes to the AIF Rulebook.  This consultation closes on 24 February 2016.

Central Bank Reporting Guidance for Alternative Investment Fund Managers

The Central Bank published the latest version of the 'Reporting Guidance for Alternative Investment Fund Managers'. The Guidance has been updated to reflect the reporting requirements for non-EU master AIFs not marketed in the EU that have either EU feeder AIFs or non-EU feeder AIFs marketed in the EU under Article 42 of the AIFMD.

Central Bank issues new UCITS Q&A

The Central Bank issued UCITS Q&A 10th Edition - A new Q&A 1058 has been added on the publication and submission to the Central Bank by a UCITS of its first annual/half-yearly reports. UCITS Q&A 1050 has been amended on the investment in financial indices, diversification requirements and the use of look through.

Central Bank programme of themed inspections in Markets Supervision  

The Markets Supervision Directorate of the Central Bank published its programme of themed-inspections for 2016. These inspections reflect a number of supervisory priorities for 2016 and anticipate areas of emerging risk.  This programme builds on the successful supervisory work undertaken in 2015 in the areas of Cyber Security, Operational Risk and Investment Fund pricing. The planned themed-inspections, which supplement day-to-day supervisory activities, for 2016 are:

  • Outsourcing Arrangements – Inspection of service level agreements and operational arrangements with outsourcing providers for Investment Firms, Fund Managers and Fund Service Providers.
  • AIFM Programme of Activities – Review of AIFMs adherence to their programme of activity.
  • Risk Function - Focus on the risk culture within firms including governance arrangements, risk ownership and responsibility.
  • Investment Funds – Analysis of the production costs of investment funds.
  • Financial Indices – Review of the use of financial indices as eligible investments for UCITS investment funds.
  • Director Time Commitments - Continued focus on various issues with director time commitments.
  • Client Assets – Focused review of Client Asset Management Plans for Investment Firms.
  • Information Technology Risk – Focus on resilience of firms’ IT systems.
  • Suitability – Review of the suitability assessment of clients.
  • Conduct – Examination of the information provided to clients on an on-going basis.
  • Hedging Arrangements – Review of hedging arrangements at share class level for investment funds.
  • Market Integrity – Review of the practices of firms when dealing with insider information and their compliance with Market Abuse Regulations (Reg (EU) No 596/2014).

Director of Markets Supervision, Gareth Murphy said: “Consistent with the Central Bank’s mandate of investor protection, market integrity and financial stability, we are embarking upon a large number of themed-inspections for 2016.   Some of these inspections are a continuation of our work in 2015 where follow-up is warranted.  An underlying theme for many of these areas is the need to strengthen firms' culture of regulatory compliance.  The Central Bank is increasing its inspection activities for entities deemed to be low impact under PRISM and is further developing data analytics to sharpen the focus of supervisory resources.  Following these inspections, the Central Bank will communicate its assessment of the issues which have emerged and will use the full range of its powers to ensure that remedial actions are taken where there are unacceptable breaches or where the regulatory risks are unacceptable.”


UCITS V level 2 Regulation

The European Commission published the first official draft of the UCITS V level 2 Regulation. The UCITS V level 2 regulation will implement UCITS V which will come into force on 18 March 2016. The draft Regulation sets out more detailed requirements on the UCITS V amendments affecting depositaries. Regulators, UCITS managers and depositaries have been waiting for this Regulation so as to understand how the detailed requirements can be implemented into relevant processes and procedures within the tight timescales envisaged. The current draft provides that the Regulation shall apply from a date which is six months after it comes into force (although this is still draft and so liable to change). The delegated regulation is now be subject to scrutiny by co-legislators prior to publication in the Official Journal and will come into force 20 days after that date.

ESMA Q&A on application of AIFMD

On 2 December 2015, the ESMA published an updated version of its Q&A paper on the application of the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD). The Q&As were amended to reflect new queries on reporting to national competent authorities.

On 15 December 2015, ESMA published a further updated version of that Q&A paper. The Q&As were amended to address a query on depositaries and whether the depositary liability regime applies to those assets for which a depositary has safe-keeping duties on a look-through basis (according to Articles 89(3), first sub-paragraph, and 90(5), first sub-paragraph of the AIFMD Level 2 Regulation). This is of particular interest in the context of funds of funds or master-feeder structures. 

IOSCO reports on third hedge fund survey

On 11 December 2015, the International Organization of Securities Commissions (IOSCO) published a report on the findings from its third hedge fund survey.

The survey gathers data from hedge fund managers and advisers about the markets in which they operate, their trading activities, leverage, funding and counterparty information. It forms part of IOCSO's work to support the G20 initiative to mitigate risk associated with hedge funds. The report explains the results of the survey and provides an overview of the hedge fund industry as at 30 September 2014.

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

Date published: 04 Janaury 2016