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Funds Update - Ireland
Quarterly Update | October - December 2014

1 Legal & Regulatory

1.1 AIFMD Update

1.2 Irish Collective Asset-Management Vehicle Bill

1.3 Money Market Funds: Update

1.4 UCITS: Update

1.5 Companies Act 2014

1.6 EMIR Update

1.7 MiFID

1.8 MiFID II/MiFIR

1.9 PRIIPs KID Regulation

1.10 UCITS KIID Filing Deadline

1.11 Minimum Capital Requirement Report – Updated Guidance Note

1.12 European Venture Capital Funds Regulation

1.13 Implementing Measures For New CSDR Settlement Regime

1.14 Market Abuse and Criminal Sanctions

1.15 Benchmark Regulation on Indices

1.16 Prospectus Directive and Handbook Update

1.17 Outline of the Administrative Sanctions Procedure and Inquiry Guidelines

1.18 IFIA Memorandum of Understanding with China

1.19 ELTIF Regulation

1.20 CRD IV

1.21 ESMA Consultation on European Access Point

1.22 Custody of Collective Investment Scheme Assets

1.23 Regulation on Securities Financing Transactions

1.24 Strengthening Oversight and Regulation of Shadow Banking

1.25 Payment Services Directive

1.26 IOSCO Consultation Report on Cross-Border Regulation

1.27 Protected Disclosure Act 2014

1.28 Anti-Money Laundering Update

1.29 Fitness and Probity Amendments

1.30 Data Protection Regulation

1.31 Central Bank Policy on Skilled Persons' Reporting

 Go to Legal & Regulatory section


2 Tax

2.1 FATCA

2.2 Common reporting Standard

2.3 Finance Act 2014

 Go to Tax section


3 Listing


3.1 Admitting to Trade Non-UCITS ETFs on the LSE

3.2 ISE Removes Daily Disclosure Requirement for Actively-Managed ETFs Listed on ISE

3.3 ISE Offers Discount of 33% on LEI Bulk Orders of 10 or More Codes

3.4 ISE Fund Hub 

Go to Listing section



1 Legal & Regulatory

1.1 AIFMD Update

On 16 July 2013, the European Union (Alternative Investment Fund Managers) Regulations 2013 (No. 257 of 2013) (the "AIFM Regulations") gave effect to Alternative Investment Fund Managers Directive (2011/61/EU) ("AIFMD") in Ireland.

There have been a number of developments over the quarter:

(a) New application form

In October 2014, the Central Bank of Ireland ("Central Bank") published a new QIAIF Section 1+2 application form on its website. It contains a specific section relating to loan origination Qualifying Investor alternative investment funds ("LQIAIFs"). The Central Bank commenced accepting applications for authorisation of LQIAIFs on 1 October 2014.

(b) Central Bank Q&A

On 5 November 2014, the Central Bank published the eleventh edition of its AIFMD Questions & Answers ("AIFMD Q&A"). It clarifies the LQIAIF requirements and the reporting requirements for non-EU alternative investment fund managers ("AIFMs") that have notified the Central Bank of their intention to market AIFs through private placement in Ireland but have not commenced marketing.

(c) AIFMD passport and third country AIFMs

On 7 November 2014, the European Securities and Markets Authority ("ESMA") published a call for evidence (ESMA/2014/1340) on the EU passport under AIFMD and third country AIFMs.

Under Articles 36 and 42 of AIFMD, non-EU AIFMs and non-EU alternative investment funds ("AIFs") managed by EU AIFMs are subject to the national private placement regime of each EU Member State where the AIFs are marketed or managed. However, AIFMD allows the passport to be potentially extended. Article 67 requires ESMA to provide the European Commission with:

  1. An opinion on the functioning of the passport for EU AIFMs under Articles 32 and 33 of AIFMD and on the functioning of the national private placement regimes in Articles 36 and 42.
  2. An advice on whether the passporting regime should be extended to the management and marketing of AIFs by non-EU AIFMs and to the marketing of non-EU AIFs by EU AIFMs (in accordance with the rules Article 35 and Articles 37 to 41).


The deadline for responses is 8 January 2015. ESMA will consider the feedback it receives and then is required to deliver the opinion and the advice to the Commission by 22 July 2015.
If ESMA delivers a positive advice and opinion, the Commission is required to adopt a delegated act specifying the date when the rules in Article 35 and Articles 37 to 41 of AIFMD will apply in all Member States. As a result, the EU passport would be extended to non-EU AIFs and non-EU AIFMs.

(d) ESMA Q&A

On 11 November 2014, ESMA published an update of its Q&A on the application of AIFMD (ESMA/2014/1357) with new sections on reporting to national competent authorities under Articles 3, 24 and 42 and measures for the calculation of the total value of assets under management.

(e) Asset segregation

On 1 December 2014, ESMA published a consultation on its guidelines on asset segregation under AIFMD. The paper clarifies that the account where the AIF’s assets are to be kept at the level of the delegated third party can only comprise assets of the AIF for which the safekeeping has been delegated to the third party and assets of other AIFs. Non-AIF assets cannot be included in such an account.

ESMA proposes two options: (a) delegated third party holding assets for multiple depositary clients would not be required to have separate accounts for the AIF assets of each of the delegating depositaries; and (b) the account on which the AIF’s assets are to be kept by the delegated third party may only comprise assets of the AIF and assets of other AIFs of the same delegating depositary. Assets of AIFs of other depositary clients would have to be kept in separate accounts. Responses must be submitted by 30 January 2015.

(f) Information to be provided by NCAs

On 18 December 2014, the European Commission published a Delegated Regulation it adopted on information to be provided by national competent authorities ("NCAs") to ESMA under AIFMD.

Under AIFMD, NCAs are required to report quarterly to ESMA information on AIFMs that are managing or marketing AIFs under their supervision, either under the application of the passport regime or under their national regimes. This Delegated Regulation specifies the information to be reported quarterly to ESMA under Article 67(2) of AIFMD (such quarterly reporting to ESMA must contain information needed for the assessment of the elements referred to in Article 67(2)).

ESMA submitted its technical advice to the Commission in March 2014. The Delegated Regulation closely follows the advice delivered by ESMA, with additional aspects concerning more specific reporting on measures adopted by NCAs, as well as the extension of information to cover the impact on UCITS funds and their managers. It will come into force 20 days after publication in the Official Journal of the EU.

(g) AIFMD Amendment Regulations

The European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2014 ("Regulations") transpose the requirements of the Credit Ratings Agencies Directive (2013/14/EU) ("CRAD") into Irish law and amends the European Union (Alternative Investment Fund Managers) Regulations 2013 and also the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ("UCITS Regulations"). The Regulations came into effect on 21 December 2014. CRAD aims to restrict the reliance on ratings provided by credit rating agencies and to clarify the obligations for risk management. The Regulations prevent fund managers (both AIFs and UCITS) "solely or mechanistically" relying on ratings provided by a credit ratings agency to assess the creditworthiness of a fund's assets.

The Regulations also clarify the Irish marketing requirements for Non–EU AIFMs; that AIFMs offering individual portfolio management services must comply with MiFID client asset requirements and confirm that the Investor Compensation Company Limited may impose a levy on Irish AIFMs who offer additional non-core services.

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1.2 Irish Collective Asset-Management Vehicle Bill

In the previous quarter, the Irish government published a draft Irish Collective Asset-management Vehicle ("ICAV") Bill which, once enacted, will allow the incorporation of a new, tax efficient and innovative corporate structure for Irish investment funds. The ICAV is currently progressing through the Irish parliament and is expected to become operational in 2015.

For further details please see our client update, Irish Collective Asset-management Vehicle Bill published

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1.3 Money Market Funds: Update

On 4 November 2014, the Financial Stability Board ("FSB") published its global shadow banking monitoring report 2014. The report presents data as of end-2013 from 25 jurisdictions covering approximately 80% of global GDP and 90% of global financial system assets and reflects the size, trends and composition of the shadow banking sector, including money market funds ("MMFs") in its remit.

On 11 November 2014, the Presidency of the Council of the EU published its first compromise proposal (15299/14) (dated 10 November 2014) relating to the proposed Regulation on MMFs ("MMF Regulation").

On 14 November 2014, the International Organization of Securities Commissions ("IOSCO") published its key preliminary findings of its peer review of implementation of incentive alignment recommendations for securitisation and its peer review of regulation MMFs.

On 17 November 2014, the European Parliament's Committee on Economic and Monetary Affairs ("ECON") published its draft report which contains a European Parliament legislative resolution setting out suggested amendments to the European Commission's original proposal. Points of interest made include the following:

  1. There is still scope for improvement relating to liquidity and maturity transformation and in making MMFs more stable. It is the rapporteur's opinion that both constant net asset value ("CNAV") and variable net asset value ("VNAV") MMFs need to be tackled and that rules should be applied to both where appropriate.
  2. A new category of EU government CNAV MMFs should be established which would invest a majority of assets into EU government debt.
  3. Increased transparency. The actual NAV of CNAVs should be subject to daily disclosure requirements, including publication on websites. Stress tests should take place on a quarterly basis and there should be stronger investor warnings.


On 28 November 2014, the Presidency of the Council of the EU published a second compromise proposal. On 18 December 2014, it published its third compromise proposal (17008/14) (dated 17 December 2014).

The Council has also published a progress report (17007/14) (dated 17 December 2014) from the Presidency to Delegations on the MMF Regulation. The report assesses delegations' positions on the key issues.

In general, EU Member States have agreed to establish a regulatory framework for MMFs. However, a number of provisions, in particular relating to the specific treatment of CNAV MMFs, are subject to "strong reservations". There is more convergence on issues relating to the common rules applicable to both VNAV and CNAV MMFs.

The Parliament is due to consider the MMF Regulation at its plenary session on 28 April 2015.

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1.4 UCITS V: Update

(a) UCITS V

The UCITS V Directive (2014/91/EU) came into force on 17 September 2014. EU Member States must transpose the Directive into national law by 18 March 2016.

(b) Calculation of Counterparty Risk by UCITS

On 28 October 2014, ESMA published its responses to its July 2014 consultation paper on the calculation of counterparty risk by UCITS for OTC financial derivative transactions subject to clearing obligations.

(c) Central Bank Q&A

On 5 November 2014, the Central Bank published the third edition of its UCITS Q&A which clarifies the application of anti-dilution levies to UCITS master-feeder fund structures. On 17 December 2014 the Central Bank published the fourth edition of its UCITS Q&A updating Question ID 1007 and adding a new question ID 1012 in relation to UCITS ETFs. Question 1007 concerns compliance by UCITS MMFs with paragraph 43(e) of the ESMA guidelines on ETFs and other UCITS. The answer was updated to state that it is reasonable for a UCITS MMF, authorised before 18 February 2013, to delay its compliance with paragraph 43(e) until the Central Bank has concluded the consultation process. Question 1012 concerns active UCITS ETFs and the requirement to provide details of the holdings within its portfolio on a daily basis.

(d) Depositaries

On 28 November 2014, ESMA published its final report setting out technical advice to the European Commission on the implementation of the UCITS V Directive on two of the delegated acts on depositaries:

  1. Independence between the UCITS management company and the UCITS depositary; and
  2. Insolvency protection of UCITS assets when delegating safekeeping.


The European Commission will issue draft delegated acts to implement the Directive taking into account ESMA’s advice. The Commission plans to adopt these delegated acts by April 2015. ESMA will draft UCITS V remuneration framework guidelines.

(e) Credit ratings

The European Union (Alternative Investment Fund Managers) (Amendment) Regulations 2014 came into effect on 21 December 2014 and transpose the Credit Ratings Agencies Directive (2013/14/EU) ("CRAD") into Irish law. As highlighted in 1.1 (g), CRAD aims to restrict the reliance on ratings provided by credit rating agencies and to clarify the obligations for risk management.

The Regulations also provide that the Central Bank shall assess the use of references to credit ratings in the investment policies of the UCITS and, where appropriate, encourage mitigation of the impact of such references with a view to reducing sole and mechanistic reliance on such credit ratings.

For more information see our client update, Over-Reliance on Credit Ratings: Important Changes to the UCITS Regulations.

(f) Share classes

On 23 December 2014, ESMA published a discussion paper on share classes of UCITS which sets out its views on what constitutes a share class, including how to distinguish share classes from compartments of UCITS. It sets out possible approaches to the extent of differentiation between share classes that should be allowed.

ESMA has invited comments by 27 March 2015. It will take into account the feedback given in order to establish a common position on the use of share classes by UCITS. In addition, ESMA appreciates that national practices on the use of share classes vary and will take into account the possible impact on current market practices.

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1.5 Companies Act 2014

The Companies Act 2014 became law on 23 December 2014 and is expected to be commenced substantially by statutory instrument with effect from 1 June 2015. It consolidates the existing 17 Companies Acts, which date from 1963 to 2013, into one Act and it also introduces a number of reforms designed to make it easier to operate a company in Ireland.

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1.6 EMIR Update

The European Market Infrastructure Regulation (Regulation on OTC derivative transactions, central counterparties ("CCPs") and trade repositories (Regulation 648/2012)) ("EMIR") is intended to improve transparency, mitigate counterparty credit risk and bring increased stability to the financial derivative instruments ("FDI") market. It is relevant to all Irish funds trading in FDI, whether on an exchange or otherwise.

On 8 October 2014, the European Union (European Markets Infrastructure) Regulations 2014 designated the Central Bank as the national competent authority in Ireland for the purposes of EMIR.

On 24 October 2014, ESMA published an updated version of its Q&A (ESMA/2014/1300) on the implementation of EMIR

On 4 December 2014, the Central Bank published Consultation Paper 90 ("CP 90") with proposals in relation to supervision of Non-Financial Counterparties ("NFCs") under EMIR. EMIR applies to financial counterparties ("FCs"), which are currently subject to the supervision of the Central Bank (including UCITS and QIAIFs) or the Irish Pensions Authority and also to NFCs (including QIFs not yet converted for AIFMD), the majority of which have not been previously regulated by the Central Bank. CP 90 focuses on the Central Bank’s supervisory approach to those NFCs which have not previously been supervised by the Central Bank.

The Central Bank intends to use the EMIR Regulatory Return ("ERR") to assess a NFC’s compliance with its EMIR obligations which includes, for example, the reporting of all derivatives to a registered or recognised trade repository and various risk mitigation techniques which a NFC must carry out. The consultation runs until 30 January 2015.

On 10 November 2014, ESMA published a consultation paper (ESMA/2014/1352) on revised RTS and implementing technical standards ("ITS") relating to reporting under EMIR. Comments can be made on the consultation until 13 February 2015.

On 24 November 2014, ESMA has published its letter to the European Commission Director General for Internal Market and Services, stating that it is delaying submitting further draft RTS on the clearing obligation under EMIR.

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1.7 MiFID

On 7 October 2014, ESMA published a list of competent authorities that comply or intend to comply with ESMA’s guidelines on remuneration policies and practices (MiFID) (ESMA/2013/606).

On 11 December 2014, ESMA published a press release on its review of supervisory practices on MiFID investor information. The review focused on how national regulators supervise MiFID conduct of business rules on providing fair, clear and not misleading information to clients. The review set out a number of areas that should be improved on including but not limited to;

  1. establishing more robust structures and efficient coordination and cooperation arrangements between different supervisory units within national competent authorities;
  2. defining a clear set of information and marketing material to be supervised;
  3. assessing the adequacy of monitoring the distribution channels used by firms including in the cross border provision of services; and
  4. considering the use of integrated databases to assist in supervision of information and marketing to clients.


On 17 December 2014, ESMA published its report looking into the extent of high-frequency trading activity in the EU's equity markets.

On 17 December 2014, the Central Bank issued a letter to industry on the Themed Inspection of MiFID authorised Investment Firms regarding the Provision of Information to Clients in relation to Costs and Charges. The letter sets out feedback in relation to the areas of concern including; consumer protection culture; provision of information requirements; thematic review findings; and the next steps for MiFID investment firms.

On 18 December 2014, ESMA issued its opinion and advice on investment-based crowdfunding. The opinion, addressed to national competent authorities, provides clarity on how crowdfunding business models fit within the existing EU regulatory framework. The advice, addressed to the EU institutions, highlights the concern that strong incentives currently exist for crowdfunding platforms to structure their business models to fall outside the scope of regulation and asks them to consider policy options to reduce these incentives.

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1.8 MiFID II/MiFIR

The Markets in Financial Instruments Directive (2014/65/EU) ("MiFID II") came into force on 2 July 2014. It must be transposed into national law by 3 July 2016 and will apply from 3 January 2017 (subject to a small number of excepted sections).

On 15 October 2014, ESMA published a speech by the Chair of ESMA, Steven Maijoor, noting the role of the European Supervisory Authorities ("ESAs") in financial consumer protection. He highlights how investor protection is enhanced by the creation of the single rulebook for EU financial markets, but also by direct measures such as issuing EU-wide investor warnings.

On 18 December 2014, ESMA published a speech by ESMA Executive Director Verena Ross on issues such as transparency, market data and best execution under MiFID II. She noted that ESMA will provide guidelines and a Q&A document to assist in the implementation of such provisions.

On 19 December 2014, ESMA published final technical advice (ESMA/2014/1569) to the European Commission and a consultation paper (ESMA/2014/1570) on MiFID II and MiFIR (the "Markets in Financial Instruments Regulation" (Regulation 600/2014). ESMA will send the technical advice to the Commission.

The consultation paper includes draft RTS and ITS under MiFID II and MiFIR and closes on 2 March 2015. ESMA will use the responses received to finalise its draft RTS, which will be sent to the Commission by mid-2015. It will send its draft ITS to the Commission by January 2016.

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1.9 PRIIPs KID Regulation

The Regulation on key information documents ("KIDs") for packaged retail and insurance-based investment products 1286/2014 ("PRIIPs") ("PRIPs KID Regulation") introduces a new pan-European pre-contractual product disclosure document for PRIIPS (previously known as PRIPS) and came into effect on 29 December 2014. It applies in EU Member States from 31 December 2016.

On 17 November 2014, the Joint Committee of the ESAs (EIOPA, ESMA and the EBA) published a discussion paper on PRIIPS. This is a first step in preparing the draft RTS which will contain detailed rules on:

  1. The contents and presentation of the KID (Article 8).
  2. The revision, review and republication of the KID (Article 10).
  3. The timing of the KID's delivery to the retail investor (Article 13).


The closing date for responses to the paper is 17 February 2015.

Following a consultation in early 2015 the ESAs are expected to submit the final RTS to the Commission at the end of 2015/start of 2016, and firms will start using the new KIDs at the end of 2016.

On 18 November 2014, the Joint Committee of the ESAs published a call for expressions of interest (JC-14/089) to support the work it is carrying out on KIDs for PRIIPs. On 28 November 2014, EIOPA published a consultation paper on product intervention powers under the PRIIPs KID Regulation.  This consultation ends on 27 February 2015.

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1.10 UCITS KIID Filing Deadline

All UCITS should ensure that its updated key investor information document ("KIID") is filed with the Central Bank and each host state authority where the UCITS is register for sale and made available to investors no later than 19 February 2015.

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1.11 Minimum Capital Requirement Report – Updated Guidance Note

The Central Bank has issued an updated guidance note for AIFMs and UCITS Management Companies in respect of the Minimum Capital Requirement Report. This must be submitted to the Central Bank by a firm holding an authorisation as an AIFM and/or as a UCITS Management Company (along with the half yearly and annual audited accounts at the reporting intervals specified in paragraph 20, Notice UCITS 2 and Chapter 3, AIF Rulebook.)

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1.12 European Venture Capital Funds Regulation

On 11 November 2014, ESMA published updated versions of its Q&A (ESMA/2014/1354) contains updated questions and answers on the application of the European Social Entrepreneurship Funds ("EuSEF") Regulation (Regulation 346/2013) and the European Venture Capital Funds Regulation ("EuVECA") (Regulation 345/2013). The new Q&As are numbers 1b and 1c.

On 11 December 2014, ESMA published advice (2014/SMSG/051) given to it by its securities and markets stakeholder group ("SMSG") relating to ESMA's technical advice on the implementing measures under both regulations.

Among other things, the SMSG strongly advocates a principle-based approach for all of the Level 2 implementing measures. It considers that examples provided are examples only and ideally annexed for ease of ongoing update, leaving sufficient flexibility for the market to find its own "level" in terms of how these funds are constituted and how they constitute their portfolios. The SMSG also agrees with ESMA that proportionality is important, since the majority of the small managers concerned cannot opt for full AIFMD authorisation in order to obtain the EU marketing passport, due to the costs involved.

ESMA consulted on its technical advice in September 2014. It is required to provide the advice to the European Commission by 30 April 2015. On 16 December 2014 ESMA published all the responses it received.

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1.13 Implementing Measures For New CSDR Settlement Regime

On 18 December 2014, ESMA published three consultation papers on implementing measures for a new settlement regime under the Regulation on improving securities settlement and regulating central securities depositories ("CSDs") (Regulation 909/2014) ("CSD Regulation"):

  1. Technical standards under the CSD Regulation which set out draft technical standards on proposed rules covering settlement discipline, CSD requirements, and internalised settlement.
  2. Technical advice under the CSD Regulation which includes proposed penalties for settlement fails. It also covers arrangements to identify the substantial importance of a CSD.
  3. Guidelines on access to a CCP or a trading venue by a CSD.


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1.14 Market Abuse and Criminal Sanctions

On 2 July 2014, the Market Abuse Regulation (Regulation 596/2014) ("MAR") and the Directive on criminal sanctions for insider dealing and market manipulation (2014/57/EU) ("CSMAD") (together, MAD II) entered into force. MAR will apply from 3 July 2016 and CSMAD ("CSMAD") has to be transposed into Irish law on the same date (together, MAD II).

On 10 October 2014, ESMA published the response it had received from the Securities and Markets Stakeholder Group ("SMSG") on ESMA’s consultation paper on Draft Technical Standards on MAR and draft technical advice on possible delegated acts concerning MAR. SMSG outlines four key areas in their response; market soundings and their classification as market abuse; insider lists; investment recommendations; and manager transactions.

On 17 October 2014 ESMA published a list of responses that it has received to its consultations on draft RTS and ITS on MAR and on draft technical advice on possible delegated acts concerning MAR.

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1.15 Benchmark Regulation on Indices

On 8 December 2014, the Presidency of the Council of the EU published a further compromise proposal for the Regulation on indices used as benchmarks in financial instruments and financial contracts (the "Benchmark Regulation"). Under it, the manipulation of benchmarks would be considered a market abuse offence subject to strict administrative fines.

On 11 December 2014, the European Parliament's Committee on Economic and Monetary Affairs ("ECON") published its draft report on the Benchmark Regulation which contained nearly 250 amendments to the original Benchmark Regulation dated 18 September 2013.

On 18 December 2014, the Presidency published a progress report on the proposed Benchmark Regulation noting that agreement had been reached on most issues however further debate is required. It is expected the general approach of the Benchmark Regulation will be reached in Q1 2015.

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1.16 Prospectus Directive and Handbook Update

ESMA's consultation on its proposed draft RTS on prospectus-related issues under the Omnibus II Directive 2014/51/EU closed on 19 December 2014. ESMA must submit draft RTS to the Commission by 1 July 2015. The Omnibus II Directive (2003/71/EC) must be transposed into national law by 31 March 2015 and applies from 1 January 2016.

On 22 October 2014, ESMA published an updated version of its Prospectuses: Questions and Answers on Prospectus issues ("Q&A"). It incorporates three new questions, namely; the presentation of selected historical key financial information in the prospectus summary; the minimum information on risks to be included in the prospectus summary; and the information which can appear in the summary of an individual issue which did not appear in the summary of the base prospectus

In November 2014, the Central Bank published the Prospectus Handbook - A Guide to Prospectus Approval in Ireland which sets out the requirements for the structure and content of a prospectus, procedures for submission and review, together with Central Bank guidance.

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1.17 Outline of the Administrative Sanctions Procedure and Inquiry Guidelines

The November 2014, updated Outline of the Administrative Sanctions Procedure describes the structures and procedures of the Administrative Sanctions Procedure of the Central Bank under Part IIIC of the Central Bank Act 1942 (as amended). Reference in the Outline to the Administrative Sanctions Procedure refers only to the Administrative Sanctions Procedure under Part IIIC of the Act. While the Outline indicates the procedure that the Central Bank will generally follow, it may depart from the procedure outlined therein in appropriate circumstances. New Inquiry Guidelines were also issued by the Governor of the Central Bank on 3 November 2014 which replace the 2013 Inquiry Guidelines.

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1.18 IFIA Memorandum of Understanding with China

In October 2014, the Irish Funds Industry Association ("IFIA") signed a memorandum of understanding with the Asset Management Association of China in Beijing in order to promote closer collaboration and better understanding between the Irish and Chinese asset management industries. The key areas of the agreement are information sharing, industry communication and reciprocal relationships.

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1.19 ELTIF Regulation

The proposed Regulation on European Long-Term Investment Funds ("ELTIF Regulation") is designed to provide a framework for retail investment in illiquid asset classes such as infrastructure projects and unlisted companies. The Council of the EU reached political agreement on the ELTIF Regulation with the Parliament on 27 November 2014. On 8 December 2014, it published the agreed ELTIF Regulation text and on 10 December 2014, the Council announced that its Permanent Representatives Committee ("COREPER") has approved, on the Council's behalf, an agreement reached with the European Parliament on the ELTIF Regulation.

The Council's press release explains that COREPER's agreement will enable the ELTIF Regulation to be adopted at first reading, once the text has been finalised in all languages. The Council will adopt the Regulation at a forthcoming meeting without further discussion.

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1.20 CRD IV

The CRD IV Directive (2013/36/EU), together with the Capital Requirements Regulation (Regulation 575/2013) ("CRR") replaced the Capital Requirements Directive (2006/48/EC and 2006/49/EC).

The European Commission Implementing Decision on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures according to the CRR entered into force on 1 January 2015. Under the CRR, certain categories of exposures to entities located in third countries can benefit from more favourable prudential treatment if the Commission has adopted an Implementing Decision determining that a third country's prudential supervisory and regulatory requirements are at least equivalent to those applied in the EU.

The Implementing Decision sets out the jurisdictions that the Commission has determined have equivalent supervisory and regulatory arrangements for exposures to credit institutions, exposures to investment firms and exposures to exchanges. These include Brazil, Canada, China, Singapore, South Africa and the US.

On 30 October 2014, the European Commission adopted a report containing a general assessment of the economic consequences of country-by-country reporting by banks and investment firms under Article 89 of CRD IV. The report notes that stakeholders expect that country-by-country reporting should have a positive impact on the transparency and accountability of, and public confidence in, the European financial sector

On 17 November 2014, ESMA published the responses to its consultation on draft implementing technical standards on main indices and recognised exchanges (ESMA/2014/1188) which was published in the previous quarter.

On 20 November 2014, the Advocate General of the European Court of Justice ("ECJ") opinion was issued in response to the UK challenge to the remuneration provisions under CRD IV. The UK submitted that certain provisions of CRD IV should be annulled including but not limited to those relating to various pay caps and the definitions of a 'material risk taker'. The Advocate General dismissed the challenge. The opinion is not binding on the ECJ, whose judgement is expected in Q1 2015.

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1.21 ESMA Consultation on European Access Point

On 19 December 2014, ESMA published a consultation paper on the draft RTS on a European Access Point. The paper sets out five key proposals for technical requirements regarding access to regulation information under the Transparency Directive (2013/50/EC). The consultation closes on 30 March 2015 and ESMA must submit the draft RTS to the European Commission by 27 November 2015.

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1.22 Custody of Collective Investment Scheme Assets

On 10 October 2014, IOSCO published a consultation paper relating to the custody of collective investment scheme assets. The paper explores the key risks associated with the custody function and sets out nine principles aimed at identifying the core issues that should be kept under review by the regulatory framework. The consultation closed on 10 December 2014 and it is expected that IOSCO will publish its final report with adopted principles in Q1 or Q2 of 2015.

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1.23 Regulation on Securities Financing Transactions

On 20 November 2014, the Council of the EU reported that COREPER has agreed, on the Council's behalf, a general approach on the proposed Regulation on reporting and transparency of securities financing transactions ("SFTs") ("SFT Regulation"). The aim is to adopt the SFT Regulation at first reading.

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1.24 Strengthening Oversight and Regulation of Shadow Banking

On 14 October 2014, the FSB published its regulatory framework for haircuts on non-centrally cleared securities financing transactions. The intention of the framework is to limit the build-up of excessive leverage outside the banking system and to help reduce procyclicality of that leverage.

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1.25 Payment Services Directive

On 31 October 2014, the Presidency of the Council of the EU published its compromise proposal on the Payment Services Directive 2 ("PSD2").

On 5 December 2014, the Council issued a press release nothing that COREPER agree on behalf of the Council, on PSD2.The agreement enables negotiations with the European Parliament to start, with the aim of adopting the directive at first reading. PSD2 is expected to be fully implemented by 2017.

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1.26 IOSCO Consultation Report on Cross-Border Regulation

On 25 November 2015, IOSCO published its consultation report of the IOSCO Task Force on Cross-Border Regulation, identified and describing cross-border regulatory tools and challenges. The report describes three cross-border regulatory tools that have been used or are under consideration;

(a) national treatment

(b) recognition; and

(c) passporting.

Responses are requested before 23 February 2015.

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1.27 Protected Disclosure Act 2014

On 4 November 2014, the Central Bank published the responses to its consultation paper on the handling of protected disclosures by the Central Bank (CP79). There were a number of requests asking the Central Bank to define a 'disclosure'. The Central Bank responded that is does not have the authority to determine what can be classified as a 'disclosure' as it is a matter of law.

On 5 November 2014, the Central Bank issued a letter to all regulated financial service providers drawing attention to their obligations under the Central Bank (Supervision and Enforcement) Act 2013 including the general effect of the Protected Disclosures Act 2014.

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1.28 Anti-Money Laundering Update

On 13 November 2014, the Financial Action Task Force published its Guidance on Transparency and Beneficial Ownership. The guidance will assist countries in establishing and implementing measures to prevent money laundering, terrorist financing and other illicit activities through the misuse of corporate vehicles. The guidance explores three potential mechanisms for obtaining beneficial ownership information of legal persons; company registries; requiring companies to hold beneficial ownership information; and reliance on existing information.

On 8 December 2014, the Central Bank published its letter to industry dated 8 October 2014 on the application of customer due diligence ("CDD"). The letter sets out that it is for designated persons to interpret the Criminal Justice (Money Laundering and Terrorist Financing) Act (as amended), and for the Central Bank to assess whether compliance has occurred. The letter further highlights the importance of applying CDD to existing customers; the implementation of policies and procedures to ensure that CDD documentation is kept up to date; and retaining of CDD documentation on file for a period of not less than five years after the business relationship has ceased. 

On 17 December 2014, the Presidency of the Council announced that it has reached political agreement with the European Parliament on the proposed Fourth Money Laundering Directive ("MLD4") and the proposed Regulation to replace Regulation (EC) 1781/2006 on information on the payer accompanying transfers of funds (the revised Wire Transfer Regulation) ("WTR").

The approved texts implement the Financial Action Task Force's 2012 recommendations. The agreement still needs to be endorsed by COREPER, ECON and the Parliament's Committee on Civil Liberties, Justice and Home Affairs ("LIBE"), before being put to a vote by the Parliament in plenary in 2015.

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1.29 Fitness and Probity Amendments

From 31 December 2014, the Central Bank Reform Act 2010 (Sections 20 and 22) (Amendment) Regulations 2014 introduced a number of changes to the fitness and probity regime. They have added a further six pre-approved control functions: Chief Operating Officers; Head of Claims for insurance companies; signing actuaries for non-life insurers and re-insurers; Head of Client Asset Oversight for investment firms; Head of Investor Money Oversight for Fund Service Providers; and Head of Credit for retail credit firms.

On 3 November 2014 the Central Bank published updated guidance and FAQs on the Fitness and Probity Standards and Code.

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1.30 Data Protection Regulation

On 19 December 2014, the Council of the EU published the latest draft of the Data Protection Regulation. The Council reached a partial general approach on specific aspects of the draft regulation setting out a general EU framework for data protection. The partial general approach includes provisions which are crucial to the public sector as well as provisions relating to specific data processing situations. In the accompanying press release, note was made of the importance of enhancing the cost-efficiency of the data protection rules for international business, and as such contributing to the growth of the digital economy.

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1.31 Central Bank Policy on Skilled Persons' Reporting

On 19 November 2014, the Central Bank published a statement setting out its policy and expectations when using the skilled persons' reporting powers as a supervisory tool. The statement applies to all firms regulated by the Central Bank and sets out the;

(a) use of the Skilled Persons’ Reporting Powers;

(b) preparation of the Skilled Persons’ Report;

(c) expectations in respect of a Skilled Person, and

(d) confidentiality provisions.

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2 Tax

2.1 FATCA

By now, all Irish investment funds should have taken advice as to their Foreign Account Tax Compliance Act ("FATCA") classification status and reporting requirements.  In addition, any funds which have determined that they are required to register for FATCA should have done so by 31 December 2014.  Our Tax Group is available to discuss any FATCA queries and assist in all aspects of FATCA implementation.

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2.2 Common Reporting Standard

With FATCA implementation complete, focus has now turned to the introduction and implementation of the global "Common Reporting Standard" ("CRS") as developed by the OECD.  CRS will build on the information reporting requirements introduced by FATCA but there are a number of important differences:

  1. Entities which are subject to the CRS will be required to report the residence of their account holders (i.e. CRS extends beyond the FATCA requirement to identify solely US account holders);
  2. There are no minimum threshold levels for accounts to be considered reportable;
  3. There will be no frequently traded exemption as exists for FATCA purposes;
  4. The definition of reporting institutions will be widened and there may be a requirement to look at passive accountholders to identify the controlling persons.


To date, 51 jurisdictions have signed up to implement CRS by 2017.  Ireland is one of those countries and has legislated for the introduction of the CRS in the Finance Act 2014 which was signed into law on 23 December 2014.  The start date for due diligence obligations under CRS is 1 January 2016 with the first reporting date currently set for September 2017.

The Maples Tax Group is actively involved in the CRS and BEPS working groups of the Irish Funds Industry Association and the Irish Debt Securities Association and has attended meetings with Irish Revenue in relation to these topics. As such, we are ideally positioned to advise clients on the impact of these developments.  If you have any queries in this regard, please do not hesitate to contact a member of our Tax Group or your usual Maples contact.

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2.2 Common Reporting Standard

The Finance Act 2014 includes a provision which ensures that neither a non-Irish UCITS nor a non-Irish AIF will be chargeable to Irish tax (but not including VAT) solely by reason of the fund being managed by a management company or AIFM (or by an Irish branch or agency of an AIFM) authorised in another European Economic Area ("EEA") state.  This change brings welcome certainty to the area.

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3. Listings

3.1 Admitting to Trade Non-UCITS ETFs on the LSE

In a welcome development, the London Stock Exchange ("LSE") has extended their offering for non-UCITS ETFs to allow non-UCITS retail schemes ("NURS") and qualified investor alternative investment funds ("QIAIFs") admission to trading on the LSE. There are two listing routes available:

  1. Apply to the UK Listing Authority for an official listing to the LSE for admission to trading on the Main Market. This route is available for NURS, qualified investor schemes and AIFs.
  2. Apply to the LSE for admission to trading on the Main Market based on an existing European Economic Area listing.This alternative route to trading on the LSE is available for AIFs such as QIAIFs that are recognised as an overseas scheme by the UK Financial Conduct Authority.


For more information see our client update, Admitting to Trade Non-UCITS ETFs on the LSE.

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3.2 ISE Removes Daily Disclosure Requirement for Actively-Managed ETFs Listed on ISE

In November 2014, the Irish Stock Exchange ("ISE") removed the requirement to provide daily disclosure of the holdings of actively managed ETFs listed on the ISE (rule 5.5.2(a)). There are now numerous actively managed ETFs established and listed on various stock exchanges throughout Europe, including the ISE and it is worth nothing that several exchanges do not require portfolio disclosure. The requirement to disclose portfolio details in rule 5.5.2(a) is no longer appropriate for actively managed ETFs for the following reasons: 

  1. The information may be commercially sensitive.  If the portfolio details are analysed over a period of time, the information may be used by third parties to replicate investment houses’ strategies thus rendering them uncompetitive; and
  2. The information may give rise to undesirable market activity.  It may enable other investors and managers to “front run” and otherwise trade against the funds in question, to the detriment of their investors and to market integrity.


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3.3 ISE Offers Discount of 33% on LEI Bulk Orders of 10 or More Codes

The cost of buying 10 or more new legal entity identifiers ("LEIs") through the ISE has been reduced to €120 (ex VAT) per LEI. This reduction represents a discount of 33% on the regular price of €180. A bulk order to renew LEIs has also fallen with a large order of 10 or more LEIs renewable at a cost of €87 (ex VAT) per LEI. This is normally charged at €130 per LEI.

The ISE provides LEI codes to organisations in Ireland and internationally for regulatory purposes via its quick, secure, online service on www.isedirect.ie. Contact Laurence Morrissey at laurence.morrissey@maplesandcalder.com for further details.

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3.4 ISE Fund Hub

On 10 November 2014, the ISE launched ISE Fund Hub, a new web based information portal for funds which are listed on the ISE. The new portal, located at www.isefundhub.com displays important information such as fund net asset values, key fund documents and an individual profile area for each manager as well as extensive performance based analytics. Targeted at professional investors, ISE Fund Hub was developed in partnership with FundConnect, a Danish based funds infrastructure provider to the European market.

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© Maples and Calder 2015

This update is intended to provide only general information for the clients and professional contacts of Maples and Calder. It does not purport to be comprehensive or to render legal advice.

Contacts

Dublin

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Barry McGrath
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Stephen Carty
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Carol Widger
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Adam Donoghue
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