In response to recent industry changes, the Irish Stock Exchange ("ISE") has amended its suitability requirements for prime brokers with immediate effect. In particular, the current definition of the "Specified Credit Rating" for Prime Brokers has been amended to remove the reference to the long term credit ratings and only the reference to short term credit ratings has been retained.
The amended Specified Credit Rating requirement for Prime Brokers appointed to an ISE listed fund has been lowered where the credit exposure to the prime broker is less than 40% but will remain the same in situations where the exposure is more than 40%.
Listing Rule 7.7(a) now reads as follows:
Listing Rule – 7.7
7.7 The prime broker must satisfy:
(a) The specified credit rating requirement;
(b) The financial resources requirement; and
(c) The regulatory requirement
Specified Credit Rating Requirement means in relation to a legal person, a requirement either that such person or that a parent company of such person has the specified credit rating.
Specified Credit Rating means a minimum credit rating of 'A2' for long term debt from the credit agency of Moody's or 'A' from Standard & Poor's or Fitch and a minimum of 'P-1' or 'A-1' or 'F1', respectively, for short term debt from those same agencies.
Change to definition of Specified Credit Rating
a) a minimum of P-1, A-1 or F-1, respectively for short term debt from the credit agency of Moody's or Standard & Poor's or Fitch;
or
b) Minimum short term credit rating of A2 or P2 (or equivalent) from the credit agency of Moody's or Standard & Poor's or Fitch provided that the maximum exposure of the applicant to the Prime Broker is limited to 40% of the Net Asset Value of the fund.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
