1.1 ESMA UCITS Q&A updates

On 20 July 2022, ESMA published an updated version of its UCITS Q&As with the following new Q&As:

  • Section X: Depository - new Q&As 7 and 8 on reconciliations; and
  • Section XIII: Delegation - new Q&A 1 on the responsibility to ensure compliance with the rules governing marketing communications.

1.2 European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) (No.2) Regulations 2022

On 9 September 2022, S.I. No. 442/2022 European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) (No.2) Regulations 2022 (the "Regulations") were published in Iris Oifigiúil. The Regulations further amend the UCITS Regulations 2011 (S.I. No. 352 of 2011) to give effect to the Commission Delegated Directive (EU) 2021/1270 of 21 April 2021 as regards the sustainability risks and sustainability factors to be taken into account for UCITS.

The Regulations came into operation on 12 September 2022.


2.1 ESMA AIFMD Q&A updates

On 20 July 2022, ESMA published an updated version of its AIFMD Q&As with the following new Q&As:

  • Section VI: Depositaries - new Q&As 15 and 16 on reconciliations; and
  • Section VIII: Delegation - new Q&A 4 on the responsibility for compliance with requirements for marketing communications.

2.2 Updates to Central Bank's pre-submission process for certain QIAIFs

On 1 July 2022, the Central Bank of Ireland ("Central Bank") provided an update relating to the pre-submission process it has in place for certain QIAIFs. Going forward this process is only required where it is proposed that a QIAIF will invest in: (i) Irish property assets; or (ii) crypto assets. However the Central Bank has made it clear that it may update the list of QIAIFs which are required to make a pre-submission in the future by amending the webpage setting out details of the pre-submission process for QIAIFs.

Our advisory provides an overview of these updates.

2.3 Updates to Central Bank's authorisation requirements for QIAIFs

On 1 July 2022, the Central Bank updated its Authorisation Process for AIFs webpage to include a link to the pre-submission requirements detailed in section 2.2 and additional information under the heading "Quality assurance checks of Qualifying Investor AIFs". This section states "The Central Bank carries out quality assurance reviews post authorisation on a sample of QIAIFs. These QIAIFs are selected at the discretion of the Central Bank. These reviews focus on the QIAIF's compliance with the Central Bank's AIF Rulebook (and other regulatory / legislative obligations as applicable). Where selected for a quality assurance review, the QIAIF or their representative is expected to respond to any comments raised by the Central Bank in a timely manner".

2.4 European Central Bank ("ECB") publishes an Opinion on the AIFMD II Proposal (This is a further update to section 1.1 of the report covering the fourth quarter of 2021)

On 9 August 2022, the ECB published its own initiative opinion on the proposal with regards to delegation arrangements, liquidity risk management, supervisory reporting, provision of depositary and custody services and loan origination by alternative investment funds ("AIFMD II"). The ECB welcomes the proposed directive's principal aim to fill certain regulatory gaps in the functioning of AIFMD.

A number of specific observations and proposals are made by the ECB on the operationalisation and development of ex ante macroprudential tools to reduce risks posed by alternative investment funds ("AIFs") to the financial system, as well as ensuring that detailed data on individual AIFs are made available to the ECB and the European System of Central Banks ("ESCB").

The ECB also sets out a technical working document with its proposed amendments to the Commission's draft text, in the following areas:

  • Liquidity management and macroprudential tools.

The Commission's review of the functioning of the rules laid down in AIFMD should include a review of the available macroprudential tools for AIFs. For this purpose, the Commission's review, as detailed in the proposed new Article 69b of AIFMD, should be expanded to include an ex ante review of developments in the use of macroprudential tools to manage AIF liquidity risks. This expansion would facilitate an assessment of whether the availability of certain instruments, not only the suspension of redemptions, should be harmonised and/or expanded upon. The review should also specifically cover how Alternative Investment Fund Managers ("AIFMs") of leveraged, open-ended AIFs set leverage limits and how supervisors exercise the powers to impose leverage limits. In conducting this review, the Commission should take into consideration developments in relevant international standards.

While the proposed directive specifies a common set of optional liquidity management tools which AIFMs of open-ended AIFs may use, the ECB recommends that the ability of such AIFs to withstand liquidity risks would be strengthened if AIFMs were required, as a minimum, to select several, and not merely one, of the listed tools.

  • Reporting.

The proposed directive aims to eliminate duplicative reporting requirements existing under Union and national legislation, including, in particular, certain statistical regulations adopted by the ECB. The ECB stresses, however, that the integration of the underlying reporting infrastructure must not interfere with or prejudice the ECB's competence to adopt statistical regulations for its own purposes or to include the full set of relevant statistical reporting requirements in relevant ECB regulations, such as those on the collection of statistics on holdings of securities and on the assets and liabilities of investment funds.

  • ESCB access to detailed data on the AIF sector.

The ECB proposes that the proposed directive should require that the detailed information that the competent authorities of the home Member State of an AIFM are required to make available to ESMA (amongst other authorities) pursuant to Article 25(2) of the AIFMD is made available by ESMA to the ECB and other relevant ESCB central banks. ESCB central banks should have access to detailed data on the AIF sector to be able to fulfil their tasks of defining and implementing monetary policy and contributing to the stability of the financial system.

The opinion notes that certain AIFs' investment strategies involve them in taking positions, which are often leveraged, in the securities market, in particular in fixed income products such as sovereign bonds. By having access to detailed individual AIF data, the ESCB will be able to follow how such AIF activities in the securities market, in particular for sovereign bonds, affect the monetary policy transmission mechanism. With access to such data, ESCB central banks will also be able to better assess individual AIFs and their heterogeneity and hence more effectively contribute to managing the extent to which systemic risks may build up in the AIF sector. As one of the underlying aims of the proposed directive is to avoid duplication of reporting requirements, the ECB notes it is not feasible for it to impose additional data reporting on AIFMs when the required data from the competent authorities is already held by ESMA and the European Systemic Risk Board (the "ESRB").


3.1 Beneficial Ownership Register updates

On 25 July 2022, the Central Bank published an update dated 22 July 2022 relating to the beneficial ownership register for certain financial vehicles including Irish Collective Asset-Management Vehicles ("ICAVs"), Common Contractual Funds ("CCFs"), unit trusts and Investment Limited Partnerships ("ILPs"), detailing certain changes being introduced. The update specifically relates to the process for beneficial owners who do not currently hold a PPS number or a Central Bank of Ireland reference number. A verification of identity process will be in operation from 8 August 2022, in advance of the new beneficial ownership information return template being made available. Just to note that for beneficial owners who do not hold a PPS number, but who have previously been approved in a PCF role, the unique Central Bank reference number provided to the person under this process may be entered on the beneficial ownership information return.

On 18 August 2022, the Central Bank published a subsequent update on its website confirming that the new beneficial ownership information return template to be used for the collection of PPS numbers that had been delayed. The update states that a new template will be made available in Q4 2022 and the precise date will be communicated by the Central Bank at the earliest opportunity. All relevant Central Bank guidance and supporting documentation will be updated in advance to support these changes.

In the meantime certain financial vehicles, including in scope investment funds (that is, ICAVs, unit trusts, ILPs and CCFs), are reminded to continue to engage with the verification of identity process as previously outlined and are required to ensure a Central Bank reference number is available, where required, for beneficial owners who do not hold a PPS number, and do not currently hold a Central Bank reference number (where they have previously been approved in a PCF role).

The declaration as to verification of identify form is available here.

3.2 Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) (Amendment) Regulations 2022

The Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) (Amendment) Regulations 2022 came into effect on 8 July 2022. The regulations update the 2021 regulations (Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) Regulations 2021) to replace the schedule which sets out the amount of the beneficial ownership levy payable in respect of ICAVs, ILPs, unit trusts, CCF and credit unions. The levy amount has been increased to €811 and the Central Bank issued a notice to relevant entities requesting payment of this levy.

3.3 Central Bank's quarterly bulletin

On 7 July 2022, the Central Bank published its third quarterly bulletin of 2022. While the bulletin provides updates on the Irish economy including recent developments and information on domestic demand; exports, imports and balance of payments, the labour market; prices and costs; and the public finances, there is nothing specifically relating to funds or the asset management industry in this bulletin. Central Bank's markets update

On 4 July 2022, the Central Bank published its seventh markets update. The only policy development contained in this update is dealt with in section 3.4.

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