Central Bank News; Consultation on Amendments to the AIF Rulebook (CP99), Reporting Guidance for AIFMs, Markets update and AML/CTF briefing

The Central Bank issued:

• A consultation paper setting out details of proposed policy amendments and technical changes to the AIF Rulebook, 
   
• The latest version of its 'Reporting Guidance for Alternative Investment Fund Managers',
   
• Markets Update Issue 8 2015, and
   
• Information on briefing sessions it will be holding on ESA's AML Guidelines and FATF Mutual Evaluations Review 2016.

Central Bank Consultation on Amendments to the AIF Rulebook; CP99

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

• Extending the category of investors who are provided with an exemption from the eligibility criteria and minimum subscription amount required to invest in a Qualifying Investor AIF;
   
• Amending the reporting requirement which applies to AIF depositaries where they provide services to non-Irish AIFs;
   
• Extending the list of requirements from the AIFM Regulations 2013 which apply to QIAIFs with registered AIFMs;
   
• Aligning the rules which apply to collateral received by Retail Investor AIFs under an OTC derivative or a repo / securities lending contract and the rules which reference external credit ratings with the rules recently introduced for UCITS;
   
• Clarifying that the requirement to hold minimum capital as eligible assets and in a separate account does not apply to internally-managed AIFs;
   
• Removing all references to bearer shares in the AIF Rulebook;
   
• Requiring external AIFMs and AIF Management Companies to produce a second set of half-yearly accounts.

Central Bank Reporting Guidance for Alternative Investment Fund Managers

The Central Bank also 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 Markets Update Issue 8 2015

The Central Bank also published Issue 8 of 2015 of its Markets Update. This covers:

Central Bank of Ireland

• Updated Transparency Rules November 2015;
   
• CP99: Consultation on Amendments to the AIF Rulebook (discussed above);  
   
• UCITS Q&A 10th Edition - A new Q&A ID 1058 has been added on the publication and submission to the Central Bank by a UCITS of its first annual/half-yearly reports. 

Central Bank UCITS Q&A 1050 has been updated as follows:

Q. Regulation 9(4) of the Central Bank UCITS Regulations provides that a ‘responsible person shall not invest assets of the UCITS in a financial index where a single component’s impact on the overall return of that index exceeds the diversification requirements set out in Regulation 71 of the UCITS Regulations’. The Central Bank had, in Guidance Note 2/07, stated that a UCITS proposing to use a financial index comprised of eligible assets with concentrated levels in excess of that permitted by the Regulations, may, applying a look through approach, consolidate the constituents of the index with the assets held directly by the UCITS to ensure it meets the risk-spreading requirements of the Regulations. Is the Central Bank continuing to adopt this position in light of Regulation 9(4)?

A. Regulation 9(4) follows the ESMA guidelines on ETF and other UCITS issues where each financial index must meet the relevant criteria and no look through can be applied. Accordingly, it is not possible to treat such investments as a look through of a financial index. However, this is without prejudice to Article 9(2) of the Eligible Assets Directive (Commission Directive 2007/16/EC) which allows investments in financial derivatives whose underlyings are eligible assets with concentration levels in excess of that permitted by the UCITS Regulations to be regarded as financial derivatives on a combination of assets.  

• Reporting Guidance for Alternative Investment Fund Managers;
   
• Address by Gerry Cross, Director, Policy and Risk, Central Bank of Ireland to the ACOI Annual Conference.

European Securities and Markets Authority (ESMA)

• ESMA has published its Final Report on Guidelines on complex debt instruments and structured deposits in MiFID II;
   
• ESMA will not exempt the collateralisation of bank guarantees for energy derivatives under EMIR;
   
• MiFID: ESMA has made available pan-EU data on suspensions and removals from trading;
   
• ESMA has published a discussion paper to consult on the validation and review of Credit Rating Agencies' methodologies;
   
• ESMA has updated EMIR standards on data reporting;
   
• ESAs have defined risk weights for credit ratings in the EU;
   
• ESAs have published a consultation paper on PRIIPs Key Information Documents;
   
• ESMA Chair's statement to the ECON Committee Scrutiny Hearing on MiFID II;
   
• ESMA has approved Greek HCMC short selling ban on bank shares;
   
• ESMA has published MAD/MAR Q&A;
   
• ESMA is consulting on indirect clearing arrangements;
   
• ESMA has published responses to the Consultation on on Draft implementing technical standards under MiFID II.

IOSCO (International Organization of Securities Commission)

• CPMI-IOSCO have published a consultative paper - Guidance on cyber resilience for financial market infrastructures; 
   
• IOSCO has published its final report on Standards for the Custody of CIS Assets.

EBA (European Banking Authority)

• Joint Consultation Paper on PRIIPs key information for EU retail investors.

European Commission

• Prospectus Rules Overhaul.

Central Bank briefing on ESA's AML Guidelines and FATF Mutual Evaluations Review 2016

The Central Bank of Ireland will hold briefing sessions on two regulatory guidelines recently published by the European Supervisory Authorities (ESAs) AML committee. It also intends to provide a brief outline of the forthcoming FATF Mutual Evaluation Review (MER) of Ireland that is due to take place in 2016 and to explain what involvement the private sector will have during the process. The ESA’s guidance papers concern the risk factors to be considered when applying customer due diligence and the risk based supervision. The briefing sessions are scheduled to take place on Monday, 14th of December in the Westin Hotel, Westmoreland Street, Dublin 2. The briefing sessions will be provided by Tony Cahalan and Hannah O’Neill from the Legal and Policy section of the Anti-Money Laundering Division in the Central Bank. As spaces are limited, the Central bank will operate on a first come first served basis and only two people from any organisation may attend. The central bank highlighted the following resources.

• Further information on ESA’s Guidelines and how to submit comments
   
• Further information on the FATF Mutual Evaluation Process Review (MER) Process
   
• FATF Methodology
   
• FATF Recommendations

For more information please contact Nollaig Greene or a member of the Asset Management & Investment Funds Team.

Date published: 01 December 2015