COVID-19: CBI announces more flexibility measures in response to the pandemic

The Central Bank of Ireland (CBI) launched a package of measures where regulatory flexibility will be allowed in respect of requirements applicable to securities markets, investment management and investment firms in light of the challenges posed by COVID-19.

The measures which are targeted at UCITS, AIFs, Fund Service Providers, Investment Managers and Investment Firms include:

• Allowing flexibility on filing deadlines for the financial statements of authorised investment funds over the COVID-19 period. The CBI expects that authorised investment funds will file financial statements within usual time frames. However, the CBI will allow an extension provided that (i) the CBI and (ii) investors are informed as soon as practicable of (a) the delay, (b) the reasons for such a delay and to the extent possible the estimated publication date. 
  • The deadline for filing annual audited financial statements for UCITS and AIFs with a year-end between 31 December 2019 and 1 April 2020 may be extended by 2 months
  • The deadline for filing annual audited financial statements for UCITS and AIFs with a year-end between 1 April 2020 and 1 May 2020 may be extended by 1 month
  • The deadline for filing semi-annual financial statements for a reporting period ending between 31 January 2020 and 1 April 2020 may be extended by 1 month
• Allowing flexibility on filing deadlines for a range of regulatory returns (including annual and interim accounts and capital returns) due from investment firms, fund service providers and investment funds over the COVID-19 period, subject to meeting the requisite extended filing deadlines. Firms which can meet the existing reporting deadlines should do so. CBI ONR automated filing reminders for these returns will be disabled for impacted returns during the relevant reporting periods.
• Allowing flexibility on filing deadlines for assurance reports. These reports outline firms’ arrangements for the safeguarding of client assets or investor money. For submissions falling due from April to July 2020 inclusive, the deadline may be extended by up to 2 months, where the investment firm or fund service provider contacts CBI in a timely manner, explaining the rationale and, to the extent possible, the estimated submission date. This flexibility reflects CBI understanding that the Covid-19 outbreak may result in challenges for investment firms and fund service providers, and their auditors, in preparing and completing such assurance reports, for example when seeking relevant information in a timely manner, engaging with relevant personnel and conducting relevant testing.
• Allowing flexibility on risk mitigation programme implementation dates which aim to iron out governance and risk management issues among fund managers. Firms that can meet their implementation deadline should do so. Where necessary, firms should engage directly with their usual supervisors, including the reasons why and supervisors will consider postponement on a case-by-case basis.
• Postponing its regular assessments of the domestic regulatory policy framework in respect of securities markets, investment management activities and investment funds. The CBI will also delay the publication of its feedback statement arising from Consultation Paper 130 on Treatment, Correction and Redress of Errors in Investment Funds.
• Clarifying CBI expectations on MiFID investment firms that are subject to the Capital Requirements Regulation and Capital Requirements Directive IV in respect of Pillar 3 disclosures.
• Clarifying the application of relevant announcements made by the European Securities and Markets Authority (ESMA) to support stakeholders in meeting regulatory obligations during the coronavirus period (detailed below).

The CBI will be requiring additional targeted reporting by investment firms, investment funds and fund service providers in order to enable it to examine the effects of COVID-19 on the financial sector. The CBI will aim to be measured and pragmatic with these data requests in terms of the type and frequency of requests.

ESMA announcements

The CBI will apply the measures outlined in recent announcements by ESMA as follows:

• The statement issued by ESMA on 19 March 2020 and revised on 26 March 2020, that it expects National Competent Authorities (NCAs) not to prioritise their supervisory actions towards entities subject to securities financing transactions reporting obligations, which were due to come into application on 13 April 2020, until 13 July 2020.
• The statement issued by ESMA on 20 March 2020 that in circumstances where firms are unable to record voice communications ESMA expects them to consider alternative steps they could take to mitigate the risks related to the lack of recording until recording is resumed.
• The statement issued by ESMA on 20 March 2020 that it expects NCAs not to prioritise their supervisory actions in relation to the new tick-size regime for systematic internalisers until 26 June 2020.
• The statement issued by ESMA on 27 March 2020 encouraging NCAs to apply a risk-based approach in the exercise of supervisory powers in their day-to-day enforcement of applicable legislation in the area of the Transparency Directive concerning the publication deadline of financial reports. The statement underlines that requirements under the Market Abuse Regulation still apply, and issuers are expected to exercise their best efforts to prepare their financial reports and publish them within the legislative deadline.
  • Where issuers reasonably anticipate that publication of their financial reports will be delayed beyond the deadline set out in the Transparency (Directive 2004/109/EC) Regulations 2007, they should inform the CBI and, in accordance with the ESMA statement, disclose to the market that publication will be delayed, the reasons for such delay and, to the extent possible, the estimated publication date.
  • Regulation 40(5) Transparency (Directive 2004/109/EC) Regulations 2007 provides the CBI with the power to direct the suspension of, or request the suspension of trading in securities where it has reasonable grounds to suspect an infringement of transparency (regulated markets) law. In the normal course, the CBI will prioritise taking supervisory action in exercising its powers under Regulation 40(5) where an issuer fails to meet the deadline for publication of financial reports. The CBI will allow flexibility where an issuer fails to meet the deadline for publication of a financial report solely on the basis of disruption arising from COVID-19 related issues, provided an issuer complies with the conditions and deadlines set out in this ESMA statement. (This does not affect any existing supervisory action regarding suspensions for suspected breaches of Regulation 4(2) and/or Regulation 6(2) of the Transparency (Directive 2004/109/EC) Regulations 2007.)
• The statement issued by ESMA on 31 March 2020 that execution venues and firms unable to publish execution reports due pursuant to RTS 27 and RTS 28 by 31 March and 30 April 2020 respectively should publish them as soon as reasonably practicable after that date and no later than the next publication deadline for each of them which is 30 June 2020.
• The statement issued by ESMA on 31 March 2020 that the first quarterly reports by money market fund managers under the Money Market Funds Regulation to be submitted to NCAs are now postponed to September 2020.
• The statement issued by ESMA on 9 April 2020 that ESMA expects NCAs to act in accordance with national rules set out in their Member States and when possible during this specific period not to prioritise supervisory actions in respect of the upcoming deadlines set out in the UCITS Directive, the AIFMD, the EuSEF Regulation and the EuVECA Regulation.

The launch of this package follows earlier CBI COVID-19 measures as detailed in our March Asset Management & Investment Funds bulletin.

For more information on this topic please contact any member of A&L Goodbody's Asset Management and Investment Funds team.

Date published: 17 April 2020