Financial Services Regulation and Compliance - Funds Mar 2020
Domestic
The European Union (Shareholders’ Rights) Regulations 2020
The European Union (Shareholders' Rights) Regulations 2020 come into force on 30 March 2020. They implement the Second Shareholders' Rights Directive. They contain provisions applicable to AIFMs (including internally managed AIFs), UCITS ManCos and SMICs (including self-managed ICAVs) authorised and regulated by the CBI.
COVID-19
The CBI increased its engagement with firms in response to COVID-19. As an example, the CBI wrote to management companies, recognising that firms are currently operating in challenging times, with increased market volatility and staffing issues. CBI requested management companies to engage at an early stage on emerging operational issues or issues within a fund range that have the potential to have an impact on investors. CBI introduced a requirement for weekly reporting from management companies, commencing 30 March. In a further statement, CBI noted that it expects financial service firms' boards and senior management to actively monitor developments in order to be in the best position to pre-empt and respond to rapidly changing circumstances.
Central Registers of Beneficial Ownership for ICAVs and unit trusts
The CBI confirmed that it will be responsible for establishing the Central Beneficial Ownership Register in respect of ICAVs and unit trusts. The relevant statutory instruments are expected to issue soon.
CBI letter on cybersecurity
The CBI published the findings from its thematic inspection into the cybersecurity risk management practices in asset management firms. The letter must be brought to the attention of boards and senior management by 30 April 2020.
Irish Funds Financial Intermediary Guidelines - Approach to AML CDD
Irish Funds issued guidance and templates in the context of AML customer due diligence and the treatment of financial intermediaries
CBI proposal to split PCF-39 Designated Person into six PCF roles
The CBI proposes to split PCF-39 Designated Person roles into six PCF roles aligned to the specific managerial functions set out in the CBI's UCITS Regulations, the CBI's AIF Rulebook requirements and the CBI's Fund Management Companies – Guidance 2016.
European & International
ESMA recommends action by financial market participants for COVID-19 impact
Following discussion of the market situation and contingency measures taken by supervised entities in respect of COVID-19, ESMA made recommendations to financial market participants in respect of business continuity planning, market disclosure, financial reporting and fund management.
ESMA requires net short position holders to report positions of 0.1% and above
ESMA temporarily requires the holders of net short positions in shares traded on an EU regulated market to report positions of 0.1% and above. ESMA considers that lowering the Short Selling Regulation reporting threshold is a precautionary action that, under the exceptional circumstances linked to the ongoing COVID-19 pandemic, is essential for authorities to monitor developments in markets. The measure applies for a period of three months.
Cross-border distribution of funds
ESMA launched a consultation on 31 March 2020 on the standard forms, templates, and procedures that NCAs should use to publish information on their websites to facilitate the cross-border distribution of funds.
Money Market Fund reporting deadline delayed to September 2020
ESMA announced that the first reports by money market funds managers under the MMF Regulation should be submitted in September 2020. The original date for submissions was April 2020. MMF managers will have to report in September 2020 quarterly reports for both the Q1 and Q2 reporting periods.
ESMA guidelines on stress test scenarios under MMF Regulation
On 3 March 2020, ESMA issued the official translations of its guidelines on stress test scenarios under the MMF Regulation. Effectively, the guidelines will apply from 3 May 2020. The final version of the guidelines was published in July 2019.
ESMA consultation on guidance to address leverage risk in the AIF sector
ESMA launched a consultation on its draft guidance to address leverage risks in the AIF sector. The consultation is part of the ESMA response to the recommendations of the European Systemic Risk Board (ESRB) in April 2018 to address liquidity and leverage risk in investment funds.
ESMA's draft guidelines aim to promote supervisory convergence in the way NCAs assess how the use of leverage within the AIF sector contributes to the build-up of systemic risk in the financial system, as well as how they design, calibrate and implement leverage limits.
European Commission report on consumer testing to improve PRIIPs KID
The European Commission published a final report on consumer testing of the key information document (KID) under the PRIIPs Regulation. The results of the exercise will be used in the European Supervisory Authorities' review of the PRIIPs Delegated Regulation.
HM Treasury consultation on marketing and overseas funds regime
HM Treasury published a consultation paper on fund marketing and an overseas funds regime (OFR). The consultation contains the government's proposal for a new process to allow investment funds that are domiciled overseas to be marketed and sold to UK investors.
For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 6 April 2020