Some Approaching Deadlines
- the capital markets union (CMU) action on cross-border distribution of investment funds (UCITS, AIFs, ELTIFs, EuVECAs, EuSEFs) across the EU closes on 2 October 2016.
- Friday 7 October 2016. Central Bank deadline for filing details of pre-Christmas or pre year end authorisation/ approval/ noting applications. The Central Bank has requested details of applications which have pre-Christmas or pre- year end authorisation/ approval/ noting deadlines to be furnished by close of business on Friday, 7 October 2016 (see below for more detail).
- 13 October 2016. European Commission Delegated Regulation (EU 2016/438) supplementing the UCITS V Directive (2009/65/EC) with regard to obligations of depositaries applies from 13 October 2016.
- 1 November 2016. End of transition period for Central Bank UCITS Regulations. Deadline for existing UCITS to, amongst other matters, remove provisions wherebyredemption requests carried over from a prior dealing day as a result of the application of a gate receive priority over subsequent redemption requests. This change (which will likely require a change to the UCITS' constitution) should be completed by all UCITS by 1 November 2016.
- 31 December 2016. Corporate Governance – completion of reviews of board and individual director performance. Under the Irish Funds Corporate Governance Code, the overall Board's performance and that of individual members must be reviewed annually with a formal documented review and a review of the chairperson taking place at least once every three years.
- 31 December 2016. Anti-Money Laundering/ Counter Terrorist Financing (AML/CTF) - collective investment schemes and management companies should be aware of the regulatory expectation to offer training to their boards on the law relating to AML/CTF on an annual basis (and at such other times as may be appropriate). Boards should also ensure that they have considered whether to adopt a board level AML/CTF policy and where the board has adopted such a policy, that it receives appropriate confirmations from relevant persons and that it is subject to periodic review.
- 31 December 2016. Business Plan/ Programme of Activity - UCITS management companies, self-managed UCITS, AIFMs and internally managed AIFs, where they have not already done so, may need to complete their annual performance review on service providers, and obtain annual confirmations from service providers and relevant persons in accordance with their business plan/ programme of activity, complete onsite visits with service providers, ensure adoption of valuation policy and make disclosure in respect of connected parties transactions.
- 31 December 2016. Fitness & Probity - management companies, AIFMs, self- managed/ internally- managed UCITS/AIFs and other regulated financial service providers (RFSPs), where they have not already done so, will need to obtain their annual certification from persons performing PCFs (e.g. directors) and CFs (e.g. Money Laundering Reporting Officer (MLRO) and Company Secretary) that they are aware of the Fitness and Probity standards, agree to continue to abide by those standards and will notify the Board if they no longer comply. This forms part of ongoing performance monitoring set out in Section 22 of the Guidance on Fitness and Probity Standards. The Annual PCF Confirmation Return due dates are discussed below.
- 20 February 2017. UCITS KIID - Annual update of the key investor information document (KIID) must be filed no later than this date (where required). Any update to the KIID filed with the Central Bank must be translated (as necessary) and filed in any other host jurisdictions where the UCITS is registered to market its shares and uploaded on the UCITS' website.
- 1 January 2017 PRIIPs KID. New and existing RIAIF products must be accompanied by a PRIIPs KID from 1 January 2017. The possible delay of this date is dicussed below. UCITS are exempt from the obligation to produce a PRIIPs KID until 31 December 2019. The PRIPs Regulation will be subject to review which will assess whether the transitional arrangements for UCITS should be prolonged, or whether, with some adjustments, the UCITS KIID might be replaced by or considered equivalent to the PRIIPs KID. Where funds are wrapped into insurance products, they may be required to provide supplementary information or data to enable the underlying insurance company to produce the PRIIPs KID.
The deadlines for filing the Fitness & Probity PCF Confirmation Return (for the year ending 31/12/16) for Investment Funds and Fund Service Providers (including AIFMs and UCITS management companies) has not yet been noted on the Central Bank website.
The above list does not cover ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include annual FDI Return) and semi-annual accounts or other similar returns which deadlines will vary to reflect the particular entity's year ends.
Central Bank Deadlines for Pre-Christmas/Year-End Applications
As detailed in our Front Page NewsAlert, the Central Bank has issued details of its pre-Christmas or pre- year end approval deadlines for receipt of applications:
- for approval of funds and sub-funds that have pre-Christmas or pre-year end approval deadlines (this includes self-managed/ internally managed investment company/ICAV applications and risk management processes); and
- for approval of post-authorisation amendments that have pre-Christmas or pre-year end authorisation/ approval/ noting deadlines.
The Central Bank has requested specific details of applications which have pre-Christmas or pre- year end authorisation/ approval/ noting deadlines to be lodged with it by close of business on Friday, 7 October 2016. Please let us know if you are considering any such application.
Central Bank Markets Update
The Central Bank of Ireland (Central Bank) published a Markets Update which includes updates to both the UCITS and AIFMD Q&As.
- Updated UCITS Q&A (14th Ed.) includes new Q&A in respect of umbrella funds and cash accounts (Q&A 1067 – 1069) and new Q&A on the submission of the second set of half-yearly accounts by UCITS management companies / depositaries (Q&A 1070 – 1072).
- Updated AIFMD Q&A (20th Ed.) also includes the new Q&A in respect of umbrella funds and cash accounts (Q&A 1108 – 1110).
- First Edition of Market Abuse Regulatory Framework Q&A (which primarily focusses on Central Bank ONR issues).
- Director Time Commitments letter. The Central Bank issued a letter to all fund service providers and fund Boards providing an update on the director time commitments thematic review. Extensive engagement with directors following the 2015 review has delivered significant progress in reducing concentrations of directorships. The industry letter highlights significant progress in reducing concentrations of directorships and areas for directors to consider when reviewing their capacity to fulfil their directorship roles.
Central Bank guidance on IT risk management and cybersecurity for financial services firms
The Central Bank issued cross industry guidance on IT risk management and cybersecurity for financial services firms (the IT Guidance). The Central Bank has stated that it expects Boards and Senior Management of regulated firms to fully recognise their responsibilities for these issues and to put them among their top priorities. Firms must robustly address key issues such as alignment of IT and business strategy, outsourcing risk, change management, cybersecurity, incident response, disaster recovery and business continuity. Firms need to make sure that they understand these risks and that they are managed effectively. The IT Guidance sets out the Central Bank's expectations of firms in this area. The Central Bank's supervisory engagement will reflect IT Guidance with firms assessed accordingly. More analysis on the IT Guidance can be found here.
Central Bank Director of Policy & Risk, Gerry Cross, on liquidity risk in investment funds
Central Bank Director of Policy & Risk, Gerry Cross, delivered a speech on market liquidity. Mr Cross discussed, among other issues, liquidity risk in investment funds and noted the need to assess the structural challenges and risks which asset management activities may pose to financial stability. Liquidity mismatch in investment funds is a key element of this structural assessment. The Central Bank recognises that liquidity mismatch is addressed within the current UCITS and AIFMD frameworks. However improvements are necessary including, but not limited to, the following areas:
- the availability and use of liquidity management tools could be more harmonised across the EU. The current range of tools available differs between Member States, as does guidance and the protocols governing their use. More harmonisation could be beneficial.
- we need to assess the benefits of adding new tools to the current set. Stress testing is perhaps the most widely known example of a new tool in investment fund liquidity management. Fortunately, the Central Bank recognises that investment fund stress tests are quite different from bank stress tests and there is a need to develop a common framework which needs to take account of the characteristics of individual fund portfolios, investor profile and investment mandate requirements, liquidity management practices in funds, and the potential presence of countercyclical buyers in the market.
- data is crucial to the wider risk assessment as well the conduct of any fund stress testing and there is a need to review the methods and formats of the data defined as collectable in the immediate wake of the crisis to ensure that it is fit for purpose and are being collected at an appropriate cost for industry and supervisors.