The Central Bank has published CP 97 – “Consultation on Central Bank Investment Firm Regulations 2015” and draft Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Investment Firms Prudential and Supervisory Requirements Regulations 2016 (the Central Bank Investment Firm Regulations).
Investment firms are typically authorised in Ireland as MiFID firms under the European Communities (Markets in Financial Instruments) Regulations, 2007 (SI 60 of 2007) (MiFID) or under the Investment Intermediaries Act 1995 (the IIA) (Investment Firms).
The conditions and requirements that the Central Bank has imposed on Investment Firms under MiFID and the IIA are set out in various documents. The Central Bank proposes publishing an “Investment Firms rulebook” which will consolidate into one document all such conditions and requirements.
The Central Bank has highlighted some issues in particular that stakeholders should consider.
Administrator capital requirements
The definition of “own funds” items will be brought broadly into line with certain modernisations made by the CRR/CRD IV regime. It is proposed that “tier 2” capital will be capped at one-third of “tier 1” capital (presently no limit is applied). In addition, there are certain new deductions from capital proposed.
It is also proposed that the method of calculation of the fixed overhead requirement for fund administrators be refined to better align with CRR/CRD IV.
Chapter 5 of the Central Bank’s AIF Rulebook also contains certain requirements applicable when fund administrators outsource activities. The circumstances and conditions where the final check and release of a fund’s NAV may be outsourced by the administrator will be more clearly specified and defined in the proposed Central Bank Investment Firm Regulations. In addition, a new requirement for fund administrators to make an annual return to the Central Bank concerning outsourced activities is proposed.
Responses to the consultation must be made by 27 January 2016.