Some approaching compliance deadlines

  • 30 November 2018. UCITS Performance Fees - The Chairman of UCITS ManCos which manage UCITS that charge performance fees must give confirmations to the Central Bank by 30 November 2018 as detailed in the Central Bank's outcome of an inspection into UCITS performance fees.
  • 1 December 2018. MMFR. ESMA is holding a consultation on draft guidelines on stress test scenarios under the MMF Regulation. The consultation closes on 1 December 2018.
  • 7 December 2018. UK Temporary Permissions Regime. The UK FCA is holding a consultation on the temporary permissions regime (TPR), discussed below. The deadline for responses to the consultation is 7 December 2018.
  • 31 December 2018. 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 2018. 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. Where the board has adopted such a policy, it should ensure that it receives appropriate confirmations from relevant persons and that it is subject to periodic review.
  • 31 December 2018. 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. They should also 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 party transactions.
  • 31 December 2018. 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 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 submission due date for the Annual PCF Confirmation Return (for the year ending 31/12/18) for Investment Funds and Fund Service Providers (including AIFMs and UCITS management companies) will be detailed on the ONR system.
    • The Annual PCF Confirmation Return (which is made via the ONR system) involves a mandatory declaration to confirm that the CEO or equivalent, has confirmed in writing that:
    • the RFSP has brought the Standards to the attention of all PCFs,
    • the RFSP is satisfied on reasonable grounds that all PCFs comply with the Standards,
    • the written agreement of all PCFs to abide by the Standards has been obtained,
    • all necessary due diligence has occurred
    • the RFSP will investigate any fitness and probity concerns, take appropriate action and notify the Central Bank of any action taken without delay.
  • 31 December 2018. PRIIPs KID. Investment funds which have issued a PRIIPs KID must review KIDs regularly, when there is a significant change, and at least annually. The KID must be revised as necessary. Unlike the UCITS KIID, there is no annual refresh deadline. UCITS are exempt from the obligation to produce a PRIIPs KID until 31 December 2019. See below for more information on this topic.
  • 1 January 2019. Securitisation Regime - Due diligence and disclosures on securitisations will need to be applied (in the case of UCITS) or updated and refreshed (in the case of AIFMs). Where AIFMs and UCITS are exposed to securitisation positions which do not meet the requirements, they must, acting in the best interest of the investors, take corrective action. See our In Focus paper on this topic.
  • 1 January 2019. Benchmarks Regulation - Prospectuses of UCITS and of funds which are subject to the Prospectus Directive, which reference a benchmark and which have been approved prior to 1 January 2018, will need to be updated at the next update and in any event by no later than 1 January 2019 to include information on the benchmark. See our In Focus Q&A on this topic.
  • 7 January 2019 to 28 March 2019. UK FCA TPR Notifications - The UK FCA has advised that TPR notifications must be made during the period 7 January 2019 to 28 March 2019 (discussed below).
  • 15 January 2019. Depositaries to specific types of AIFs. The Central Bank has set out its proposal for a regulatory framework for entities to seek authorisation under Regulation 22(3)(b) of the AIFM Regulations act as depositaries to specific types of AIFs. The Central Bank has invited stakeholders to comment on the proposals until 15 January 2019.
  • 18 January 2019. Outsourcing – The Central Bank issued a Discussion Paper on Outsourcing which is open for comment until 18 January 2018.
  • 21 January 2019. Money Market Funds (MMFs) - The MMF Regulation introduces new requirements for MMFs, in particular portfolio composition, valuation of assets, diversification, liquidity management and credit quality of investment instruments. Existing UCITS and AIF MMFs must comply with the new rules by 21 January 2019. The European Union (money market funds) Regulations 2018 (S.I. No. 269 of 2018) came into operation on 21 July 2018
  • 19 February 2019. UCITS KIID - A UCITS must update its key investor information document (KIID) on an annual basis for each sub-fund / standalone fund within 35 business days of the end of each calendar year. This year the annual update of the KIID must be filed no later than 19 February 2019 (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.

Central Bank's Christmas and year-end deadlines for:

  • Fund and sub-fund applications that have Christmas or year-end approval deadlines including self-managed/internally managed investment company/ICAV applications
  • Approval of post-authorisation amendments that have Christmas or year-end approval or noting deadlines are detailed here.

The above list does not cover tax, FATCA or CRS filings, ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include any annual FDI Return) and semi-annual accounts or other similar returns which deadlines will vary to reflect the particular entity's year end.

The Criminal Justice (Money Laundering and Terrorist Offences) (Amendment) Act 2018

The Criminal Justice (Money Laundering and Terrorist Offences) (Amendment) Act 2018 is in force. See our summary here.

In order to ensure compliance with this new legislation designated persons will need to consider and possibly update their:

  • business risk assessment
  • policies and procedures
  • subscription forms
  • record keeping

For more information in relation to this topic please contact a member of the Asset Management & Investment Funds team..

Central Bank discussion paper on outsourcing activities in financial service providers.

The Central Bank of Ireland (Central Bank) undertook a review of outsourcing across the Irish financial services sector.

The Central Bank found:

  • significant increase in reliance on outsourcing of activities by financial service providers
  • serious deficiencies in board awareness and understanding of the extent of reliance on outsourcing
  • major weaknesses in relation to risk management controls and processes, and business continuity planning, around outsourcing.

The Central Bank of Ireland published a paper "Outsourcing - Findings and Issues for Discussion". This two-part paper uses findings and observations from supervisory engagements combined with results of a survey issued to a sample of regulated firms to assess industry practice.

  • Part A of the paper emphasises the most obvious and minimum supervisory expectations around the management of outsourcing risks
  • Part B highlights some of the key risks and evolving trends associated with outsourcing and invites feedback and discussion on these matters.

Gerry Cross, Director of Policy and Risk, said:

"As the management of outsourcing risk remains the responsibility of the Board of Directors for individual firms, the Central Bank fully expects that firms will analyse this paper and take appropriate steps to address issues relevant to their outsourcing practices. Furthermore, firms can expect that supervisors will seek evidence of updates to risk management frameworks to ensure that the paper was considered and an examination of outsourcing was conducted."

"The findings in this important report are disappointing. Significant action is required by boards and senior management to meet our minimum supervisory expectations on outsourcing governance arrangements, risk management controls and business continuity practices. This is necessary to ensure these activities do not compromise firms' operational resilience."

The Central Bank Discussion Paper on Outsourcing is open for comment until 18 January 2019.

The Central Bank will hold an outsourcing industry conference in Q1 2019.

Pragmatic Central Bank statement on clearing and trading obligations

The Central Bank welcomed the recent ESMA statement on the clearing and trading obligations' 21 December deadline. The Central Bank has confirmed that, in accordance with the recommendation from ESMA and pending the entry into force of EMIR Refit and the amending RTS, the Central Bank will apply its risk-based supervisory powers in the day-to-day enforcement of applicable legislation (i.e. EMIR's clearing obligation and MiFIR's trading obligation) in a proportionate manner.

Central Bank Notice of intention to make provision for entities to act as depositaries to AIFs.

The Central Bank published a Notice of Intention to permit entities to seek authorisation under Regulation 22(3)(b) of the AIFM Regulations to act as a depositary for specific types of AIFs which generally do not invest in assets that must be held in custody. The notice sets out the Central Bank's proposed regulatory framework for these types of entities. The Central Bank has invited stakeholders to comment on the proposals until 15 January 2019.

Central Bank UCITS Q&A- UCITS ETF share classes

The Central Bank updated its UCITS Q&A Twenty-Fourth Edition. One Q&A is updated and one added to address:

  • establishing unlisted share classes in an ETF
  • having different dealing cut-off times for hedged and unhedged share classes in an ETF.

Central Bank consideration of authorisation and registration under the Benchmarks Regulation.

Benchmarks Regulation- CBI is considering the authorisation and registration processes and the third country provisions, endorsement and recognition specified under the Benchmark Regulation alongside its proposed supervisory regime with a view to drafting the relevant application forms, guidance and developing its supervisory processes as required. The Central Bank will publish a further update on its website in due course.

Central Bank speeches on culture, innovation, diversity, outsourcing and accountability

The following speeches were delivered recently by the Central Bank

Learning to Lead: Cultural Change, Ethical Behaviour and Consumer Protection - Derville Rowland, Director General Financial Conduct

Hubs and spokes: remarks on innovation and outsourcing - Gerry Cross, Director of Policy and Risk

Rapid Technology Developments and Conduct Risk – What does the Future look like through the Regulator's Eyes.'' - Director General Derville Rowland

The Supervision of Conduct in the Funds Market – Remarks by Colm Kincaid, Director of Securities and Markets Supervision

Bad Apples or Bad Barrels? How Effective Culture Mitigates Conduct Risk - Director General Derville Rowland

'Leadership, Accountability and Culture in Financial Services' - Derville Rowland, Director General, Financial Conduct

"Safeguarding the best interests of investors in a changing landscape" - Derville Rowland - Director General, Financial Conduct

Central Bank strategic priorities for next three years

The Central Bank published its Strategic Plan 2019-2021, setting out its key priorities for the next three years. The strategy sets out the five strategic themes that the Central Bank will focus on for the next three years. These are:

  • Strengthening resilience
  • Brexit
  • Strengthening consumer protection
  • Engaging and influencing
  • Enhancing organisation capability.

Central Bank Funding

The Central Bank has published its Funding Strategy and Guide to the 2018 Industry Funding Regulations.

Central Bank Markets Updates

The Central Bank published issue 15 of its Central Bank Markets Update. Many of the key developments are discussed throughout this bulletin.

Central Bank Corporate Governance Requirements for Investment Firms and Market Operators 2018

The Central Bank published Corporate Governance Requirements for Investment Firms and Market Operators 2018 (the Requirements) and a Feedback Statement on CP120: Corporate Governance Requirements for Investment Firms and Market Operators. The Requirements are intended to apply to firms authorised by the Central Bank that are designated as High, Medium High or Medium Low Impact under the Central Bank’s Probability Risk Impact System (PRISM) with effect from 1 July 2019. Low Impact firms are encouraged to adopt the Requirements as best practice.

FCA directs EEA firms to make temporary permissions notifications from 7 January 2019 to 28 March 2019.

On 9 November 2018, the FCA published a direction to EEA firms that are carrying on a regulated activity in the UK under passporting arrangements to notify it if they intend to obtain a deemed permission or variation under the temporary permissions regime (TPR). Notifications must be made by submitting the Temporary Permission Notification Form using the Connect system. They must contain the information required by that form and be made during the period beginning at 9 am on 7 January 2019 and ending on 28 March 2019.

The FCA has updated its TPR webpage (which is a valuable source of information) to reflect the publication of the direction. It warns that once the notification window has closed, firms that have not submitted a notification will not be able to use the TPR. The TPR will come into force if the UK leaves the EU in a no-deal Brexit.

FCA speech on Brexit preparations

The FCA published a speech by Nausicaa Delfas, FCA Executive of International, on Brexit and maintaining market confidence.

In the speech, Ms Delfas gives an overview of the FCA's current priorities relating to Brexit, including its work to ensure there is a robust regulatory framework in a no-deal Brexit.

Among other things, Ms Delfas considers the FCA's expectations of firms preparing for a no-deal Brexit. It expects firms to:

  • Take their own legal advice on what a no-deal Brexit might mean for them and their customers, and any steps they may need to take to manage this.
  • Continue to meet the FCA's rules as they implement their Brexit plans. This means that if a firm is expanding its presence in Europe, any structures put in place by the firm must allow the FCA to supervise its UK business effectively, continue to meet threshold conditions and provide appropriate senior oversight in the UK.
  • Understand the impact of Brexit on customers, continue to service them fully and fairly, and communicate with them in a timely fashion. Firms should let customers know if there will be any change to their ability to provide services to them post Brexit, and if any changes may affect the customers' products or contracts.

Ms Delfas highlights the fact that the FCA's consumer objective is relevant to consumers served by UK firms outside the UK. She comments that the FCA has informed large international banks that they should only consider moving activity relating to their non-EU clients away from the UK if it is demonstrably in the interests of the client to do so.

Ms Delfas also calls for work to begin on memorandums of understanding (MoU) between the FCA and their EU counterparts to support cross-border supervision of firms and data-sharing and for the UK and the EU to commit to taking reciprocal equivalence decisions on each other's regimes as early as possible.