Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2023

• Year: 2023

STATUTORY INSTRUMENTS

S.I. No.10of2023

Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2023

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 27 th January, 2023.

CONTENTS

Regulation PART 1 Preliminary and general 1. Citation and commencement 2. Interpretation 3. Scope and application PART 2 General supervisory requirements for investment firms Chapter 1 General Requirements 4. Relationship with the Bank 5. Acquisition and disposal of assets 6. Internal audit requirements 7. Change in auditor Chapter 2 Reporting Requirements 8. General reporting requirements for investment firms PART 3 Additional supervisory requirements for investment business firms 9. Organisational requirements — general 10. Organisational requirements — appointment of a compliance officer 11. Client borrowing 12. Books, records, financial control and management information 13. Telephone recordings PART 4 Fund administrator requirements Chapter 1 Organisational Requirements 14. Directors 15. Client assets Chapter 2 Outsourcing Requirements 16. Scope 17. Prohibition on outsourcing in certain circumstances 18. Outsourcing proposal notification to the Bank 19. Check and release of the Final NAV and prohibition on outsourcing of the maintenance of the shareholder register 20. Management of outsourcing risks 21. Outsourcing requirements — general 22. Documented policy on outsourcing 23. Outsourcing to be subject to a written agreement 24. Chain outsourcing 25. Annual return — outsourcing Chapter 3 Miscellaneous 26. Fund prospectus PART 5 Own funds and capital adequacy requirements for fund administrators 27. Interpretation 28. Fund administrator own funds requirement 29. Expenditure requirement — calculation 30. Expenditure requirement — notification of material change to Bank 31. Own funds 32. Common Equity Tier 1 — items 33. Common Equity Tier 1 — prudential filters and deductions 34. Additional Tier 1 — items 35. Additional Tier 1 — deductions 36. Tier 2 — items 37. Tier 2 — maturity of instruments 38. Tier 2 — deductions 39. Qualification 40. Permissions required 41. Own funds transitional measures 42. Own funds breaches or potential breaches 43. Fund administrator eligible assets 44. Risk analysis and capital adequacy assessment process 45. Own funds plan 46. Wind down plan PART 6 Client Asset Requirements 47. Interpretation Chapter 1 General Requirements 48. Prior approval of the Bank Chapter 2 Segregation Requirements 49. Segregation 50. Holding and depositing client funds 51. Holding and depositing client financial instruments Chapter 3 Designation and Registration Requirements 52. Registration of client financial instruments 53. Designation 54. Funds facilities agreement 55. Financial instruments facilities agreement 56. Verification and third party confirmations Chapter 4 Reconciliation Requirements 57. Reconciliation Chapter 5 Calculation Requirements 58. Calculation Chapter 6 Client disclosure and Consent Requirements 59. Information to be provided to clients in the terms of business 60. Client assets key information document 61. Statement of client financial instruments or client funds 62. Credit institutions – notification to clients 63. Client consent requirements 64. Collateral margined transactions 65. Securities financing transactions 66. Use of client financial instruments 67. Use of title transfer collateral arrangements 68. Termination of title transfer collateral arrangements 69. Prime brokerage statement of client assets 70. Prime brokerage client asset annex Chapter 7 Risk Management Requirements 71. Client asset oversight 72. Client asset management plan Chapter 8 Client Asset Examination Requirements 73. Client asset examination Chapter 9 Outsourcing, Record-Keeping and Reporting Requirements 74. Outsourcing requirements 75. Record keeping – general requirements 76. Reporting requirements Chapter 10 Miscellaneous 77. Application of provisions 78. General Reporting Requirements for Credit Institutions PART 7 Investor Money Requirements 79. Interpretation Chapter 1 General Requirements 80. General requirements and segregation 81. Holding and depositing investor money 82. Designation 83. Investor money facilities agreement 84. Verification and third party confirmations 85. Reconciliation 86. Daily calculation Chapter 2 Risk Management Requirements 87. Risk management 88. Investor money management plan 89. Investor money examination Chapter 3 Outsourcing, Record-keeping and Reporting Requirements 90. Outsourcing requirements 91. Record-keeping — general requirements 92. Reporting requirements PART 8 Market Operators 93. Interpretation 94. General capital requirement framework 95. Basic capital requirement 96. MORCAAP amount 97. Systemic capital add-on 98. MORCAAP—Internal assessment of capital required in stressed market conditions 99. MORCAAP—Capital required for orderly wind down 100. MORCAAP—Board approval 101. MORCAAP—Capital add-ons 102. MORCAAP—Documentation and submission to the Bank 103. Capital requirement framework report 104. General liquidity requirement 105. Liquid financial assets PART 9 Revocations and Saver 106. Revocations 107. Saver SCHEDULE Reporting Requirements

In exercise of the powers conferred on the Central Bank of Ireland (the “Bank”) by section 48 of the Central Bank (Supervision and Enforcement) Act 2013 (No. 26 of 2013) (the “Act”), the Bank, having consulted the Minister for Finance and the Minister for Enterprise, Trade and Employment in accordance with section 49 (1) of the Act, hereby makes the following regulations:

PART 1

PRELIMINARY AND GENERAL

Citation and commencement

1. (1) These Regulations may be cited as the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2023.

(2) Subject to subsection (3), these Regulations shall come into operation on 1 July 2023.

(3) Part 6 of these Regulations shall come into operation on 1 January 2024 to the extent that it applies to credit institutions.

Interpretation

2. (1) In these Regulations—

“Act of 1971” means the Central Bank Act 1971 (No. 24 of 1971);

“administration services” means services pertaining to the administration of an investment fund including, but not limited to, the following:

(a) the performance of valuation services;

(b) fund accounting services;

(c) acting as a transfer agent or a registration agent for an investment fund;

“AIF” has the same meaning as is assigned to an “alternative investment fund” in Regulation 5(1) of the European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013);

“AIFM Regulations” means the European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013);

“applicable accounting framework” means the accounting standards to which the investment business firm is subject;

“Bank” means the Central Bank of Ireland;

“calendar month end” means the last day of the month;

“calendar quarter end” means the following in any year:

(a) 31 March;

(b) 30 June;

(c) 30 September;

(d) 31 December;

“Capital Requirement Regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 1;

“chain outsourcing” means outsourcing where the outsourcing service provider subcontracts elements of the outsourced administration services to a subcontractor and “chain outsourced” shall be construed accordingly;

“client assets” means client funds and client financial instruments;

“collateral margined transaction” means a transaction effected by an investment business firm for a client relating to an investment instrument under the terms of which the client will, or may, be liable to make a deposit of cash or give collateral, either at the outset or subsequently, in order to secure performance of an obligation which the client may have to perform when the transaction falls to be completed or upon the earlier closing of the client’s position with such investment instruments;

“CRD Regulations” means the European Union (Capital Requirements) Regulations 2014 (S.I. No. 158 of 2014);

“deferred tax assets” has the same meaning as under the applicable accounting framework;

“deferred tax liabilities” has the same meaning as under the applicable accounting framework;

“director” with respect to an investment business firm has the meaning assigned to it in section 2 (1) of the Investment Intermediaries Act 1995 (No. 11 of 1995);

“distributions” means the payment of dividends or interest in any form;

“eligible custodian” means—

(a) a person whose authorisation from the Bank, or an authority in any other jurisdiction that performs a function similar to the functions performed by the Bank, includes the safekeeping and administration of financial instruments on behalf of clients, including custodianship and related services such as cash management or collateral management, or

(b) a credit institution;

“final NAV” means a net asset value calculated for the purposes of dealing in an investment fund, provided to investors, published or otherwise released to the market by the fund administrator or its outsourcing service provider;

“financial accounts” means annual audited accounts and management accounts for the purposes of financial control and management information;

“financial sector entity” has the meaning assigned to it in point (27) of Article 4(1) of the Capital Requirement Regulation;

“fund administrator” means an investment business firm which has been authorised by the Bank and appointed to provide administration services to investment funds;

“fund service provider” means a person who is:

(a) authorised pursuant to section 10 of the Investment Intermediaries Act 1995 to carry out:

(i) the administration of collective investment schemes or fund accounting services or acting as a transfer agent or...