Central Bank Issues A Feedback Statement On Consultation Paper CP 84, An Updated Q&A On AIFMD And A New Q&A On Investor Money Regulations

Author:Mr Kevin Murphy, Sarah Cunniff, Dara Harrington and Adrian Mulryan
Profession:Arthur Cox

On 5 October 2015, the Central Bank published:

a feedback statement on its consultation paper CP 84; an updated AIFMD Q&A; and a new Q&A on the Investor Money Regulations. The purpose of this briefing is to summarise the main details of each of these publications.


In July 2014 the Central Bank published its consultation paper CP 84 relating to the adoption of ESMA's revised Guidelines on ETFs and other UCITS issues. The consultation focused on the ability in the revised ESMA Guidelines for all UCITS to derogate from the 20% diversification requirement for collateral, where the collateral consists of securities issued or guaranteed by an EU member state ("Member State") or one or more of its local authorities, a non-EU country or a public international body to which one or more Member States belong (each, a "State Issuer").

The Central Bank raised concerns in its consultation about whether all UCITS should be able to derogate from the collateral diversification requirement where collateral consisted of securities issued or guaranteed by a State Issuer. In its consultation paper the Central Bank stated that there were strong grounds for limiting the derogation set out in the ESMA Guidelines to UCITS money market funds only. In the context of the issue of the new UCITS Rulebook (which is to take effect on 1 November 2015), the Central Bank has now reached a conclusion on this issue which is addressed in its feedback statement on CP 84. The Central Bank is to implement ESMA's Guidelines in a modified manner to address its concerns.

The conditions for collateral received by a UCITS are now contained in Schedule 3 to the new UCITS Rulebook. The Central Bank will require that the threshold applied by a UCITS in its credit assessment of collateral issuers is the standard which applies to investments by a UCITS money market fund. Where collateral issued or guaranteed by a single State Issuer results in exposure of the UCITS to that State Issuer of more than 20% of NAV the securities must be from at least six different issues and the securities from any single issue must not account for more than 30% of NAV. Where a UCITS intends to be fully collateralised in securities issued or guaranteed by a State Issuer this must be disclosed in the UCITS prospectus.

Where collateral results in exposure to any State Issuer of more than 20% of NAV, the identity of the State Issuer must be included in the prospectus. The Central...

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