1 Legal & Regulatory
1.1 UCITS Update
There have been a number of developments over the quarter:
Revised guidance on the use of financial indices
On 8 October 2018 the Central Bank of Ireland ("Central Bank") published updated guidance on the use of financial indices by UCITS. It clarifies its requirements and introduces a certification process regarding the use of financial indices by UCITS.
UCITS - review process
On 9 October 2018 the Central Bank advised of its updated review processes for UCITS and RIAIFs which simplify authorisation procedures and, in some cases, eliminate a review period of several weeks.
For more information see our client update, Improvements to Central Bank of Ireland Review Process for UCITS and RIAIFs
Central Bank Q&A
On 19 November 2018 the Central Bank published the 24th edition of the Central Bank's UCITS Q&A. One Q&A is updated and one added to address (i) the ability to establish unlisted share classes in an exchange traded fund or ETF; and (ii) the possibility of having different dealing cut-off times for hedged and unhedged share classes in an ETF.
Depositary safekeeping duties
Article 22a(3)(c) of the UCITS Directive 2009/65/EC requires that where a depositary delegates safe-keeping functions to third parties (custodians), the assets also need to be segregated at the level of the delegate. Delegated Regulation (EU) 2016/438 on safe keeping duties of depositaries details how this obligation is to be fulfilled.
On 19 November 2018 Delegated Regulation 2018/1619 amending Delegated Regulation (EU) 2016/438 on safekeeping duties of depositaries came into force. It will apply from 1 April 2020 and sets out further requirements where custody of UCITS clients' assets is delegated to a third party.
Closet indexing UCITS funds
On 4 December 2018 the Central Bank announced that it had begun analysis on 2000-plus Irish domiciled UCITS that report to be actively managed with supervisory follow-up where indications of 'closet indexing' are found. The objective of this review to ensure investors are not misled or misinformed about their investments in Irish domiciled funds.
1.2 AIFMD Update
There have been a few recent developments in relation to Directive 2011/61/EU ("AIFMD"):
On 4 October 2018 the European Securities and Markets Authority ("ESMA") added a new Q&A clarifying the application of AIFMD notification requirements with regard to alternative investment fund managers ("AIFMs") managing...