Investment Funds Legal & Regulatory Update, March 2019

Author:Mr Kevin Murphy, Tara O'Reilly, Sarah Cunniff, Dara Harrington, Cormac Commins, Ian Dillon, Siobhan McBean and Audrey Giles
Profession:Arthur Cox

As reported in our February update, a number preparations are underway at EU, UK and Irish level for a potential "nodeal" Brexit. With the crucial "meaningful vote" on the withdrawal agreement between the UK and the EU scheduled for March 12, we consider some recent legal and regulatory developments of relevance in the event that the UK leaves the EU without a deal in place.


Issue 3 of the Central Bank's Markets Update (published on 7 March) contains a number of Brexit related clarifications. These include a Notice of Intention that, in the event of a no-deal Brexit, the Central Bank will consider whether UK UCITS, which will become UK AIFs at that point, should be included as a category of eligible investment for UCITS and retail AIFs. The Central Bank notes that while this is under consideration that it will not adopt a default position that they are ineligible. However, in the case of UCITS, any investment in UK AIFs must fall within with the aggregate limit of 30% for investments in all AIFs.

MiFID investment firms are eligible OTC derivative counterparties for Irish UCITS and retail AIFs. In the event of hard-Brexit, UK authorised investment firms, as non-EU country non-banking entities would not be eligible OTC counterparties for Irish UCITS and/or retail AIFs. Again, the Central Bank will not immediately determine these entities to be ineligible counterparties while it decides whether to include them as an eligible category of OTC derivative counterparty.

The update also clarifies that the Multilateral Memoranda of Understanding that were agreed between European securities regulators and the FCA on 1 February 2019 facilitate delegation or outsourcing arrangements between Irish UCITS Management Companies/AIFMs/MiFID Firms and UK entities. Additionally, the AIFMD Q&A has been updated to clarify that QIAIFs with UK AIFMs (which become non-EU AIFMs) are subject to the full AIFMD depositary regime including the AIFMD depositary liability provisions (ID #1129).


On 6 March 2019, the Irish Government's omnibus Bill for a no-deal Brexit - the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill (the "Bill") - was passed by the Irish parliament (Dáil) and will go through the Irish senate (Seanad) in the week commencing 11 March.

The Bill is intended to be consistent with and complementary to the EU's preparations for the UK's withdrawal from the EU. Part 7 of the Bill, which contains 17 parts in all, introduces legislative amendments to support the implementation of the European Commission's temporary equivalence decision with regard to UK authorised central securities depositories (for more information, please see below) and to extend the protections in the Settlement Finality Directive to Irish participants in relevant non-EU country domiciled settlement systems (for more information please see our recent Derivatives Group briefing here).


On 8 February, the Data Protection Commission published guidance on transfers of personal data from Ireland to the UK in the event of a 'No-Deal' Brexit'. The guidance includes...

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