The Central Bank of Ireland (the "Central Bank") has released an update to its UCITS Notices and certain UCITS Guidance Notes.
This update reflects changes being made to align the UCITS Notices and Guidance Notes with measures contained in the recent ESMA Guidelines on ETFs and other UCITS issues1(the "ESMA Guidelines"). The ESMA Guidelines were published on 18 December 2012 and will become effective (albeit with transition arrangements for certain aspects) on 18 February 2013. This update reflects the intention of the Central Bank to require Irish authorised UCITS to fully comply with the ESMA Guidelines.
Key changes in the UCITS Notices and Guidance Notes are summarised below.
UCITS 2/Guidance Note 4/07 Revised to apply a more extensive range of organisational requirements contained in UCITS 2 to UCITS organised as self-managed investment companies ("SMICs") from 1 July 2013. Consistent changes have also been made to section C of Guidance Note 4/07. UCITS 6 New prescribed prospectus disclosure requirements in line with the ESMA Guidelines, are as follows: (i) disclosure on the policy for the use of collateral; (ii) conflicts of interest, risk and fees disclosure regarding the use of securities lending and other efficient portfolio management ("EPM") techniques; (iii) specific detailed disclosure where total return swaps are utilised; (iv) specific disclosure for index tracking funds and leveraged index tracking funds relating to the index replication method, anticipated tracking error, factors contributing to tracking error and (where appropriate) leverage disclosure. UCITS 8 New prescribed annual and semi-annual report requirements in line with the ESMA Guidelines, regarding: (i) the use of derivatives and EPM techniques; (ii) type and amount of collateral received in relation to derivatives and EPM techniques; (iii) for index tracking funds, the actual tracking error. UCITS 10/Guidance Note 3/03 Revisions to apply consistent criteria to collateral received, whether in relation to derivatives or EPM techniques, in line with the ESMA Guidelines. Provision that risk exposure from EPM techniques as well as derivatives must be captured in counterparty risk calculation. Consistent changes have also been made to Guidance Note 3/03. UCITS 12 Revised comprehensively in line with the ESMA Guidelines in relation to eligible collateral and reinvestment of collateral. Notably, the provision previously contained in UCITS 12, requiring...