Central Bank Consultation Paper on Depositary Duties
The Central Bank has published a consultation paper which considers the possibility of fund administrators providing depositary services to a non-EU AIF. To address the potential conflict of interest which may arise, it is proposed that the AIF Rulebook be amended to provide that where a fund administrator provides both administration and depositary services to the same non-EU AIF, it shall:
- Functionally and hierarchically separate the depositary services and the administration services by carrying out the depositary services through a separate subsidiary
- Require the individual responsible for managing the subsidiary to report directly to an individual at a senior level within the parent fund administrator
- Advise the Central Bank of the reporting structure which it has put in place
The consultation closes on 13 May 2014.
First reporting dates for AIFMs
The Central Bank has published details of the first reporting dates for AIFMs. The first submission date depends on whether the AIFM’s frequency of reporting arises quarterly, semi-annually or annually. For AIFMs reporting quarterly and semi-annually, 30 June 2014 is the expiry of the first reporting period. For those reporting annually, the first reporting period expires on 31 December 2014. AIFMs have been given an extended period for the submission of their first report (up to ten weeks for AIFMs reporting quarterly and semi-annually). For subsequent reporting periods, the submission date is the last day of the month following the reporting period end.
Central Bank Guidance related to AIFs and their Service Providers
The Central Bank has published revised guidance relating to third party approvals and the fund authorisation processes. Specified investment managers or sub-investment managers (UCITS management companies, investment firms or credit institutions authorised under MiFID to provide portfolio management and externally-appointed AIFMs authorised under AIFMD) will not usually be subject to an additional regulatory review process by the Central Bank. Firms which are not one of the foregoing entities will only be considered where the competent authority in the home jurisdiction of the manager has signed a memorandum of understanding with the Central Bank in accordance with AIFMD. Where the firm is regulated in a jurisdiction not considered to date by the Central Bank, it must be demonstrated that the regulatory regime for asset managers in the relevant jurisdiction is comparable to the model of prudential regulation applicable to those firms listed above.
8th Edition of Central Bank AIFMD Q&A
The Central Bank has published the 8th edition of its AIFMD Q&A. Two new questions have been added. The Q&A now confirm that an entity authorised as an AIFM may not be authorised under MiFID but may be authorised to carry out “management of portfolios in accordance with mandates given by investors on a discretionary, client-by-client basis”. Therefore, an AIFM may manage AIFs and managed accounts. Also, where an AIFM proposes to appoint a delegate investment manager and this delegate is not subject to regulation, such proposals will be assessed by the Central Bank on a case by case basis.
ESMA Q&A on the application of AIFMD
ESMA has published an updated version of its Q&A on the application of AIFMD. The first version of the Q&A was published on 17 February 2014 and ESMA intends that the Q&A will be continually edited and updated as and when new questions are received.
The updated Q&A principally address the reporting obligations to national competent authorities under AIFMD. The updated Q&A address the following:
- The inclusion of repurchase transactions as financing operations for the purpose of AIFMD reporting obligations
- The mechanics for calculating the global exposure and the breakdown of investment strategies of an AIF
- The methodology for calculating the percentage of market value of securities traded on regulated markets and OTC markets
- The mechanism for calculating the percentage of trade volumes for derivatives traded on regulated markets and OTC markets
- The final reporting date for an AIF in liquidation
- The manner in which AIFMs should report information on the liquidity portfolio and investor liquidity
- The relevant reporting language for AIFMs
The purpose of the Q&A is to promote common supervisory approaches and practices in the application of AIFMD and its implementing measures. The Q&A is aimed at competent authorities but is also intended to assist AIFMs by clarifying the content of the AIFMD rules, rather than creating an extra layer of requirements.
European Parliament requests additional time to examine Delegated Regulation
In December 2013 the European Commission adopted a Delegated Regulation which determines whether an AIFM is an AIFM of an open-ended and/or closed-ended AIF. At the request of the European Parliament, the initial period for examining this delegated act has been extended by a further three months.
Contributed by Vincent Coyne