Central Bank Markets Update - Issue 6

On 4 August 2017 the Central Bank of Ireland published its latest Markets Update which includes;

• the first edition of the Prospectus Regulatory Framework Q&A which updates and replaces the Frequently Asked Questions on the Prospectus Regulation previously published by the Central Bank;
• the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2017- SI 344 of 2017 (‘Central Bank UCITS (Amendment) Regulations 2017’);
• Central Bank UCITS Q&A which includes new questions ID 1079 - ID 1083 relating to the Central Bank UCITS (amending) Regulations 2017 and ID 1084 relates to the governing law of management company agreements;
• updated UCITS Financial Derivative Instruments and Efficient Portfolio Management Guidance which includes an additional provision on disclosure requirements for financial derivative instruments in periodic reports;
• consultation on the Protection of Retail Investors in relation to the Distribution of CFDs;
• Transparency (Directive 2004/109/EC) (Amendment) Regulations 2017 came into operation on 1 August 2017 which transpose Article 6 of Directive 2004/109/EC (as amended) by introducing a requirement for extractive industry issuers and logging issuers to prepare an annual report on payments made to governments; and
• an update on industry preparedness for MiFID II and regulatory implications stemming from Brexit - Michael Hodson, Director of Asset Management Supervision which includes comment on the recent ESMA opinions on Investment Management, Investment Firms and Secondary Markets.

ESMA publishes an opinion on asset segregation and applying depositary delegation rules

The European Securities and Markets Authority (ESMA) has published an opinion to the European Commission, the Council and the Parliament (EU institutions) under Article 34 of the ESMA Regulation.

The opinion sets out suggestions to the EU institutions for possible clarifications of the legislative provisions under both Directive 2011/61/EU (AIFMD) and Directive 2009/65/EC (UCITS) relating to:

1. the asset segregation requirements in case of delegation of safe-keeping duties by the appointed depositary of a fund (UCITS or AIF); and
2. the application of depositary delegation rules to CSDs.

The purpose of the opinion is twofold:

1. to provide an EU framework with strong client asset protection, especially in insolvency, for the safe-keeping of assets which are, in accordance with both AIFMD and UCITS Directive, required to be held in custody, and
2. to provide clarification in the AIFMD and UCITS Directive regarding the application of the relevant depositary rules in the case of CSDs, ensuring a consistent approach across the EU.

The opinion is the final step of the work on these topics which began with the consultation paper (ESMA/2014/1326) published on 1 December 2014 and was followed by the Call for Evidence (ESMA/2016/1137) published on 15 July 2016.

The UK FCA publishes a final report on Asset Management Market Study

The FCA has issued its much anticipated Final Report on the UK asset management sector, presenting its principal findings and proposing a wide-ranging ‘package of remedies’ to address the concerns it has identified and to increase the efficiency and competitiveness of the UK market. Find out more.

• prospectus regulatory framework Q&A;
• Central Bank UCITS Q&A; and
• industry preparedness for MiFID II and regulatory implications stemming from Brexit.