Asset Management update - January 2016

ESMA updates to AIFMD Q&A

The European Securities and Markets Authority (ESMA) has published a further updated version of its Alternative Investment Fund Managers Directive (AIFMD) Q&A paper. The Q&As were amended to address a query on depositaries and whether the depositary liability regime applies to those assets for which a depositary has safe-keeping duties on a look-through basis. This is of particular interest in the context of funds or master-feeder structures. Find out more


UCITS V Level II Regulation

The European Commission (EC) published the first official draft of the UCITS V Level II Regulation (the Regulations). The draft Regulations will implement UCITS V which will come into force on 18 March 2016. The draft Regulation sets out more detailed requirements on the UCITS V amendments affecting depositaries. Find out more


FASB issues new guidance on the recognition and measurement of financial instruments

On 5 January 2016, The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organisations and employee benefit plans that hold financial assets or owe financial liabilities. Find out more


Prepare for SEC proposed rules: Liquidity risk management

With a mid-January due date for comments on the SEC’s proposed rules, open-end mutual funds and Exchange-Traded Funds (ETFs) and their boards should get ready by reviewing their liquidity risk management policies and programs. The rules are designed to reduce risks associated with large redemption obligations in distressed or less liquid markets. They would require funds to adopt formal liquidity risk management programs. Comments on the proposed rules must be received by the SEC by 13 January 2016. Find out more


AML Health Check – Irish funds sector. Is surgical intervention needed or not?

On 18 November the Central Bank issued its findings following a detailed review of the Irish Funds Sector. The prognoses wasn’t great and confirms our understanding that AML will continue to be under the spotlight, specifically for this industry sector, for the foreseeable future. Find out more


Case alert: Fiscale Eenheid X

This is the latest judgement from the CJEU in connection with what does and does not constitute a ‘special investment fund’ for VAT purposes. The judgment will be of interest to funds invested in property. Provided that the fund is a pooled fund where the investors bear the investment risk and, provided the fund is subject to state supervision, it will be regarded as a special investment fund.

Central Bank publishes programme of themed inspections in Markets Supervision 

The Markets Supervision Directorate of the Central Bank of Ireland has published its programme of themed-inspections for 2016. These inspections reflect a number of supervisory priorities for 2016 and anticipate areas of emerging risk. 

The planned themed-inspections, which supplement day-to-day supervisory activities, for 2016 are:

  • outsourcing arrangements - inspection of service level agreements and operational arrangements with outsourcing providers for investment firms, fund managers and fund service providers;
  • AIFM programme of activities - review of AIFMs adherence to their programme of activity;
  • risk function - focus on the risk culture within firms including governance arrangements, risk ownership and responsibility.
  • investment funds - analysis of the production costs of investment funds;
  • financial indices - review of the use of financial indices as eligible investments for UCITS investment funds;
  • director time commitments - continued focus on various issues with director time commitments;
  • client assets - focused review of Client Asset Management Plans for Investment Firms;
  • information technology risk - focus on resilience of firms’ IT systems;
  • suitability - review of the suitability assessment of clients;
  • conduct - examination of the information provided to clients on an on-going basis;
  • hedging arrangements - review of hedging arrangements at share class level for investment funds; and
  • market integrity - review of the practices of firms when dealing with insider information and their compliance with market abuse regulations.