S.I. No. 230/2019 - Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019

• (a) the short-term money-market fund has obtained a triple-A rating from an internationally recognised rating agency;

• (b) the responsible person is engaged in the management, or has been engaged in the management, of a triple-A rated money-market fund;

• (c) in circumstances other than those in subparagraph (a) or subparagraph (b), where the responsible person or, where relevant, its delegate, has demonstrated to the Bank (through separate application) that appropriate expertise exists in the operation of this type of Money-Market Fund.

• (3) Where a UCITS is a Short-Term Money-Market Fund which uses the amortised cost valuation methodology, the responsible person of that UCITS shall -

• (a) ensure that, upon appointment and at all times thereafter, the persons responsible for the operation of that UCITS, including under any delegation arrangements, have the necessary expertise;

• (b) carry out a weekly review of discrepancies between the market value and the amortised cost value of its money-market instruments;

• (c) where a discrepancy in excess of 0.3 per cent occurs between the market value and the amortised cost value of the portfolio -

• (i) conduct a daily review, and

• (ii) notify the Bank of that discrepancy and provide to the Bank a description of the action, if any, that will be taken to reduce such discrepancy;

• (d) in its constitutional document, provide -

• (i) for the escalation procedure that is required by paragraph (4); or

• (ii) that a review of the amortised cost valuation vis-à-vis market valuation will be carried out in accordance with the requirements of the Bank.

• (4) For the purposes of the weekly review that is mandated by paragraph (3)(b), the responsible person shall have in place an escalation procedure to ensure that any material discrepancy between the market value and the amortised cost value of a money-market instrument is brought to the attention of personnel who are responsible for the investment management of the UCITS.

• (5) For the purposes of paragraph (4) -

• (a) a discrepancy in excess of 0.1 per cent between the market value and the amortised cost value of the portfolio shall be brought to the attention of the responsible person, and

• (b) a discrepancy in excess of 0.2 per cent between the market value and the amortised cost value of the portfolio shall be brought to the attention of senior management of the responsible person, and to the attention of the depositary.

• (6) A responsible person of a UCITS that is a Short-Term Money-Market Fund, which uses the amortised cost valuation methodology, shall -

• (a) document the occurrence and the outcome of every weekly review, every daily review and every engagement (if any) of the escalation procedure that is set out in paragraph (4),

• (b) undertake and document a monthly portfolio analysis, incorporating stress-testing of the portfolio, to examine portfolio returns under various market scenarios to determine if the portfolio constituents are appropriate to meet pre-determined levels of credit risk, interest rate risk, market risk and investor redemptions.

• (7) A responsible person shall ensure that a UCITS that is a Money Market Fund shall not follow the amortised cost valuation methodology.

European Central Bank reporting requirements

• (a) a monthly return, in accordance with paragraph (2), that shall be provided to the Bank within six business days of the last business day of the month to which it relates, and

• (b) a quarterly return, in accordance with paragraph (3).

• (2) A return prepared for the purposes of paragraph (1)(a) shall -

• (a) consist of aggregated and summarised balance sheet data, and

• (b) break down all components of assets into three general issuer categories

• (i) Irish,

• (ii) other Monetary Union Member States, and

• (iii) the rest of the world.

• (3) A return prepared for the purposes of paragraph (1)(b) shall -

• (a) be prepared, on a quarterly basis, to the end of March, the end of June, the end of September and the end of December,

• (b) be received by the Bank within ten business days of the last business day of the quarter to which it relates, and

• (c) include a more detailed breakdown of the data that is included in the monthly return that is prepared for the purposes of paragraph (1)(a), including a profile of the issuers and the maturity of the assets that the Money-Market Fund holds.

PART 9 GUARANTEED UCITS

General

Legal agreement

• (a) the guarantee shall be evidenced in a contract that is legally enforceable under Irish law before the courts of Ireland, unless it can be demonstrated that the law of another jurisdiction or the existence of a non-exclusive foreign jurisdiction clause is best market practice,

• (b) the responsible person shall satisfy itself, and retain records to demonstrate the basis for that satisfaction, that it is within the legal capacity of the guarantor to enter the guarantee, and

• (c) the guarantee shall not contain any onerous provision in respect of the UCITS that would permit the guarantor to invalidate the guarantee.

• (2) A responsible person shall, in advance of using the word “guaranteed” in the name of a UCITS, provide to the Bank written confirmation from the legal adviser to the UCITS that the guarantee satisfies the conditions set out in paragraph (1).

• (3) The responsible person shall not act as a guarantor for the purposes of this Part.

• (4) For the purposes of Regulation 93, the guarantor must be -

• (a) an entity of substance and good standing, and

• (b) a credit institution with paid-up share capital in excess of €100 million which is of a type that is mentioned in Regulation 7.

Disclosure

• (a) the legal name and any business or trading name of the guarantor;

• (b) the obligations of the UCITS under the guarantee, including detail on the cost of the guarantee;

• (c) the nature, timing and terms of the guarantee;

• (d) a warning to the effect that any performance of the guarantee is dependent on the solvency of the guarantor at the relevant time;

• (e) a clear description of the upside limitation as well as the downside protection, sufficient for an investor to make an informed judgement about the practical and economic value of the guarantee;

• (f) where relevant, the impact on an investor who sells their units prior to the maturity of the guarantee.

PART 10 CROSS-BORDER NOTIFICATION OF UCITS

Outward marketing: UCITS authorised under the UCITS Regulations

• (2) A responsible person that markets units of a UCITS in a Member State of the EEA or is approved to market the units of a UCITS in a jurisdiction other than a Member State of the EEA shall notify the Bank in the event that the UCITS ceases to market units in that Member State or jurisdiction.

Inward marketing: UCITS authorised in another Member State

• (2) The responsible person of a UCITS that is authorised in another Member State and which markets its units in the State, shall ensure that the prospectus of the relevant UCITS provides the following information for Irish investors:

• (a) details of the facilities agent and of the facilities that are being maintained;

• (b) relevant provisions of Irish tax laws.

• (3) Where -

• (a) a UCITS that is authorised in another Member State and which markets its units in the State ceases such marketing to investors in the State, or

• (b) an umbrella UCITS ceases marketing any sub-fund to investors in the State,

the responsible person of the relevant UCITS or umbrella UCITS shall, in writing, inform the Bank promptly of that fact.

PART 11 MANAGEMENT COMPANIES

Chapter 1 General Requirements

Operating conditions

• (2) A management company shall –

• (a) submit to the Bank -

• (i) annual audited accounts of the management company prepared in accordance with any applicable legislative requirements, and

• (ii) such further information as the Bank may prescribe from time to time, and

• (b) submit the information required in paragraph (a) to the Bank within four months of the year-end.

• (3) A management company shall -

• (a) prepare accounts of the management company twice in every financial year to cover, respectively -

• (i) the first six months of the financial year of the relevant management company, and

• (ii) the full twelve months of the relevant financial year, and

• (b) in each case to which subparagraph (a) applies -

• (i) submit the accounts for the first six months of the financial year to the Bank within two months of the end of the relevant period, and

• (ii) submit the accounts for the full twelve months of the relevant financial year to the Bank within one month of the end of the relevant period, and

• (c) prepare the accounts in subparagraph (a) in the format prescribed by the Bank from time to time.

• (4) Every set of financial accounts specified in paragraphs (2) and (3)(a)(i) shall be accompanied by a minimum capital requirement report.

• (5) A minimum capital requirement report of a management company shall be -

• (a) prepared in the format prescribed by the Bank from time to time, and

• (b) completed by the relevant management company.

• (6) A management company shall maintain an up to date business plan.

• (7) Where, by virtue of an investment in the units of another investment fund, a management company or the delegate of a management company (as the case may be) receives a commission (including a rebated commission) -

• (a) the commission is the property of the investment fund on behalf of which the investment has been made, and

• (b) the management company treats the commission as such property.

Remuneration policies

Capital

• (ii) For the purpose of clause (i) a reference to a depositary in paragraph 4 of Schedule 9 means a UCITS management company.

• (b) For the purpose of subparagraph (a) the expenditure requirement is calculated as one quarter of a management company’s total expenditure taken from the most recent annual accounts.

• (c) For the purpose of subparagraph (b) total expenditure includes all expenditure incurred by a management company less the following items which may be deducted:

• (i) profit shares;

• (ii) bonuses;

• (iii) net losses arising in the translation of foreign currency balances;

• (iv) shared commissions and fees payable which are directly related to commission;

• (v) fees, brokerages and other charges which are paid to clearing houses, exchanges and brokers;

• (vi) fees to tied agents;

• (vii) interest paid on client money;

• (viii) any other non-recurring expenses from non-ordinary activity.

• (2)
• (a) A management company must be in a position to demonstrate its ongoing compliance with the capital requirements of these Regulations and of the UCITS Regulations.

• (b) Where the financial position of a management company changes materially at any time between reporting dates, which would impact on its compliance with its regulatory capital requirements, that management company must -

• (i) notify the Bank immediately, and

• (ii) take any necessary steps to rectify its position.

Organisational requirements: general

• (a) be responsible for the managerial functions of the management company specified in Schedule 10,

• (b) be responsible for making all material decisions that affect the operation and conduct of the business of the management company,

• (c) have the competence to make all material decisions that affect the operation and conduct of the business of the management company.

• (2) The board of a management company shall put in place, and ensure adherence to, the following:

• (a) procedures that are designed to ensure compliance by the management company with every legal and regulatory requirement to which the management company and every investment fund that is under its management are subject;

• (b) procedures that are designed to ensure that every relevant risk pertaining to the management company and to every investment fund that is under its management can and is being identified, monitored and managed;

• (c) procedures to -

• (i) ensure and verify that the investment policy and strategies of every investment fund that is under the management of the management company are complied with, and

• (ii) ensure the availability to the board of the management company of up-to-date information on portfolio performance;

• (d) procedures to ensure that every relevant accounting record (including the annual and half-yearly financial statements) of the management company and of every investment fund that is under the management of the UCITS management fund is maintained properly and is readily available;

• (e) procedures to ensure compliance with regulatory capital requirements of the management company;

• (f) procedures for the effective internal audit of the management company and of every investment fund that is under its management;

• (g) proper accounting policies and procedures in respect of the management company and every investment fund that is under its management;

• (h) procedures to ensure that clear structures are in place for the ongoing monitoring of any work that is delegated to a third party;

• (i) procedures to ensure that any complaint from a unit-holder is addressed promptly and effectively.

Organisational requirements: delegation

• (a) be identified in the business plan of the management company, and

• (b) on a day-to-day basis, monitor and control each of the individual activities of the management company identified in Regulation 101(2) and Schedule 10.

• (2)
• (a) A management company shall put in place a procedure, which must be set out in its business plan, that specifies how the designated person shall monitor and control the managerial function(s) for which he or she has been designated.

• (b) A procedure for the purposes of paragraph (a) shall include a provision for the receipt of reports from delegates for the purpose of monitoring and controlling the managerial function(s) for which he or she has been designated.

• (3) The board of a management company shall, by resolution, adopt a statement of responsibility in relation to the managerial functions and the procedures that will apply in respect of each managerial function.

• (4) Where a management company delegates activities, the management company shall ensure that its business plan provides for the following requirements in relation to the reports that the designated person is to receive and the required action that the designated person is to take in response:

• (a) a list of the types of report that the designated person is to receive from parties who have an involvement, by delegation or otherwise, in the performance of activities relevant to that managerial function and the identity of those parties;

• (b) details concerning the frequency of the reports. These provisions must include procedures for immediate reporting to the designated person of all material issues that arise;

• (c) a policy regarding the circumstances in which action by a designated person is required;

• (d) procedures that the designated person is to follow in the event that he or she is required, by the policy that is referred to in subparagraph (c), to take action, including escalation to the board of the management company.

• (5) A management company shall not designate the same person to perform the investment management managerial function and either the fund risk management managerial function or the operational risk management managerial function.

• (6) A responsibility that is set out in paragraph 40 of Schedule 5 to the UCITS Regulations -

• (a) may not be delegated by the relevant management company, and

• (b) shall be carried out by senior management of the management company.

Code of conduct in relation to collective portfolio management

• (a) to prevent late trading,

• (b) to take into account the risks associated with market timing, and

• (c) for the effective consideration and proper handling of complaints.

• (2) A management company shall ensure that any complainant is notified of his, her or its right to refer the relevant complaint to the Financial Services and Pensions Ombudsman.

Directors

• (2) For the purpose of paragraph (1), a management company shall notify the Bank immediately in writing of the resignation, removal or other termination of the service of a director of that management company.

• (3) No person may, simultaneously, be a director of a management company and of the depositary of any investment fund that the relevant management company manages.

• (4) Subject to paragraph (6), a management company shall have a minimum of 2 directors resident in the State.

• (5) A management company shall conduct a preponderance of its management in the EEA or such other country as the Bank may, taking into account criteria regarding effective supervision, determine and advise by notice published on the website of the Bank. Such determination may be changed, including if circumstances change.

• (6) Where a management company has a PRISM impact rating of—

• (a) Medium Low or above, the management company shall have at least—

• (i) 3 directors resident in the State or, at least, 2 directors resident in the State and one designated person resident in State,

• (ii) half of its directors resident in the EEA or such other country as determined in accordance with paragraph (5), and

• (iii) half of its managerial functions performed by at least 2 designated persons resident in the EEA or such other country as determined in accordance paragraph (5), or

• (b) Low, the management company shall have at least—

• (i) 2 directors resident in the State,

• (ii) half of its directors resident in the EEA or such other country as determined in accordance with paragraph (5), and

• (iii) half of its managerial functions performed by at least 2 designated persons resident in the EEA or such other country as determined in accordance with paragraph (5).

• (7) A management company shall obtain from every proposed appointee to the board of directors details of all concurrent directorships that are held by those persons.

• (8) The board of a management company shall appoint a chairperson on a permanent basis.

• (9) A management company shall ensure that an organisation effectiveness role:

• (a) shall be performed by an independent Chairman or an independent board member, and

• (b) shall not be performed by a person with responsibility in relation to any of the managerial functions specified in Schedule 10.

• (10) In the case of investment companies that have designated a management company, the following shall apply to the investment company and the management company:

• (a) paragraphs (1) to (3) and (7); and

• (b) the requirement to have a minimum of 2 directors resident in the State.

Record-keeping

• (a) a complete record of every transaction into which the management company enters (whether on its own behalf or on behalf of any investment fund that is under its management);

• (b) records that are sufficient to demonstrate compliance with the provisions of the UCITS Regulations, including any conditions that the Bank may, from time to time, impose on the management company or on any investment fund that is under its management and these Regulations.

• (2) Where any record of a management company is not retained by the management company in legible form, the management company shall ensure that such record is capable of being reproduced in a legible form.

• (3) If the Bank terminates the authorisation of a management company, that management company shall retain each of the records of the types referred to in paragraph (1) for the outstanding term of the six year period referred to in that paragraph.

• (4)
• (a) A management company shall put in place and ensure adherence to procedures for the maintenance, security, privacy and preservation of records and working papers of the management company and of every investment fund that is under its management.

• (b) A management company shall ensure that all records and working papers to which paragraph (a) applies are, to the greatest extent reasonably possible, safeguarded against loss, unauthorised access, alteration and destruction.

Management resources

Relationship with the Bank

• (a) engaging in any significant new activity,

• (b) establishing any branch, office or subsidiary, or

• (c) introducing material changes to the management company’s operating model.

• (2) A management company shall notify the Bank in writing immediately that the management company becomes aware of any of the following:

• (a) any breach of the UCITS Regulations or of the Bank’s requirements that are applicable to the relevant UCITS or to the management company (including these Regulations);

• (b) any breach of other Irish legislation which breach may be of prudential concern to the Bank or which may be likely to impact on the reputation or good standing of the relevant UCITS or of the management company;

• (c) the bringing of any legal proceedings by or against the relevant UCITS or the management company;

• (d) the initiation of any criminal prosecution against the relevant UCITS or the management company or against any officer or employee of the management company;

• (e) any situation or event that impacts, or potentially impacts, to a significant extent on the relevant UCITS or on the management company;

• (f) the imposition of any fine, administrative sanction or other penalty on the relevant UCITS or on the management company by any other entity, in the State or in any other jurisdiction, that performs a prudential or regulatory function in respect of financial services entities;

• (g) a visit to the relevant UCITS or to the management company by any entity other than the Bank, in the State or in any other jurisdiction, that performs a prudential or regulatory function in respect of financial services entities.

• (3) A management company shall obtain the prior approval of the Bank to any proposed change to the name of the relevant management company.

• (4) A management company shall inform the Bank in writing promptly of any change to the registered office, postal address, telephone number or email address of the management company.

• (5)
• (a) A management company shall, on its headed paper, state that it is regulated by the Bank.

• (b) A management company shall not include in any material or documents issued by it or on its behalf or by any delegate, any reference to the role of the Bank in relation to the supervision of the management company’s activities that is misleading or inaccurate.

• (6) Where a management company provides management services to an investment fund that is not authorised by the Bank, the management company shall ensure that the prospectus issued by the relevant investment fund does not, in any way, imply that the investment fund is regulated by the Bank.

• (7) Without prejudice to Regulations 51 and 52, where a management company provides fund administration services to an investment fund that is not authorised by the Bank, the management company shall submit to the Bank a quarterly return containing the following aggregate information for each such investment fund that the management company manages, within each base currency category:

• (a) the domicile of each relevant investment fund;

• (b) the number of investment funds;

• (c) the number of unit-holders in each investment fund;

• (d) the total net asset value of all investment funds that the management company manages.

Financial control and management information

• (2) A management company shall notify the Bank in advance of any proposed or anticipated change of auditor of the management company and of the reasons for the proposed change.

Internally-managed investment companies

• (a) Regulation 98(6) and (7);

• (b) Regulation 101;

• (c) Regulation 102;

• (d) Regulation 103;

• (e) Regulation 104 (1) — (9);

• (f) Regulation 105;

• (g) Regulations 107 (3) and (4);

• (h) Regulations 108;

• (i) Schedule 4 of the UCITS Regulations;

• (j) paragraphs 30-32, 34-40 (excluding 40(c)), 41-43, 54-61 and 64 of Schedule 5 to the UCITS Regulations.

Chapter 2 Management Company Passport

Notifications

• (a) establish a branch in another Member State in accordance with Regulation 27 of the UCITS Regulations, or

• (b) under the freedom to provide services, engage in an activity in another Member State in accordance with Regulation 28 of the UCITS Regulations,

the management company shall include, in the programme of operations that is submitted to the Bank, the information that is set out in paragraph (2).

• (2) The information to which paragraph (1) refers is -

• (a) a description of the activities that it is proposed will be undertaken,

• (b) a description of the risk management process which the management company has put in place,

• (c) a description of the procedures and arrangements for the handling of complaints from, and making information available to, investors, and

• (d) in the case of a proposal to establish a branch in accordance with Regulation 27 of the UCITS Regulations, details of the address of the proposed branch and the names of those who will be responsible for the branch.

Assessment: general requirements

• (a) establish a branch in another Member State in accordance with Regulations 27 of the UCITS Regulations, or

• (b) under the freedom to provide services, engage in an activity in another Member State in accordance with Regulations 28 of the UCITS Regulations,

the management company shall review its assessment of -

• (i) the nature, scale and complexity of its business, and

• (ii) the nature and range of services and activities that are undertaken in the course of that business,

in order to determine the impact that establishing a branch or pursuing an activity under the freedom to provide services in accordance with the UCITS Regulations would have on the nature, scale and complexity of its business, and in particular on its organisational structure and resources.

• (2) For the purposes of the assessment required by paragraph(1), a management company shall consider the impact which the establishment of a branch or the provision of activities under the freedom of services in another Member State would have on -

• (a) the corporate governance of the management company,

• (b) the administration function of the management company, and

• (c) the interaction of the management company with the relevant trustee or depositary in the other state or states.

• (3) Where a management company proposes to establish a branch or, under the freedom to provide services, engage in an activity in another Member State, the management company shall specify in the programme of operations that it submits to the Bank -

• (a) how the management company will address any increased strain on its corporate governance due to the increase in the workload and responsibilities of its board of directors, and

• (b) where relevant, the steps that the management company will take to ensure that the delegation of its administration activities to an entity that is not authorised or supervised by the Bank will not interfere with the effective supervision of the management company by the Bank.

Assessment: governance issues

• (2) A management company that is managing a UCITS that is authorised in another Member State shall include in the programme of operations that it submits to the Bank -

• (a) the identity of the employee of the management company, or designated persons, who has expertise concerning the regulatory requirements applicable in the home state of the relevant UCITS,

• (b) a description of how the management company will monitor compliance with regulatory requirements that are applicable in the home state of the relevant UCITS on a day-to-day basis,

• (c) where a UCITS is an investment company, the resources that the management company is putting in place to address the need to have a representative available to travel to the home state of the relevant UCITS to attend and report at board meetings of the relevant UCITS, and

• (d) an analysis of the impact that managing a UCITS that is authorised in another Member State is likely to have on the management company’s minimum capital requirement and how this impact will be addressed.

• (3) A management company shall ensure that it has in place, and utilises, sufficient resources to supervise the services that are provided to every UCITS that is under its management.

Assessment: administrator issues

• (a) ensuring that the Bank has effective access to data related to the delegated functions of the management company;

• (b) ensuring that the Bank has effective access to the business premises of the administrator, where not prohibited by the laws of the jurisdiction in which the administrator is established;

• (c) requiring that the administrator co-operates with the Bank in respect of the functions that the management company delegates to the administrator from time-to-time.

• (2) Where an administrator is located in another Member State, a management company shall, in the programme of operations that it submits to the Bank specify, and adhere to, any additional record-keeping procedures that the management company establishes to address the fact that the records of the administrator are not located in the State.

• (3) A management company shall ensure that the programme of operations that it submits to the Bank addresses how the management company will ensure that, at all times, a person with the requisite detailed knowledge of the day-to-day operation of the UCITS will be available to the Bank.

• (4) A management company shall undertake an annual due diligence assessment of any administrator that the management company engages and which is located in another Member State to ensure a high standard of oversight by the management company over such administrators.

Assessment: depositary issues

• (2) A management company shall, in the programme of operations that it submits to the Bank, specify the steps that it will take to ensure compliance with this Regulation.

PART 12 UCITS DEPOSITARIES

Organisational requirements

• (a) sound and effective administrative and internal control mechanisms,

• (b) complete and accurate records,

• (c) adequate arrangements for ensuring that the employees of the depositary are trained and supervised suitably, adequately and properly, and

• (d) defined procedures to ensure compliance with all applicable laws.

• (2) A depositary which falls within Regulation 35(2)(c) of the UCITS Regulations shall—

• (a) hold its minimum capital requirement in the form of eligible assets pursuant to Schedule 9, and

• (b) be in a position to demonstrate its compliance with the minimum capital requirement throughout the relevant reporting period.

• (3) For the purpose of paragraph (2), “minimum capital requirement” means the capital requirement set out in Regulation 35(4) of the UCITS Regulations.

Governance

• (2) A depositary which falls within Regulation 35(2)(c) of the UCITS Regulations shall have at least two directors that are resident in the State.

Operating conditions

• (2) A depositary shall –

• (a) submit to the Bank -

• (i) annual audited accounts of the depositary prepared in accordance with any applicable legislative requirements, and

• (ii) such further information as the Bank may prescribe from time to time, and

• (b) submit the information required in paragraph (a) to the Bank within four months of the year-end.

• (c) ensure that, when submitted to the Bank in accordance with subparagraph (b), the annual accounts of the depositary are accompanied by the annual audited accounts of every corporate shareholder of the depositary.

• (3) A depositary shall -

• (a) prepare accounts of the depositary twice in every financial year to cover, respectively -

• (i) the first six months of the financial year of the relevant depositary,

• (ii) the full twelve months of the relevant financial year.

• (b) in each case to which paragraph (a) applies:

• (i) submit the accounts for the first six months of the financial year to the Bank within two months of the end of the relevant period, and

• (ii) submit the accounts for the full twelve months of the relevant financial year to the Bank within one month of the end of the relevant period, and

• (c) prepare the accounts in subparagraph (a) in the format prescribed by the Bank from time to time.

• (3) Every set of financial accounts specified in paragraphs (2) and (3)(a)(i) shall be accompanied by a minimum capital requirement report.

• (4) A minimum capital requirement report of a depositary shall be -

• (a) prepared in accordance with Schedule 9, and

• (b) completed by the relevant depositary.

Depositary obligations and restrictions

• (a) paragraph (2) (c) and paragraph (3);

• (b) Regulation 34 of the UCITS Regulations.

• (2) A depositary shall establish and implement written procedures for the purpose of dealing with any breach by the relevant UCITS or by the depositary of any of the following:

• (a) the UCITS Regulations;

• (b) any requirement that the Bank imposes on the relevant UCITS or on the depositary, including these Regulations;

• (c) any provision of the prospectus of the relevant UCITS.

• (3) A depositary shall notify the Bank promptly of any material breach by the UCITS or by the depositary of any requirement, obligation or document to which paragraph (2) relates.

• (4) A depositary shall notify the Bank promptly of any non-material breach by the UCITS or by the depositary of any requirement, obligation or document to which paragraph (2) relates, if the relevant breach is not resolved within four weeks of the depositary becoming aware of that breach.

• (5)
• (a) A depositary shall maintain a written record of every breach by the UCITS or by the depositary to which paragraph (2) relates and of the steps taken to resolve such breaches.

• (b) A depositary shall retain for at least six years every record that it creates or maintains in accordance with subparagraph (a).

• (6) Where a UCITS proposes to invest in another investment fund, the depositary shall -

• (a) ensure that the UCITS has, and implements, adequate procedures for the purpose of ensuring that every underlying investment fund meets the requirements of the UCITS Regulations and of the Bank, including these Regulations, and

• (b) ensure that it reviews the decisions of the management company regularly for the purpose of ensuring that the procedures to which subparagraph (a) refers to have been adopted by the UCITS and are being adhered to.

Depositary subsidiary

• (a) in compliance with the depositaries safe-keeping duties as specified in -

• (i) Regulation 34(4)(a) and (b) of the UCITS Regulations, and

• (ii) Articles 13 and 14 of Commission Delegated Regulation No 438/2016 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries;

• (b) in compliance with its cash monitoring obligations as specified in –

• (i) Regulation 34(3) of the UCITS Regulations, and

• (ii) Articles 9 and 10 of Commission Delegated Regulation No 438/2016 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries to those assets.

Operating conditions

• (a) the relevant management company,

• (b) the relevant administration company, or

• (c) the relevant UCITS investment company.

• (2) The termination of the appointment of a depositary shall only be permitted-

• (a) upon the revocation of the authorisation of a UCITS, or

• (b) upon the appointment of a replacement depositary.

Depositary agreement

Permitted markets

• (b) If a depositary cannot provide custody in accordance with paragraph (a), the depositary must consult with the UCITS to ensure that the relevant exchanges or markets are removed from the list in the UCITS prospectus.

• (2) A depositary shall ensure that a UCITS for which the depositary acts as depositary keeps the list of permitted stock exchanges and markets in the prospectus under review to ensure that the markets meet with all applicable regulatory criteria on an ongoing basis.

Valuation of a UCITS

Dealing in specie

• (2) A responsible person shall only accept redemption for units of a UCITS on an in specie basis where the depositary approves the asset allocation.

Relationship with the Bank

• (2) Where a depositary provides depositary services to an investment fund that is not authorised by the Bank, the depositary shall submit to the Bank, every three months, a return that sets out the following aggregate information for every investment fund that is not authorised by the Bank and to which the depositary provides services, within each base currency category:

• (a) the domicile of each relevant investment fund;

• (b) the number of investment funds;

• (c) the number of unit-holders in each investment fund;

• (d) the total net asset value of each investment fund / of all investment funds to which the depositary provides services.

PART 13 MISCELLANEOUS PROVISIONS

Reporting requirements

Service of notice or other document by the Bank

Records and Compliance

• (2) A responsible person shall, upon being required by the Bank to do so, provide, to the Bank, records evidencing compliance with these Regulations for a period specified by the Bank (up to a maximum period of six years).

• (3) A management company shall keep all of its records in a way that makes them immediately retrievable in or from the State.

Transitional arrangements

• (2) A responsible person shall ensure that a UCITS, which is authorised by the Bank prior to the commencement of this Regulation, complies with Regulation 40(4) 18 months from the date these regulations enter into force, or such later date that the Bank may specify in writing in Iris Oifigiúil.

Disapplication of certain provisions

• (a) in Regulation 2, the definition of WAM and WAL;

• (b) Regulation 6(3)(a);

• (c) Regulations 23 to 25;

• (d) Regulation 84;

• (e) Regulations 88 to 91.

• (2) The Regulations specified in subparagraph (1) shall apply to a UCITS that is a money market fund as defined in Regulation 84 which was authorised by the Bank prior to 20 July 2018 until:

• (a) that UCITS is authorised pursuant to Money Market Funds Regulation, or

• (b) until 21 March 2019.”

• (3) The Regulations specified in subparagraph (1) do not apply to a UCITS that is a short term MMF or a standard MMF, as defined in Article 2(14) and 2(15) of the Money Market Funds Regulation, and which is authorised by the Bank on or after 20 July 2018.

PART 14 REVOCATIONS AND SAVER

Revocations

• (a) The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 [S.I. 420 of 2015];

• (b) The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2016 [S.I. 307 of 2016];

• (c) The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2017 [S.I. 344 of 2017].

Saver

• (a) does not affect any direction given by the Bank, or any investigation undertaken, or disciplinary or enforcement action undertaken by the Bank or any other person, in respect of any matter in existence at, or before, the time of the revocation, and

• (b) does not preclude the taking of any legal proceedings, or the undertaking of any investigation, or disciplinary or enforcement action by the Bank or any other person, in respect of any contravention of an enactment (including anything repealed or revoked by these Regulations) or any misconduct which may have been committed before the time of repeal or revocation.

SCHEDULE 1

Regulation 2(1)

Regulatory Criteria

In respect of a relevant market, the regulatory criteria to which the responsible person shall have regard include the following:

• (a) Regulated

The market must be regulated. Such a market is subject to supervision by an authority or authorities, duly appointed or recognised by the state in which it is located. The authority(ies) should generally have the power to impose capital adequacy rules, to supervise directly members of the market, to impose listing standards, to ensure transparency in dealings and to impose penalties where breaches of rules or standards occur. The clearance and settlement system for transactions should also be regulated and should have acceptable settlement periods;

• (b) Recognised

The market must be recognised or registered by an authority or authorities, duly appointed or recognised by the state in which it is located. Investment in the market by locally based retail investment funds should be permitted by the relevant authorities;

• (c) Operating Regularly

Trading must take place with reasonable frequency and the market should have regular trading hours. The assessment must have regard to liquidity in the market, including the number of members/participants, and the ability of the market to provide fair prices on an on-going basis. Custody arrangements should also be satisfactory, i.e. a depositary must be satisfied that it can provide for the safe-keeping of the assets of an authorised UCITS in accordance with the conditions set down in the UCITS Regulations;

• (d) Open to the Public

The market must be open to the public. The public should have direct or indirect access to the securities traded on the market. The degree to which overseas investors are permitted to invest and any rules which may impede the repatriation of capital or profits must be taken into account;

SCHEDULE 2

Regulation 17

Netting and Hedging

Netting

• (i) Between FDI, if the FDI refer to the same underlying asset, including where the maturity date of the FDI is different, and

• (ii) Between an FDI which has an underlying asset that is a transferable security, money market instrument or a collective investment undertaking and that same corresponding underlying asset.

Hedging

• (i) They do not aim to generate a return;

• (ii) They result in a verifiable reduction of risk at the UCITS level;

• (iii) They offset risk linked to FDI;

• (iv) They relate to the same asset class;

• (v) They are efficient in stressed market conditions.

SCHEDULE 3

Regulation 24(1)

Conditions for Collateral Received by a UCITS

The conditions for the receipt of collateral by a UCITS, to which Regulation 24 refers, are the following:

Collateral received, other than cash, should be highly liquid and traded on a regulated market or multilateral trading facility with transparent pricing in order that it can be sold quickly at a price that is close to its pre-sale valuation. Collateral that is received should also comply with the provisions of Regulation 74 of the UCITS Regulations;

Collateral that is received should be valued on at least a daily basis and assets that exhibit high price volatility should not be accepted as collateral unless suitably conservative haircuts are in place;

Collateral received should be of high quality. The responsible person shall ensure that -

• (i) where the issuer was subject to a credit rating by an agency registered and supervised by ESMA that rating shall be taken into account by the responsible person in the credit assessment process, and

• (ii) where an issuer is downgraded below the two highest short-term credit ratings by the credit rating agency referred to in (i) this shall result in a new credit assessment being conducted of the issuer by the responsible person without delay;

Collateral received should be issued by an entity that is independent from the counterparty. There should be a reasonable ground for the responsible person to expect that it would not display a high correlation with the performance of the counterparty;

• (i) Subject to subparagraph (ii) collateral should be sufficiently diversified in terms of country, markets and issuers with a maximum exposure to a given issuer of 20 per cent of the net asset value of the UCITS. When a UCITS is exposed to different counterparties, the different baskets of collateral should be aggregated to calculate the 20 per cent limit of exposure to a single issuer.

• (ii) A UCITS may be fully collateralised in different transferable securities and money market instruments issued or guaranteed by a Member State, one or more of its local authorities, a third country, or a public international body to which one or more Member States belong. Such a UCITS should receive securities from at least 6 different issues, but securities from any single issue should not account for more than 30 per cent of the UCITS’ net value. UCITS that intend to be fully collateralised in securities issued or guaranteed by a Member State should disclose this fact in the prospectus of the UCITS. UCITS should also identify the Member States, local authorities, or public international bodies or guaranteeing securities which they are able to accept as collateral for more than 20 per cent of their net asset value.

Collateral received should be capable of being fully enforced by the UCITS at any time without reference to or approval from the counterparty.

SCHEDULE 4

Regulation 19

Calculation of Global Exposure using the Value at Risk (VaR) Approach

• (a) calculate the VaR of the UCITS current portfolio, including derivatives;

• (b) calculate the VaR of a reference portfolio;

• (c) verify that the VaR of the UCITS portfolio is not greater than twice the VaR of the reference portfolio in order to ensure a limitation of the global leverage ratio of the UCITS to 2. This limit shall be presented as follows:

• (a) The reference portfolio should be unleveraged and should, in particular, not contain any FDI or embedded FDI, except that -

• (i) a UCITS engaging in a long/short strategy may select a reference portfolio which uses FDI to gain the short exposure, and

• (ii) a UCITS which intends to have a currency hedged portfolio may select a hedged index as a reference portfolio;

• (b) The risk profile of the reference portfolio should be consistent with the investment objectives, policies and limits of the UCITS portfolio;

• (c) If the risk/return profile of a UCITS changes frequently or if the definition of a reference portfolio is not possible, then the relative VaR approach should not be used;

• (d) The process relating to the determination and the ongoing maintenance of the reference portfolio should be integrated in the risk management process and be supported by adequate procedures. Guidelines governing the composition of the reference portfolio should be developed. In addition, the actual composition of the reference portfolio and any changes should be clearly documented.

Absolute VaR approach

VaR approach: Quantitative requirements

• (a) one-tailed confidence interval of 99 per cent;

• (b) holding period equivalent to 1 month (20 business days);

• (c) effective observation period (history) of risk factors of at least 1 year (250 business days) unless a shorter observation period is justified by a significant increase in price volatility (for instance extreme market conditions);

• (d) quarterly data set updates, or more frequent when market prices are subject to material changes;

• (e) at least daily calculation.

VaR approach: Qualitative requirements

• (a) sourcing, testing, maintaining and using the VaR approach on a day-to-day basis;

• (b) supervising the process relating to the determination of the reference portfolio where the UCITS reverts to a relative VaR approach;

• (c) ensuring on a continuous basis that the model is adapted to the UCITS portfolio;

• (d) performing continuous validation of the model;

• (e) validating and implementing a documented system of VaR limits consistent with the risk profile of the UCITS. The risk profile of the UCITS shall be approved by senior management and the board of directors;

• (f) monitoring and controlling the VaR limits;

• (g) monitoring on a regular basis the level of leverage generated by the UCITS;

• (h) producing on a regular basis reports relating to the current level of the VaR measure (including back testing and stress testing) for senior management.

The review shall be documented. Where necessary, the model shall be adjusted.

Documentation and procedures

• (a) the risks covered by the model;

• (b) the model’s methodology;

• (c) the mathematical assumptions and foundations;

• (d) the data used;

• (e) the accuracy and completeness of the risk assessment;

• (f) the methods used to validate the model;

• (g) the back testing process;

• (h) the stress testing process;

• (i) the validity range of the model;

• (j) the operational implementation.

SCHEDULE 5

Regulation 36(1)

Methods of Valuation

The valuation methodology for the purposes of Regulation 36(1) is as follows:

Valuation shall be the closing or last known market price.

Where a security is listed on more than one exchange, the relevant market shall be -

• (a) the exchange that constitutes the main market, or

• (b) the exchange that the responsible person determines provides the fairest criteria in a value for the security.

The value of the security is its probable realisation value which shall be estimated with care and in good faith.

The security shall be either -

• (a) valued by the responsible person,

• (b) valued by a competent person appointed by the responsible person and approved for the purpose by the depositary, or

• (c) valued by any other means, provided that the value is approved by the depositary.

Valuation shall be based on the latest bid price or latest net asset value, as published by the investment fund.

Valuation based on a mid-price or offer price is acceptable if consistent with the valuation policy. A responsible person may, in accordance with paragraph 1 of this Schedule, undertake a valuation based on market prices where the investment fund in which the investment is made is listed on a regulated market.

Value is the nominal or face value plus accrued interest.

Valuation is based on the settlement price as determined by the market where the exchange-traded future or option contract is traded.

If a settlement price is not available the exchange-traded future contract or option contract may be valued in accordance with paragraph 2 of this Schedule.

Where it is not the intention or objective of a responsible person to apply amortised cost valuation to the portfolio of a UCITS as a whole, a money-market instrument within such a portfolio shall only be valued on an amortised basis if the money-market instrument has a residual maturity of less than three months and does not have any specific sensitivity to market parameters, including credit risk.

SCHEDULE 6

Regulation 54(5)

Advertising Standards for Certain UCITS

The advertising standards for the purposes of Regulation 54(5) are the following:

• (a) clear, fair, accurate and not misleading, and

• (b) such that the advertisement can be understood easily and clearly;

• (b) In preparing an advertisement a UCITS shall take into account the fact that the complexities of finance may be beyond the understanding of some people to whom the opportunity being offered will appeal and therefore no advertisement may take advantage of inexperience or credulity;

• (a) whether reinvestment of income is assumed,

• (b) whether account has been taken of the incidence of any taxes or duties and, if it has, how such account has been taken, and

• (c) whether the forecast or projected rate of return will be subject to any deductions other than upon premature realisation or otherwise.

• (a) in the case of a full guarantee, to meet, in full, an investor’s claim under the guarantee, or

• (b) in the case of a partial guarantee, to meet, to whatever extent is stated in the advertisement, the investor’s claim under the partial guarantee;

Where values are guaranteed, sufficient detail must be included in the advertisement to give the reader a fair view of the nature of the guarantee;

“Past performance may not be a reliable guide to future performance”;

• (a) must not be misleading in relation to present prospects of an investment, and

• (b) must indicate the circumstances in which, and the period over which, such experience has been gained, in a way that is fair and representative;

• (a) the purchase or recommendation upon which the assertion is based was made at the time claimed, and

• (b) the present value asserted for the investment corresponds to the price actually obtained for identical items when sold in the open market in the period immediately preceding the advertisement;

No claim to an increase in the value of investments or collectibles should be based upon the performance within a given market of selected items only unless that claim can be substantiated in accordance with paragraphs (a) and (b);

• (a) it is made clear in the advertisement which particular tax or taxes or duty or duties are involved, and

• (b) the advertiser states clearly what liability may arise and by whom it will be paid if it does arise.

• (a) this fact must be explained clearly, and

• (b) the advertisement must make it clear that no undertaking is or can be given that the fiscal system may not be revised with consequent effects upon the return that is offered;

“Income may fluctuate in accordance with market conditions and taxation arrangements”;

“Changes in exchange rates may have an adverse effect on the value price or income of the product”;