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) state that the difference at any one time between the sale and repurchase price of a unit in the UCITS means that the investment should be viewed as medium term to long term, and

• (b) refer to the impact of a redemption charge.

SCHEDULE 7

Regulation 82(1)

Additional Information to be Included in the Annual Report

The information to which Regulation 82(1) refers is the following:

• (a) money-market instruments;

• (b) investment funds;

• (c) deposits with credit institutions;

• (d) FDI.

• (a) UCITS and AIFs,

• (b) Deposits,

• (c) FDI dealt in on a regulated market, and

• (d) OTC derivatives;

• (a) the types of FDI concerned, including-

• (i) OTC derivatives,

• (ii) the underlying exposures, and

• (iii) where relevant, the type and amount of collateral received to reduce counterparty exposure;

• (b) the purposes underlying the use of the various instruments, together with the attendant risks, for the purpose of enabling a unit-holder to assess the nature of those instruments;

• (b) For the purposes of subparagraph (a), information on open option positions shall include -

• (i) the strike price,

• (ii) the final exercise date, and

• (iii) an indication of whether or not such positions are covered;

• (c) Counterparties to OTC derivatives shall be identified in the annual report, in the same section in which open financial derivative positions are identified;

Alternatively, where the volume of positions is high, the portfolio statement can be prepared on a condensed basis listing individual open financial derivative positions representing 5% or more of net assets individually and any other open financial derivative positions that individually represent less than 5% of net assets on an aggregated basis analysed by the following groupings:

• (a) each derivative type;

• (b) each derivative type by currency and maturity;

• (c) each derivative type by industry sector;

• (d) each derivative type by geographic region.

For each derivative type within the respective groupings the leverage generated by those derivatives must be provided. The overall leverage for each grouping should be consistent.

The leverage approach used for this purpose is to be consistent with the approach used by the UCITS per paragraph 12 of Schedule 9 to the UCITS Regulations and in accordance with that outlined in the UCITS Risk Management Process (i.e. Sum-of-the-Notionals or Commitment approach).

Open financial derivative positions representing less than 5% of net assets should be aggregated in so far as open derivatives in an asset and liability position are not offset and in the case of OTC derivatives they are held with the same counterparty.

Where a condensed portfolio statement is presented, the UCITS must make the full portfolio statement available to investors on demand free of charge;

• (a) the exposure obtained through efficient portfolio management techniques and instruments;

• (b) the identity of the counterparty to the relevant efficient portfolio management techniques and instruments;

• (c) the type and amount of collateral received by the UCITS to reduce counterparty exposure;

• (d) the revenues arising from efficient portfolio management techniques and instruments for the entire reporting period, together with the direct and indirect operational costs and fees incurred;

• (a) information regarding the level of leverage employed during the relevant period;

• (b) For the purposes of paragraph (a) -

• (i) leverage is to be calculated as the sum of the notionals of the derivatives used, and

• (ii) the calculation in subparagraph (i) may be supplemented with leverage calculated on the basis of a commitment approach;

• (a) information on the size of the tracking error at the end of the period under review and an explanation of any divergence between the anticipated and realised tracking error for the relevant period,

• (b) information on the annual tracking difference between the performance of the UCITS and the performance of the index tracked, and

• (c) an explanation for the annual tracking difference;

SCHEDULE 8

Regulation 83(1)

Additional Information to be Included in the Half-Yearly Report

The information to which Regulation 83(1) refers is the following:

• (a) money-market instruments;

• (b) investment funds;

• (c) deposits with credit institutions; and

• (d) FDI;

• (a) UCITS and AIFs,

• (b) deposits,

• (c) FDI dealt in on a regulated market, and

• (d) OTC derivatives;

• (a) Identifying -

• (i) the types of FDI concerned, including OTC derivatives,

• (ii) the underlying exposures, and

• (iii) where relevant, the type and amount of collateral received to reduce counterparty exposure, and

• (b) indicating the purposes underlying the use of the various instruments, together with the attendant risks, for the purpose of enabling a unit-holder to assess the nature of those instruments;

• (b) For the purposes of subparagraph (a), information on open option positions shall include -

• (i) the strike price,

• (ii) the final exercise date, and

• (iii) an indication of whether or not such positions are covered;

• (c) Counterparties to OTC derivatives shall be identified in the half-yearly report, in the same section in which open financial derivative positions are identified;

Alternatively, where the volume of positions is high, the portfolio statement can be prepared on a condensed basis listing individual open financial derivative positions representing 5% or more of net assets individually and any other open financial derivative positions that individually represent less than 5% of net assets on an aggregated basis analysed by the following groupings:

• (a) each derivative type;

• (b) each derivative type by currency and maturity;

• (c) each derivative type by industry sector;

• (d) each derivative type by geographic region.

For each derivative type within the respective groupings the leverage generated by those derivatives must be provided. The overall leverage for each grouping should be consistent.

The leverage approach used for this purpose is to be consistent with the approach used by the UCITS per paragraph (12) of Schedule 9 to the UCITS Regulations and in accordance with that outlined in the UCITS Risk Management Process (ie Sum-of-the-Notionals or Commitment approach).

Open financial derivative positions representing less than 5% of net assets should be aggregated in so far as open derivatives in an asset and liability position are not offset and in the case of OTC derivatives they are held with the same counterparty.

Where a condensed portfolio statement is presented, the UCITS must make the full portfolio statement available to investors on demand free of charge;

• (a) the exposure obtained through efficient portfolio management techniques and instruments,

• (b) the identity of the counterparty to the relevant efficient portfolio management techniques and instruments,

• (c) the type and amount of collateral received by the UCITS to reduce counterparty exposure, and

• (d) the revenues arising from efficient portfolio management techniques and instruments for the entire reporting period, together with the direct and indirect operational costs and fees incurred;

SCHEDULE 9

Regulation 115

Minimum Capital Requirement Report

The requirements for the preparation of a minimum capital requirement report are the following:

In this Schedule, unless the context otherwise requires, “minimum capital requirement” means the capital requirement set out in Regulation 35(4) of the UCITS Regulations.

The following conditions apply to eligible capital contributions and to subordinated loan capital (both perpetual and redeemable):

a. the prior approval of the Bank must be obtained in respect of the inclusion of the eligible capital contribution or subordinated loan capital in the own funds for capital adequacy purposes;

b. subordinated loan capital may not be incorporated in the calculation of the initial capital requirement;

c. the Bank must be provided with documentation, including a copy of the original bank statement showing receipt of the relevant funds, that the depositary has received the eligible capital contribution or subordinated loan capital or both (as the case may be);

d. the Bank may require the auditor of the depositary to confirm the receipt of additional capital;

e. the depositary must use (as the case may be) the template capital contribution agreement, perpetual loan subordination agreement or loan subordination agreement (for redeemable subordinated loan capital), each without amendment, that the Bank may specify and make available, including on the Bank’s website, from time to time;

Without prejudice to paragraph 4 of this Schedule, the following conditions also apply to redeemable subordinated loan capital:

• (a) the extent to which redeemable subordinated loan capital ranks as own funds, for the purposes of calculating own funds, will be reduced on a straight-line basis over the five years immediately preceding the repayment date;

• (b) the qualifying amount of redeemable subordinated debt is calculated as follows:

Remaining term to maturity________

---

Gross Amount_____

Less Amortisations___

= Qualifying Amount___

• (a) An eligible asset must be -

• (i) accessible easily,

• (ii) free from any lien or charge, and

• (iii) maintained outside the depositary’s group.

• (b) The eligible assets shall be held in an account that is separate to the account that is, or the accounts that are, used by a depositary for the day-to-day running of its business.

• (c) The Bank must be provided with a recent written statement, from a source independent of the depositary, evidencing the location of every eligible asset.

• (d) Eligible assets are calculated as the value of total assets of the depositary less the aggregate value of the items of the depositary that are set out in clauses (i) to (xii) -

• (i) fixed assets,

• (ii) intangible assets,

• (iii) cash or cash equivalents held with group companies,

• (iv) debtors,

• (v) bad debt provisions,

• (vi) prepayments,

• (vii) intercompany amounts (gross),

• (viii) loans issued,

• (ix) investment funds that are not daily dealing,

• (x) investments in any investment fund that is promoted by a group company of the depositary or to which a group company of the depositary provides services,

• (xi) any other asset that is not accessible easily and which is not included in clauses (i) to (x), and

• (xii) accounts used by the depositary for the day to day running of its business,

where “total assets” are non-current assets plus current assets.

SCHEDULE 10

Regulation 101

Managerial functions of the Management company

The board of a management company shall be responsible for the following managerial functions:

• (a) Regulatory compliance: The board shall put in place, and ensure adherence to, procedures designed to ensure compliance with all applicable legal and regulatory requirements of the management company itself and all investment funds under management. The board shall have arrangements in place to ensure that complaints from unitholders regarding matters other than distribution are addressed promptly and effectively;

• (b) Fund risk management: The board shall put in place, and ensure adherence to, procedures designed to ensure that all applicable risks pertaining to the investment funds under management can be identified, monitored and managed at all times;

• (c) Operational risk management: The board shall put in place, and ensure adherence to, procedures designed to ensure that all applicable risks pertaining to the management company can be identified, monitored and managed at all times;

• (d) Investment management: The board shall put in place, and shall ensure adherence to, procedures to -

• (i) ensure and verify that the investment approach of each investment fund is complied with, and

• (ii) ensure availability of up to date information on portfolio performance;

• (e) Capital and financial management: The board shall put in place, and ensure adherence to, procedures to ensure compliance with regulatory capital requirements of the management company. The board shall put in place, and ensure adherence to, procedures to ensure all relevant accounting records of the management company and of the investment funds under management are properly maintained and are readily available, including production of annual and half-yearly financial statements. The board shall put in place, and ensure adherence to, procedures to ensure that proper accounting policies and procedures are employed in respect of the management company and all investment funds under management;

• (f) Distribution: The board shall put in place, and shall ensure adherence to, procedures to ensure and verify that the distribution strategy of each investment fund is complied with. The board shall have arrangements in place to ensure that complaints from regarding distribution matters are addressed promptly and effectively.

SCHEDULE 11

Regulation 108

Records of a Management company

The types of material and level and nature of content for the purposes of Regulation 109 are:

• (a) details of all money received and expended by the management company whether on its own behalf or on behalf of any investment fund that is under its management, together with details of how such receipts and payments arose;

• (b) a record of all income and expenditure of the management company explaining its nature;

• (c) a record of all assets and liabilities of the management company, long and short positions and off-balance sheet items, including any commitments or contingent liabilities;

• (d) details of all purchases and sales of investment instruments by the management company distinguishing those that have been made by the management company on its own account and those that have been made on behalf of any investment fund that is under its management;

• (e) any working papers that are necessary to show the preparation of any return that has been submitted to the Bank.

Management information records maintained in a manner such that they disclose, or are capable of disclosing, in a prompt and appropriate manner, the financial and business information that will enable the management company to -

• (a) identify, quantify, control and manage the management company’s risk exposures,

• (b) make timely and informed decisions,

• (c) monitor the performance of all aspects of the management company’s business on an up-to-date basis, and

• (d) monitor the quality of the management company’s assets.

Signed for and on behalf of the CENTRAL BANK OF IRELAND on this the.

27 day of May 2019

DERVILLE.ROWLAND,

Director General Financial Conduct

EXPLANATORY NOTE

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

These Regulations set out requirements for UCITS, UCITS management companies and depositaries of UCITS.