IRELAND: CBI Implementation of ESMA guidelines on ETFs and other UCITS issues

Friday January 24 2014

The Central Bank of Ireland has issued a Memorandum concerning issues arising in respect of the Implementation of ESMA guidelines on ETFs and other UCITS issues. In February 2013, the Central Bank of Ireland issued a memorandum to the Irish funds industry regarding implementation of the guidelines which inter alia noted that:

UCITS created before 18 February 2013 can avail of the transitional provisions set out in guidelines 63-70 of the ESMA guidelines.

Since then, on 20 December 2013, ESMA issued a consultation paper which proposes an amendment to the guidelines which would revise the rules for the diversification of collateral received by UCITS that take the form of money market funds in the context of efficient portfolio management techniques and OTC transactions.

The Central Bank has stated that in the light of that consultation it is reasonable for a UCITS money market fund, authorised before 18 February 2013, to delay its compliance with paragraph 43(e) of the ESMA guidelines until such time as ESMA has issued its feedback and concluded the consultation process.

Furthermore, a reasonable interpretation of the reference to “revenue” in Guideline 35(d), subject to any clarification which may be provided by ESMA, would be that it is applicable only to revenue from securities lending arrangements and repurchase/reverse repurchase agreements.

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