IRELAND: Central Bank updates UCITS Q&A

Wednesday December 17 2014

The Central Bank of Ireland has published an updated UCITS Q & A.

Question ID 1007 has been updated and a new question ID 1012 has been added in relation to UCITS ETFs.

The text of the revised/new questions appears below.

ID 1007

Q. When does a UCITS money market fund have to comply with paragraph 43(e) of the European Securities and Markets Authority (ESMA) guidelines on ETFs and other UCITS issues?

A. The Central Bank of Ireland issued a memorandum to the Irish funds industry regarding implementation of the guidelines in February 2013 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, ESMA revised the rules for the diversification of collateral received by UCITS in the context of efficient portfolio management techniques and OTC transactions. The Central Bank issued a consultation paper on the adoption of these revised guidelines in July 2014 and the responses to that consultation are still under review.

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 the Central Bank has issued its feedback and concluded the consultation process.

ID 1012

Q. I am a UCITS and am authorised by the Central Bank as an active ETF. Am I required to provide details of the holdings within my portfolio on a daily basis?

A. Yes. A UCITS ETF is defined in the UCITS Notices as a UCITS at least one unit or share class of which is traded throughout the day on at least one regulated market or multilateral trading facility with at least one market maker which takes action to ensure that the stock exchange value of its units does not significantly vary from its net asset value and where applicable its indicative net asset value. The Central Bank will not authorise an ETF, including an active ETF, unless arrangements are put in place to ensure that information is provided on a daily basis regarding the identities and quantities of portfolio holdings. The arrangements must be disclosed in the prospectus. Paragraph 3 of Notice UCITS 20 provides that: “A UCITS ETF should disclose clearly in its prospectus, key investor information document and marketing communications the policy regarding portfolio transparency and where information on the portfolio may be obtained, including where the indicative net asset value, if applicable, is published.”

Click on the above link for the Q & A document.