IRELAND: IFSRA speech on Positive Regulatory Environment

Tuesday June 17 2008

Patrick Neary, Chief Executive, Financial Regulator of IFSRA has given a speech on ‘Developing a Positive Regulatory Environment for Successful Financial Centres’.

The speech confirms the commitment to ensuring an efficient authorisation process for collective investment schemes and the contribution this makes to ensuring a competitive environment. The speech notes that in 2007 the Financial Regulator authorised 4,217 firms and funds and also refers to the 24-hour authorisation process now in place for Qualifying Investor Funds.

In his speech Mr. Neary also expressed IFSRA’s concerns at the European Commission’s proposals to amend the UCITS Directive as regards the Management Company Passport. Mr Neary expresses his concerns about the difficulty involved where a UCITS is located in one Member State and the management company in another and notes that this is particularly so in the case of UCITS which are contractual funds and which have no legal presence separate from the management company.”

The European Commission are due to comment on their proposals for the Management Company Passport in their upcoming UCITS IV proposals, expected in the next few weeks.

Funds-Axis comment: The Management Company Passport was a core element of UCITS III and was intended to allow a UCITS established in one Member State to be managed by a Managed Company established in another Member State. However, this radical step has been entirely undermined and rendered inoperable by the approach which Regulators in Dublin and Luxembourg have taken towards it. Hence the need for it to be looked at again as part of UCITS IV.In contrast to the Irish position, Funds-Axis support the view taken by Dan Waters of the UK FSA who stated in January 2008 that:

“If the [full] Management Company Passport is not delivered, major benefits linked to pooling and master feeder structures are then under threat. Failure to deliver these elements would be a crippling blow to the overall package of reforms. It could transform work that was a model of how better regulation can work in Europe into a particularly depressing example of how it can be undermined.”

Mr. Waters at that time encouraged the Industry to write directly to Commissioner McCreevy to express support for efforts to ensure that the benefits of a true cross-border regime for European funds are realized although Funds-Axis for open will be surprised to see such an approach to the Management Company Passport being delivered in UCITS IV.