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UCITS

Updates from November 2015

The Central Bank of Ireland issued a new set of regulations relating to Irish domiciled UCITS, their management companies and their depositaries titled “Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015” on 5 October, 2015.

UCITS Updates from the Central Bank

The regulations focus on enforcement and the importance of effective regulation.The citation to the UCITS Regulations should now be referenced as “The European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 and Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, 2015”.

 

UCITS Key Policy Changes

There are certain policy changes in the Central Bank UCITS regulations. Key changes are as follows:

  • As per Central Bank UCITS Regulation, when there is a redemption gates, all investors are to be treated equally, whereas as per UCITS Notices, the policy was first to redeem will be out first.
  • Central Bank UCITS Regulations requires that the percentage of assets expected to be invested in long and short positions be disclosed in the prospectus, whereas in UCITS notices there was no such requirement. This disclosure will be required in the next amendment in the prospectus.
  • Central Bank has introduced a new requirement for depositaries to report non material breaches to the Central Bank.
  • Central Bank UCITS regulations has also prescribed specific rules regarding Collateral, i.e. Requirement to carry out own assessment of credit quality taking into account credit ratings and an action plan to remedy in the case of a downgrade. 

It is worth noting that the policy regarding redemption gates will be applicable from 1 November 2016, whereas all other policy changes are applicable from 01 November 2015.

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