ESMA Guidelines and Recommendations

Central Bank communication in relation to ESMA Opinions concerning the relocation of entities, activities and functions from the United Kingdom

ESMA Guidelines and Recommendations

Date: 14 March 2018

The European Securities and Markets Authority (ESMA) issued three Opinions on 13 July 2017 aimed at fostering consistency in authorisation, supervision and enforcement related to the relocation of entities, activities and functions from the United Kingdom.  The Central Bank of Ireland (the Central Bank) strongly supports the work of the European Supervisory Authorities to encourage greater supervisory convergence, particularly in the context of the United Kingdom exiting the European Union.

The Central Bank has now concluded a comprehensive review of the way it deals with the issues covered by the three ESMA Opinions, to ensure that the Central Bank’s authorisation and supervisory processes are materially aligned with the opinions.

During the review, the Central Bank identified process enhancements, related to the authorisation of investment fund managers authorised under the UCITS Directive and AIFMD and investment firms authorised under MiFID. These enhancements will ensure that, in relation to the issues covered by the ESMA Opinions, relevant facts underpinning outcomes are formally documented during our authorisation processes.  These procedural enhancements will be made by updating the Central Bank’s application forms and internal procedures.

The application forms for UCITS Management Companies, UCITS Self-Managed Investment Companies, Alternative Investment Fund Managers (AIFMs) and MiFID Firms will be updated to incorporate the following requirements:

• Details and rationale for the geographical distribution of planned activities.
• Objective justification for delegation arrangements in relation to critical functions.
• Details of due-diligence undertaken during selection process.
• Information on Business Continuity arrangements.
• Information on how Legal Risk is assessed.
• Details on Delegate Remuneration Requirements.
• Details on how Best Execution obligations continue to be met when dealing with execution venues outside of the EU.

In the interim until the relevant application forms have been updated, the items listed above will be incorporated as part of the Central Bank’s authorisation process.