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12-02-2014

Trade Reporting Obligations to begin on 12 February 2014

European Market Infrastructure Regulation (No.648/2012) (“EMIR”)

  • The reporting requirements under the EMIR apply to all entities involved in
    trading derivatives, irrespective of whether they are a financial counterparty
    or not. The regulation prescribes details which must be reported.
  • Article 9 of the regulation requires all parties involved in a derivative trade to
    report the trade, and any modification of that trade, to a registered trade
    repository. Trade repositories must be registered and approved by the
    European Securities and Market Authority.
  • Both Over The Counter and Exchange Traded Contracts must be reported,
    there is no exemption for intra-group trades.

EMIR Reporting Timeline

12 February 2014

All Over the Counter and Exchange Traded derivative contracts must be reported to a Trade Repository no later than the working day following their conclusion.

 

13 May 2014

All Over the Counter and Exchange Traded derivative contracts which were entered into before or after 16 August 2012, which are still outstanding as of 12 February 2014 must be reported to a Trade Repository.

 

11 February 2017

All Over the Counter and Exchange Traded derivative contracts which were entered into before or after 16 August 2012, which are no longer outstanding as of 12 February 2014 must be reported to a Trade Repository.

For more information on these impending deadlines please click here.

Standard form for EMIR Reporting

ISDA and FOA Agreement

  • The International Swaps and Derivatives Association and the Futures and
    Options Association have published a standardised form for traders to report a
    delegation agreement under EMIR.
  • A copy of this form can be found here.

Banking Inquiry to begin within the next few months

Taoiseach and Tánaiste confirm their intentions

  • At a Cabinet meeting on 21 January 2014 it was agreed that a new Oireachtas
    Committee would be established within two weeks to preside over the inquiry.
  • On 21 January the Government Chief Whip, Paul Kehoe, also met with the
    whips of the opposition parties to provide them with a proposed set of
    standing orders for the new committee.
  • It is believed that the government favours a small committee to preside over
    the inquiry, similar to that which investigated the DIRT tax scandal in 1999. 

Revised Corporate Governance Code for Credit Institutions and Insurance Undertakings

Central Bank Issues Revised Code

  • On 23 December 2013 the Central Bank published a revised Corporate
    Governance Code for Credit Institutions and Insurance Undertakings.
  • The revised Code will apply from 1 January 2015.
  • Under the new code institutions will be required to appoint a senior manager
    with specific responsibility for managing the risk control (the “Risk Officer”).
  • The revised code will also relax the prohibition on a chairman of a Credit
    Institution or Insurance Undertaking from concurrently holding the
    chairmanship of another Credit Institution or Insurance Undertaking, to allow
    them to hold concurrent chairmanships of group subsidiaries and, subject to
    Central Bank approval, chairmanships of medium or low impact institutions.
  • It will also require that the CEO is appointed to the board.
  • The revised Code also sets down new requirements on board meetings,
    boards will now have to meet at least four times a year, and at least once
    every six months.
  • For a copy of the revised Corporate Governance Code please click here.

Central Bank Completes its Review of Suspicious Transaction Reporting

The Central Bank Conducted a Review of Suspicious Transaction Reporting
Compliance in 2013

  • On 7 January 2014 the Central Bank issued the findings of its compliance
    review.
  • Under Article 6(9) of the Market Abuse Directive, implemented in Ireland by
    Regulation 15 of the Market Abuse Regulations 2005, any prescribed person
    who reasonably suspects that a transaction might constitute market abuse
    shall notify the Competent Authority (Central Bank) without delay.
  • The 2013 review involved a review of the relevant systems, policies and
    procedures implemented by certain investment funds to comply with these
    provisions.
  • As part of the review the Central Bank reviewed the submissions of a large
    number of investment funds, conducted onsite inspections of a number of
    funds and interviewed 42 individuals.
  • The review found that while most firms have adequate written policies and
    procedures in place to comply with the Market Abuse Regulations, further
    practical application of training for staff is required, particularly for key frontline
    staff.
  • The Central Bank found that this lack of training was evidenced in the lack of
    internal recording of “near misses”.
  • The Central Bank also recommended that all orders placed by clients over the
    telephone should be directed to the firms recorded lines.
  • These recommendations were set out in an industry letter published by the
    Central Bank, a copy of which can be found here.

 

New Irish Corporate Fund Structure Proposed

Irish Collective Asset Management Vehicle (“ICAV”)

  • On 17 December 2013 the Minister for Finance published the General Scheme
    for the ICAV Bill and indicated drafting the Bill would be a priority for the
    department, which a view to having the Bill enacted later this year.
  • Currently investment funds in Ireland must be established using a plc. the
    ICAV will provide an alternative simplified vehicle under which funds can be
    established.
  • Unlike a plc, an ICAV will not be required to incorporate with the Companies
    Registration Office prior to registering with the Central Bank, instead
    incorporation and registration will be dealt with by the Central Bank.
  • An ICAV will be able to elect its classification under the US “check-the-box”
    taxation rules. This will allow the ICAV to elect to be treated as a partnership,
    which will mean US investors can avoid adverse US taxation treatment as the
    ICAV will not be classified as a passive foreign investment company.
  • ICAVs will be more streamlined in their design, they will have a simplified
    version of a Memorandum and Articles of Association referred to as an
    Instrument of Incorporation, it is also believed that under the new legislation
    the ICAV will not be required to make as complex financial statements as PLCs.
  • To see the General Scheme published by the Minister for Finance please click
    here.

Central Bank launches new fast track Authorisation Process for
Investment Firms

Two Tiered System Launched

  • Under the new process the Central Bank will classify investment firms into two
    tranches depending on the complexity of their business model.
  • The aim is to process more complicated applications within 6 months and
    more straight forward applications within 3 months.
  • For more information on this new fast track authorisation process please click
    here.

Central Bank Issue Compliance Guidelines for Compliance Statements from Life Assurance Undertakings, Non-Life Insurance Undertakings and Reinsurance Undertakings

Central Bank Issues Compliance Guidance

  • The Central Bank has published guidelines on the compliance requirements for
    undertakings under Regulation 32 of the European Communities (Life
    Assurance) Framework Regulations 1994 and Regulation 3 of the European
    Communities (Non-Life Assurance Accounts) Regulations 1995.
  • To see a copy of these guidelines please click here.

Government published Expert Group Report on Repossessions


Minister for Justice Published Report on 14 January 2014

  • The report does not recommend any further legislative reform with regards to
    repossessions, however, it does advocate greater case management by
    lenders and harmonisation of documentation standards.
  • The report also calls for greater monitoring of the Court system capacity, to
    ensure it is not overrun with an increase in the number of repossession cases.
  • For a copy of this report please click here.

Amendments to Basel III’s Leverage Ratio issued by the Basel
Committee

Group of Central Bank Governors and Heads of Supervision Reach Agreement

  • On 12 January 2014 the Basel Committee issued the full text of the Basel III
    leverage ratio framework.
  • The framework now allows for limited netting with the same counterparty to
    reduce the leverage ratio, once specific conditions have been met, in relation
    to securities financing transactions.
  • In order to avoid double counting, a clearing member’s trade exposure to
    qualifying central counterparties (“QCCPs”) associated with client cleared
    derivatives transactions may be excluded when the clearing member does not
    guarantee the performance of a QCCP to its clients.
  • For more information on the agreement reached by the Group of Central Bank
    Governors and Heads of Supervision please click here.

European Parliament Economic and Financial Affairs Committee votes in favour of agreed final compromise text

Criminal Sanctions for Market Abuse Directive (“CSMAD”)

  • The European Parliament Economic and Financial Affairs Committee has voted
    in favour of a final compromise text for CSMAD
  • The agreed text will replace the Market Abuse Directive and introduce
    European Wide offices for insider dealing and market manipulation.
  • To see the Commissions’ Press Release detailing the agreement reached
    please click here

Moody’s Upgrades Irish Government Debt to Investor Status

Moody’s rates Irish Government Debts as Baa3

  • On 17 January Moody’s rating agency increased Ireland’s sovereign debt
    rating to investor grade status, with a positive outlook.
  • This means that all major rating agencies rate Irish sovereign debt as investor
    grade.
  • This is particularly beneficial for Irish UCITS (Undertakings for Collective
    Investment in Transferable Securities) as prior to the rating increase, Irish
    UCITS had been placed on Restricted Investment Lists.
  • This upgrade by Moody’s will increase the liquidity of Irish sovereign debt as
    large investors will once again be permitted to invest in Irish debt.
  • For an analysis of the rationale behind Moody’s decision to upgrade Ireland’s
    sovereign debt rating please click here.

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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