Asset Management and Funds

DORA Impacts For Fund Managers

The Digital Operational Resilience Act (DORA) applies to a wide range of financial entities and is focused on ensuring that these entities can respond effectively to unplanned information and communication technology (ICT) disruption, while minimising the impact on their business and customers. Further details can be found here and here.

Stakeholders recognise that DORA compliance is an ongoing commitment rather than a one-time task. It is envisaged that it will become an integral part of firms' operational and IT risk management processes, embedded within their risk frameworks over the long term.

While the expectation is compliance from 17 January 2025, regulators are aware that in certain areas of DORA requirements, this may not be possible. For these areas firms must have sound, realistic and timely plans to achieve compliance.

For further detail on our DORA offering, please see here.

Building on Funds Sector 2030

In April 2023 the Department of Finance issued terms of reference for reviewing the Irish funds sector under the broad and interlinked themes of “Open Markets, Resilient Markets and Developing Markets” (the Review). The aim of the Review was to ensure that Ireland maintained its leading position in asset management and funds servicing, and that we continue to see support for our national and regional economies.

A public consultation ran from June to September 2023, followed by stakeholder engagement. The Final Report of the Funds Sector 2030 Review was published on 22 October 2024. The Review Team concluded that Ireland is well placed to grow in the funds and asset management sector, and developed 42 recommendations to address the most material issues.

For further detail on the Final Report and the recommendations please see here.

ESMA Guidance on Liquidity Management Tools Expected

Changes to the AIFM and UCITS Directives which introduce a harmonised framework for the use of liquidity management tools (LMTs) must be implemented into EU member state law by 16 April 2026. In mid-2024, ESMA announced that it was seeking input on draft guidelines and technical standards on the availability and use of LMTs by AIFs and UCITS. Stakeholders were invited to submit comments on the Guidelines and the RTS by 8 October 2024. The RTS and Guidelines will require managers to review their existing funds’ use of LMTs and the disclosure and governance arrangements applicable to them. ESMA expects to publish the final Guidelines and RTS by 16 April 2025.

For further detail on the types of LMT and how they should be selected for use, please see here.

UCITS Eligible Assets Review

The European Commission has undertaken to assess market practices to ensure that the UCITS eligibility rules are implemented in a uniform manner in all member states. The Commission is also considering the impact of market and regulatory developments over the 17 years since the Eligible Assets Directive was introduced.

ESMA’s May 2024 call for evidence as part of its review of the Eligible Assets Directive closed in August 2024 and ESMA is currently developing its technical advice to the European Commission. Delivery of this advice has been delayed to April 2025, at the earliest, due to conflicting priorities and the complexity of the topic.

Read more on ESMA’s call for evidence here.

Central Bank Requires Fund Management Companies to Assess ETF Frameworks

On 28 November 2024, the Central Bank published a “Dear Chair” letter to fund management companies containing its findings following its 2023 Review of the primary and secondary market trading arrangements of Irish authorised ETFs. The letter sets out the Central Bank’s expectations and actions to be taken by the board of the fund management company by 30 June 2025.

AIFMD II Consultations

The Department of Finance in Ireland opened a public consultation on 22 November 2024 on the exercise of certain national discretions in Directive (EU) 2024/927 (AIFMD II). The consultation period runs until 17 January 2025.

Most of the provisions in AIFMD II will be transposed on a fully harmonised basis across the EU. However, there are some provisions which give each member state, including Ireland, discretion on the application of the provision under its local law. These include extending the list of ancillary activities and services that may be provided by an external Alternative Investment Fund Manager (AIFM) and prohibiting alternative investment funds (AIFs) that originate loans from granting loans to consumers in Ireland.

In addition to the RTS on the use of LMTs under AIFMD II, in 2025 ESMA will develop RTS to determine the requirements with which open-ended loan originating AIFs are to comply to maintain an open-ended structure. On 12 December 2024, ESMA initiated a consultation on the draft RTS which is open until 12 March 2025. ESMA is expected to publish the final RTS by Q3/Q4 2025.

For more on these consultations, please see here and here.

F&P Certification Reporting Requirements From 2025

As part of the enhancements to the current Fitness & Probity (F&P) Regime introduced under the Individual Accountability Framework (IAF), regulated firms (including funds) are required to proactively certify that individuals carrying out controlled function (CF) and pre-approval controlled function (PCF) roles within the firm meet the Central Bank’s F&P Standards.

In December 2024, the Central Bank published PCF Annual Confirmation and CF Certification Guidance to assist firms in relation to submitting the Annual PCF Confirmation and the new CF Certification Confirmation through the Central Bank’s Portal. The first CF confirmation submission to the Central Bank will be required in 2025. Both the PCF Annual Confirmation and CF Annual Certification facility opened on the Central Bank’s Portal on 1 January 2025 to facilitate the submissions.

Central Bank of Ireland’s New Fitness and Probity Unit

The Central Bank of Ireland’s new dedicated Fitness and Probity Unit will become operational in January 2025, at the same time that other key changes to the Central Bank’s operating structure come into effect.

For more information, read our insights: Fitness and Probity: Central Bank announces establishment of dedicated Fitness and Probity Unit - Arthur Cox LLP and Fitness & Probity: Report published following independent review - Arthur Cox LLP