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irishfunds.ie
18 April 2018
Irish Funds London Alternative Investment
Seminar 2018
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Premium Sponsors
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Event Partners
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Wi-Fi & Audience Interaction
• Wi-Fi SSID: THE MONTCALM
no password required
• Audience Interaction - www.Sli.do #IrishFunds
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Tara Doyle
Chairperson, Irish Funds
Head of Asset Management, Matheson
Welcome Address
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Irish Funds Industry Overview
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A Global Funds Centre…
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For Global Distribution
irishfunds.ie10
Total Assets under Administration
- split between Irish domiciled & Non-Irish funds
Source: Central Bank of Ireland December 2017
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Irish Domiciled Assets
• UCITS represent 75% of
Irish Domiciled Assets
• 88 UCITS Man Cos
• 161 AIFMs Registered or
Authorised
• 642 AIFMs operating in Ireland on
cross border basis
• 410 ICAVs established
(since 18 March 2015)
Source: Central Bank of Ireland
2018
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Growth of Largest European Fund Domiciles
Source: EFAMA Statistics
0%
20%
40%
60%
80%
100%
120%
140%
2011 2012 2013 2014 2015 2016 2017
% G
row
th
2011 2012 2013 2014 2015 2016 2017
Europe 0% 13% 23% 42% 58% 78% 97%
Luxembourg 0% 14% 25% 48% 67% 77% 98%
Ireland 0% 16% 27% 57% 80% 98% 126%
France 0% 9% 10% 14% 21% 29% 37%
Germany 0% 13% 24% 40% 53% 66% 80%
UK 0% 17% 35% 59% 79% 77% 99%
Europe Luxembourg Ireland France Germany UK
1313 irishfunds.ie
Net Sales into Irish Domiciled Funds
Source: Central Bank of Ireland 2018
• > 30% of net sales
into all European
funds in 2017
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Other Developments….
• Updating of Ireland’s Investment Limited Partnership Legislation
• Legislative amendments approved by Irish Government.
• Entering legislative process
• Will provide additional scope for private equity and real asset funds.
• European Commission ESAs Proposals
• While there are aspects to the European Supervisory Authorities (ESAs) proposals we welcome, there are a number of
areas which are of significant concern. We have shared our views in Ireland and in Europe.
• Strong advocates of delegation to globally based experts.
• Loan Origination
• New enhancements have been made to the L-QIAIF.
• Tax Transparency
• OECD has awarded Ireland the highest international rating on tax transparency and exchange of information.
• EU Cross Border Distribution
• Consultation on removing barriers to Cross Border Distribution submitted 2016 and follow-up questionnaire completed
2017.
• We have subsequently met with the European Commission.
• Expected Q1 2018
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Other Developments….
• Pan European Personal Pension Plan (PEPP)
• Industry white paper published on PEPP.
• We have subsequently met with the European Commission.
• Financial Action Task Force (FATF) Mutual Evaluation Report (MER) of Ireland
• FATF’s assessment of Irelands anti-money laundering and counter terrorist financing concluded that “Ireland has a
sound and substantially effective regime to tackle money laundering and terrorist financing….” In addition the
Report highlights “National coordination mechanisms… and the Private Sector Consultative Forum (PSCF) were
fruitful in broadening the understanding of its ML and TF risks across all relevant agencies and with the private
sector.”
• CBI engagement re Exchange Traded Funds (ETF)
• Responded to Central Bank of Ireland (CBI) ETF discussion paper and engaged with the CBI throughout the
process.
• Consultation paper on CIS Liquidity Risk Management
• Response provided to the International Organization of Securities Commission (IOSCO) Consultation paper.
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Conclusion
• EU Member & Strategically Positioned
+
• International Hub for Globally Distributed Investment Funds
+
• Unrivalled Experience and Expertise in the Widest Range of Fund Structures
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Miriam Gonzalez
Partner, Dechert
Keynote Address: Brexit - what’s next?
| London Alternative Investment Seminar 1818 April 2018
Realism – we are where we are
|
Political Volatility
Inside parties
Parliament
Generational
Society
In the EU too!
How to handle volatility?
18 April 2018 London Alternative Investment Seminar
|
Preparing the UK-EU FTA
London Alternative Investment Seminar 2018 April 2018
Formal 3rd
Country FTA
Heads of Agreement
Transition
A. 50
General principles
Will frame content of FTA
|
EU negotiations
2118 April 2018 London Alternative Investment Seminar
|
UK-EU FTA: EU Process
GUIDELINES
Council:
• Opens negotiations
• Adopts Negotiating Directives
• Signs and concludes the FTA
European Parliament:
• Likely to have to consent to the FTA
Commission:
• Leads negotiations and technical discussions. Reports back to Council
Structure:
• 3 broad baskets: Services, Goods, ‘Other’ (IP, State Aid etc)
2218 April 2018 London Alternative Investment Seminar
|
UK-EU FTA: Negotiators
3 tiers of negotiators
2318 April 2018
Political
Commissioners
Member States (in Brussels and capitals)
Negotiators
DG Trade Relevant expert Commission Directorate Generals
on specific issues
Experts
Addressing sectoral-specific issues, e.g. standards or oversight for type
approval etc
London Alternative Investment Seminar
|
Other countries
2418 April 2018
How?
Trade Policy
Biggest Market
Other key markets
Smaller market
Key areas:
Content more important than political
signals
Level Playing field
London Alternative Investment Seminar
Moderator:
Panellists:
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Panel Discussion: Digital Assets- the New
Alternatives
Pete Townsend, Norio Ventures
Breige Tinnelly, AQ Metrics
Rupert Watson, Mercer
Emmett Kilduff, Eagle Alpha
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Mark White, McCann FitzGerald
Lara Winters, Insight Investments
Graham Roche, Davy
Q & A Interview Session: Developments in
Loan Origination
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Coffee Break Kindly Sponsored By
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Tom Hambrett,
Head of Legal, Revolut
Digital Disruption in Financial Services -
The Future of "Challenger Banks" and the
Rise of Cryptocurrencies
Revolut
Tom Hambrett
Cryptocurrencies
What?
Why?
How?
Cryptocurrencies
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Donnacha O’Connor, Dillon Eustace
Regulatory Update – MiFID II
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• Establishing an investment manager in Ireland; is MiFID II the most
appropriate regime for my firm?
• Brexit; MiFID II third country rules in Ireland
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Fiona de Burca, PwC
Regulatory Update – GDPR
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Gayle Bowen, Pinsent Masons
Brexit SOS – Key steps managers need to
take now
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Step 1 – Identify how you are impacted
o UK AIFM/ManCo to an EU based Fund (currently 265 UK AIFMs operating
Irish AIFs)
o Distributing to EU investors
o Selling an EU fund in the UK
o Segregated managed account mandates with EU investors
3737 irishfunds.ie
Step 2 – Look at the options available
SMIC Super ManCo w/
Delegates (‘v1’)
Super ManCo w/ Add-on
Authorisations (‘v2’)
MiFID Firm
Authorisation indicative
timeline
Allow 6 to 8 months during high
volume periods
Allow 6 to 8 months during
high volume periods
Allow 8 to 9 months during high
volume periods
Allow 9 to 10 months during high
volume periods
Activities (PM = portfolio management, RM =
risk management)
Retain oversight of PM & RM but
delegate day to day activities
Retain oversight of PM &
RM but delegate day to day
activities
Performs day-to-day PM & RM Full range of services
Manage other fund umbrellas? No Yes Yes Yes
Manage/advise Segregated
Mandates?
No No Yes, via add-on licences without need
for MiFID delegate
Yes
Substance requirements • 2 Irish-resident directors
• 2-3 Designated Persons1
• 2-3 Irish-resident
directors1
• 2-3 Designated
Persons1&2
• 2-3 Irish-resident directors
• 2-3 Designated Persons1
• Chief Investment Officer / Managing
Director
• Head of Risk/Compliance and
Finance, internal audit.2
• Substantive presence
required in Ireland3
• Specific roles based in
Ireland2:
• Legal & compliance
• Financial control
• Risk Management
Delegation / Outsourcing CBI permits delegation of day-
to-day PM and/or RM activities
CBI permits delegation of
day-to-day PM and/or RM
activities
CBI permits delegation of day-to-day
PM and/or RM activities
Outsourcing allowed (including to
other EEA states or 3rd countries)
if in line with applicable law and
best practice
1. Designated persons not all required to be Irish resident and can be directors or employees of the Investment Manager. For ‘low’ PRISM rated firms, half of the directors and at least
2 Designated Persons performing half of the managerial functions are required to be EEA-resident. For ‘medium’ PRISM rating firms, 3 directors or 2 directors plus 1 designated
person should be Irish resident.
2. The need for specific roles may differ on a case-by-case basis, depending on complexity and number of branches.
3. ‘Substantive presence’ for MiFID: the firm’s board and management run the firm from Ireland and make decisions in Ireland with sufficient staff and resources to manage the risks.
3838 irishfunds.ie
SMIC Super ManCo w/ Delegates (‘v1’) Super ManCo w/ Add-on Authorisations
(‘v2’)
MiFID Firm
Capital
Required
€300,000 initial capital (which
can be met using shareholder
funds)
One quarter of its total expenditure in
its most recent annual accounts and
€125,000 plus an additional amount of
up to 0.02% of any AUM exceeding
€250m whichever is greater, subject to
a maximum amount of €10million
One quarter of its total expenditure in its
most recent annual accounts and €125,000
plus an additional amount of up to 0.02% of
any AUM exceeding €250m whichever is
greater, subject to a maximum amount of
€10million
Will be calculated in accordance with
CRD IV / CRR requirements
Pros • Works well if no other funds
managed
• Less staff on the ground
• Can manage multiple fund umbrellas
• Can passport to other EEA
jurisdictions
• Less staff on the ground than v2 or
MiFID option
• Can perform full PM activities or delegate
• Can manage multiple fund umbrellas &
mandates
• Can passport to other EEA jurisdictions
• Less staff on the ground than MiFID
option
• Wide range of permissions/potential
business lines available
• Can passport throughout EEA
without seeking additional
authorisations
Cons • Cannot perform all PM
activities
• Cannot manage or advise
mandates
• Must delegate to regulated
investment manager
• Cannot perform all PM activities
• Cannot manage mandates
• More staff on the ground than SMIC or v1
option
• Add-on authorisations possible, which
may be subject to local review when
passporting to other EEA jurisdictions
• More staff on the ground
• Subject to CRD IV / CRR
requirements
• MiFID 2 changes in Jan-2018
3939 irishfunds.ie
Step 3 – Decide which licence is appropriate for your
activities
Do you manage
UCITS?
Yes
Yes
No
No
Do you also manage
AIFS?
Do you manage/advise on
segregated accounts?
Do you manage
more than 2 funds?
UCITS Management
Company with add-on permissions (V2)
No Yes
Self managed UCITS UCITS Management
Company
No Do you manage
AIFS?
Super MANCO with add on permissions
(V2) Super MANCO
Yes No
Do you manage/advise on
segregated accounts?
Yes
Do you also manage
UCITS Funds?
Yes
No Do you distribute/advise third
party funds/manage segregated accounts?
Yes
MIFID
AUTHORISATION
Do you manage more than 2
funds?
Yes No
Self-managed AIF(S) External AIFM (V1)
irishfunds.ie
Step 4 – Take action
• Time is now running out
• There are still a significant number of managers that have not finalised
their Brexit strategy plan
• Could be significant delays if all managers apply at the same time.
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Questions
Moderator:
Panellists:
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Panel Discussion: Brexit
Killian Buckley, Duff & Phelps
Miriam Gonzalez, Dechert
Rena Morjaria, Amber Capital
Lorcan Murphy, ACOLIN Fund Services
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Pat Lardner,
Chief Executive, Irish Funds
Closing Remarks
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Annual Global Funds Conference 2018
Now in its 20th year, the Irish Funds
Annual Global Funds Conference is a
highlight of the international funds industry
calendar.
The conference brings together prominent
industry speakers to discuss current
issues and challenges facing the global
funds industry.
For further information on registration,
sponsorship and exhibition please visit
irishfunds.ie/conference2018.
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Drinks Reception kindly sponsored by
