Europe: Irish Central Bank Discusses Its Approach to Exchange Traded Funds

By Hazel Doyle and Nicola McCaffrey

In an important speech, Derville Rowland, the Central Bank of Ireland’s Deputy Governor for Consumer and Investor Protection has outlined the Central Bank’s approach to ETFs in Ireland. Some of the points she made are highlighted in this blog.

The speech recognises the importance of Ireland as the jurisdiction of choice for ETF providers in the EU, noting that approximately 70% of the EU’s ETFs by assets under management are domiciled in Ireland. The Central Bank is supportive of the ETF industry, is cognisant of the changing environment for ETFs, is willing to innovate and is supportive of the work and recommendations made in Department of Finance Final Report on the Funds Sector 2030 (as discussed by us here).

One new development announced in the speech is that, to bring Ireland into line with other EU fund domiciles, the UCITS ETF identifier will in the future be available at the level of the sub-fund, or share class where a listed share class is added to a mutual fund. This will provide greater clarity for fund managers and investors, particularly where a fund has a mix of both listed and unlisted share classes. The Central Bank will “shortly” issue an update of its UCITS Q&As to clarify the position on this point.

Additionally, the speech notes that an industry communication will be issued shortly with details on the findings of the Central Bank’s review of the oversight that management companies perform on key players within the ETF ecosystem (including for example, authorised participants and market makers).