ANNUAL REVIEW 2016 - 17 - Irish...

ANNUAL REVIEW 2016 -17 - PAGE 1

ANNUAL REVIEW2016 - 17 irishfunds.ie

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WHY IRELAND THE FACTS

SOURCE: Central Bank of Ireland, Monterey Insight Ireland Survey 2016 and Irish Funds (Net assets and number of funds valid as of Dec 2016)

Irish Domiciled FundsBreakdown by type

SOURCE: Central Bank of Ireland, Dec, 2016

EQUITYBOND

OTHERBALANCED

4%

26%20%

3%

23%MONEY MARKETALTERNATIVE

24%

887 Fund Promoters(480 promoters of Irish Domiciled Funds)

Irish Investment Funds Industry

13,785

LAWYERSACCOUNTANTS

LISTING BROKERS

45 ADMINISTRATION

COMPANIES

18TRUSTEE /

CUSTODIAN BANKS

$4.1

EMPLOYED

OVER

14,000

6,470 $2.1 70 COUNTRIES

7,315

TOTAL FUNDS TRILLION TOTAL AUA

IRISH DOMICILED

TRILLION DOMICILED AUA

DISTRIBUTION TO OVER

NONDOMICILED


WHY IRELAND THE FACTS CONTENTS

Introduction

2015/16 – a Snapshot

Letter from the Chairperson

General Background and Activities

Regulatory Summary & Snapshots

Events and Activities (April 2016 - March 2017)

Marketing & Media

Regulatory Reporting Blockchain

Who’s Already Here

Irish Funds Around the Globe

Association Structure

Steering Groups and Responsibilities

Training & Development

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30


INTRODUCTION

We were commemorating the 25th Anniversary of the creation of the Association when we published our Annual Review last year and the beginning of our second quarter century has been characterised by a highly unpredictable environment – one with the potential for both opportunity and significant disruption. We also achieved another significant set of milestones during the last year as both domiciled and non-domiciled funds supported by the industry in Ireland reached assets under administration of more than €2 trillion each - bringing our total to €4.1 trillion. By the end of 2016 Ireland was the home to 5% of global investment fund assets, confirming our position as a global leader. This has continued to underscore the importance of a dedicated and cohesive association for the Irish funds industry. The key events and outcomes in the period from 1 April 2016 to 31 March 2017, which this review focuses on, remind us of the power of working collaboratively across our membership and a wide range of external stakeholders.

Central to our success as an organisation is harnessing the power of our members, in particular their expertise and knowledge via our steering groups and working groups. Member firms continue to be very engaged – with over 550 participants from 98 member firms. Our working groups are responsible for a wide and complex range of technical matters

and produce valuable outputs that directly feed our advocacy, industry development and promotional activities. A sincere thank you to the all participants, Chairs and Vice-Chairs who continue to give generously of their time, energy and expertise.

In the pages of this review you will find significant detail on the many topics which our working groups and steering groups addressed with the support of the Secretariat. Whether it was domestic matters (Investor Money Regulations, CP86, UCITS regulations), European developments (MMFR, Cross Border Distribution), global access (RQFII and Stock Connect) or developing our capabilities (Middle Office Survey, FinTech Proof of Concept) our strength and impact has derived from the collective nature of our work.

Domestically we saw the continuing growth in the use of the ICAV and having previously secured a government commitment to update our Investment Limited Partnership legislation we continued the preparatory work to move this forward. Maintaining and developing the tool-kit we offer investment managers/fund promoters remains high on our overall agenda. We also worked assiduously to ensure that changes to the treatment of investments focusing on Irish property in the 2016 Finance Act did not compromise the environment for the wider funds industry. The latter

point highlights a dimension to the Association’s work which took on a higher emphasis during the year – political advocacy.

The Association continues to actively support the Irish Government’s IFS2020 Strategy and has sought every opportunity to advance our shared objectives around growing and developing Ireland’s international financial services capabilities and reputation. I was also very proud to provide support to the Industry Advisory Committee of IFS2020 during the period which ensured that we supported positive collaboration across the sub-sectors of financial services as well as being a strong advocate of the “IFS Ireland” banner brand. We enjoy productive and active relationships with local stakeholders in government and across the public sector and have continued to devote significant effort to them.

Within Europe, the Capital Markets Union initiative provided a specific opportunity for us to inform and build a more direct relationship with the European Commission and we extended this with the involvement of the Commission in last year’s Annual Conference and direct meetings. Additionally ESMA have been regular participants in our events which we greatly value. The Money Market Fund Reform process, which has ebbed and flowed over the last number of years arrived at the critical juncture


of agreement during the last twelve months. Our work, especially towards the end of the process, ensured an outcome which preserved key elements of product choice and highlights the importance of being able to provide detailed and time-sensitive input at key stages of dossiers. European advocacy, and what we need to do be effective, will evolve rapidly in the coming years and we must stand ready to adapt.

No review of the past year would be complete without mentioning Brexit and its effect on the Irish funds industry. Brexit has added a new and significant dimension to the Association’s work which we would not have expected or hoped for this time last year. We have and will continue to ensure that the areas which represent a risk to our industry from the UK’s exit from the EU are well understood by Government and equally that Ireland is prepared and welcoming in assisting existing and new clients find solutions. Ireland has provided effective and competitive solutions for EU and non-EU managers for a quarter of a century and we will continue to do this. Getting our message out also remains crucial - we held three events in the UK during the period (with another one coming up in November 2017), numerous meetings with managers and stakeholders there and we incorporated relevant panels and discussions on Brexit in nearly all of our events across the globe.

We strongly believe that investors’ needs for the best risk/return outcomes require global access to investment opportunities and that the investment managers we serve also want this. Therefore, we have maintained our emphasis on the global connectivity of our offering through strategic initiatives and our promotional work. As highlighted elsewhere later, our work around RQFII and Stock Connect as well as increasing cooperation with our equivalent trade bodies in Europe and globally, exemplify our commitment to keeping Ireland internationally connected.

Promotion and marketing of the industry and our members’ capabilities is central to our mission and a main focus of our activity. With events in 18 cities, attracting more than 5,000 attendees, we feel we covered a large amount of ground with relevant content and increasing impact. It was clear from record attendances in London in November 2016 and again in late March 2017 that our work building a recurring set of events in the UK has been important. We kicked off 2017 with promotional and relationship building visits to Hong Kong, Beijing, and Shanghai, which also coincided with the Asian Financial Forum in Hong Kong and official visits to Hong Kong and Beijing by Minister of State, Mr Eoghan Murphy. The relationship with the Chinese funds industry (especially via the Asset Management Association

of China) and the work of the Irish Funds Group in Hong Kong continues to strengthen and we are intensifying our activities in this region. Other highlights during the last 12 months included very well attended sessions at our North American roadshow, which for the first time included Canada. Our events and promotion programme can only occur with the support of our sponsors and we are very grateful to them.

Traffic on the association’s website (irishfunds.ie) continues to increase, attracting approximately 30,000 page views per month. We launched an enhanced Global Distribution area on the site this year to demonstrate how widely Irish domiciled funds are distributed and to provide our members with more detailed data. This year we have also focused on increasing our online social media presence and have gained more followers on both platforms. With a large increase in followers, we will continue to develop our online and social media presences as we move forward.

Our connection with both IDA Ireland and our Embassies and Consulates overesas broadens our reach and enhances our ability to build relationships, as does our relationship with other industry organisations. The other aspects of our promotional work including collateral, product brochures and media outreach were also significant, including two new

INTRODUCTION


brochures on Money Market Funds and Loan Originating Funds, as well as a number of country-specific distribution guides for members.

Our partners in providing educational outcomes for members, the Institute of Banking, continued to evolve the offering for the funds industry. They are now offering programmes in Asia and the US – Singapore, Hong Kong and New York – in addition to programmes offered in London and Zurich.

Communicating and engaging with our membership is an area where we continually strive to be better. One key aspect is the technology infrastructure which supports our working and steering groups and members more broadly. The Member Portal now makes over 1,000 valuable document resources accessible to our membership and we are further developing this resource with the launch of an easier-to-use system to locate documents in the coming weeks. We have also continued to increase our offering to members unable to attend key technical and regulatory updates in person by making video streaming available for a wider range of meetings/events. Feedback from the 2016 Council membership engagement process was extremely positive in terms of the value of Association membership to member firms. We will continue to create an environment where members can share, learn and improve.

A defining aspect of our industry and the Association it created is the positive and determined spirit in which individuals and firms have come together to create and develop our industry along with the full range of government and public sector stakeholders. What and how we build on top of these foundations and harness our collective knowledge will determine how we face the future and respond to the evolving landscape of our industry.

Thank you for your ongoing support. It has been my great privilege to lead a dedicated and professional team within the Association and work with a highly engaged Governing Council led by Alan O’Sullivan who was unfailingly supportive and relentless in his commitment to drive the Association forward. 2016/2017 has seen many domestic and international opportunities and challenges for the Irish funds industry both at a political and regulatory level and the Association looks forward to working with, and on behalf of, our members to collectively meet these head-on.

Pat LardnerChief Executive

INTRODUCTION


2016-17 A SNAPSHOT

REGULATION AND POLICY DEVELOPMENT

TRAINING AND EDUCATION

MANAGER ENGAGEMENT & PROMOTION

INTERNATIONAL REPRESENTATION

COMPETITIVENESS AND POSITIONING

International Events held in 18 Cities with 5,000 attendees

Over 65 direct meetings with current or prospective investment

managers regarding the jurisdiction

Increased engagement via social media with over 2,300 followers

on Linkedin and over 1,300 followers on Twitter

Launched new website with 25,000 - 30,000 views per month

Board member of the:European Fund and Asset Management Association;

International Investment Funds Association;

Meetings with Foreign Regulators and Diplomatic Staff

Engagement with Industry Bodies from around the World

Direct involvement in the IFSC Funds Group

Close working relationship with IDA Ireland

domestically and network of international offices

Partnership with the Institute of Banking has enabled more than

550 students to undertake a UCD accredited professional education

programme in 2016/17

More than 60 Irish Funds member firms had participating students

Technical Seminars and Webinars attended by over 600 people with

national reach enabled via live streaming

211 meetings with local,

European and global stakeholders

66 separate written submissions

A structure comprising

38 working groups and

7 steering groups.

- Marketing and Promotions- Distribution - Tax- Operational - AIF Product Dev Group - UCITS Dev Group - Front Office

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LETTER FROM THE CHAIRPERSON

It has been a privilege to serve as Chair of Irish Funds and one of the most rewarding professional experiences of my career. In reflecting upon my term, I am reminded of the collective strength of our industry.

As I write there is much talk about the British & Irish Lions upcoming trip and the challenge that awaits them in New Zealand. Harnessing individuals from four different countries into a coherent and high performing collective is the real challenge the Lions and its management face this summer. Such collective effort is at the core of the Irish Funds Industry Association. This coming together to succeed has manifested itself in another record breaking year both in terms of assets serviced and in assisting our clients to solve for challenges and opportunities arising from geo-political, regulatory and technology shifts.

On 23 June 2016, the same day as our Annual Global Funds Conference, the UK went to the polls on their membership of the EU. Now that Article 50 has been triggered, the collective strength of the industry and associated bodies has come together to ensure we are ready to support UK Asset Managers in continuing to seamlessly access global capital and distribution channels. In addressing the challenges and opportunities that Brexit presents, the Association has positioned itself as a strong advocate for UK Asset Managers and as a flexible and responsive facilitator of Brexit solutions. The Association is linked in at the highest levels to ensure

our agenda is heard and will continue to advocate for the best outcome for our industry.

This period has also seen increased engagement with the Central Bank, Government Departments, our Embassies and Consulates around the World, Chambers of Commerce, the IDA and other Trade Bodies. At a time when there is so much uncertainty, having a Government playing an active supporting role has been and remains critical to our continued success.

The wider advocacy agenda has been highlighted continuously by our members as a primary function of the Association. Working together the Association and our members dedicated significant time to finding solutions within ongoing and new regulatory consultations and developments. Over the last 12 months the negotiations on money market fund reform came to an end with positive results that will continue to enable our significant book of money market business. We also saw CP86 mobilise the industry to agree enhanced governance and investor protection rules and the Central Bank also expanded asset eligibility within loan originating funds. The Association has been very engaged with both the Commission and ESMA in relation to the barriers to cross border distribution, recognising the importance of continually improving fund passports for the benefit of our clients.

Our Global footprint and our position as a gateway for International Asset

Managers is firmly established and continues to evolve. The announcement last December that Ireland had received an RQFII quota was welcome, and is particularly important as we move towards China’s possible inclusion in the MSCI Emerging Market Index. With 58% of European ETFs domiciled in Ireland, access to China will be a key consideration. During the Association’s trip to China in January the message was most certainly one of opportunity for Ireland and a strong interest in our financial services offering. This month we will warmly welcome a delegation from China who will be attending and participating in this year’s Annual Global Funds Conference. ‘The World Connected’ is a very apt title for this event.

The focus of the Association must remain on building the services and capabilities to support product growth and innovation. As Asset Managers develop their offerings through a full range of traditional, exchange traded and alternative funds, the industry is working collectively to ensure that we are ready to support this evolution. A comprehensive Alternative Funds Strategy is in place, driving a programme of regulatory change, education and promotion.

Both the Middle Office and HR & Training Working Groups have created a body of work that seeks to review and capitalise on new opportunities for our industry. Consistent with the vision of IFS2020, we want to sustain and grow our 14,000 strong workforce in terms of numbers, quality, value and diversity of roles.


LETTER FROM THE CHAIRPERSON

1991 - 1993 Vic Holmes1993 - 1994 Paul McNaughton1994 - 1995 Denise Kinsella1995 - 1996 John Fitzpatrick1996 - 1997 Bernard Hanratty1997 - 1998 Padraig Kenny1998 - 1999 Eimear Cowhey1999 - 2000 Anthony Carey2000 - 2001 Paul McGowan2001 - 2002 Brian Collins2002 - 2003 Damian Neylin2003 - 2004 Jeffrey Holland2004 - 2005 Dan Morrissey

2005 - 2006 Liam Manahan2006 - 2007 Noel Moynihan2007 - 2008 Deirdre Power2008 - 2009 Seán Páircéir 2009 – 2010 MichaelJackson2010 – 2011 Carin Bryans2011 – 2012 Ken Owens2012 – 2013 Fearghal Woods2013 – 2014 Kevin Murphy2014 – 2015 Barry O’Dwyer2015 – 2016 Tadhg Young2016 – 2017 Alan O’Sullivan

Past Chairs of the Association

With a focus on the future; in their first year the FinTech Working Group has delivered the MMIF Blockchain Reporting proof of concept. Led by Deloitte, in conjunction with the Working Group, and a number of members firms, this ambitious project is a prime example of how we can begin to use technology and Ireland’s unique FinTech ecosystem to provide more efficient and collaborative solutions to reporting obligations. This topic was one of the most talked about developments by Managers at our US Roadshows in March.

Our collective strength was also highly visible at our Global Roadshows and Events. Even though this is a hugely competitive industry, we come together

to travel the world to deliver a positive and consistent message about Ireland and the Irish Fund Industry. I would like to thank all those that gave up their time to travel this year and represent the Association abroad.

As I end my term as Chair I come back to the Lions analogy. My successor Tara Doyle, who knows her rugby as well as anyone, has the luxury of picking from an extremely talented and dedicated pool of resources from within the 118 members, 7 steering groups and the 560 talented individuals that contribute on a daily basis. Harnessing the collective strength of this group remains our Association’s greatest route to success and I firmly believe we will continue to thrive and grow.

I want to take this opportunity to thank the entire Council for their support and in particular Tadhg Young (Chair 2015-2016) and Sinead McDonald as they finish their terms. I wish Tara well as she takes up her position as Chair of Irish Funds and know that her depth of knowledge and experience will be a tremendous asset to the Association through the next year.

I will end by thanking Pat, Kieran, Declan, Maria, Patrick, Aoife, David and all the team at Irish Funds for their hard work and continued commitment in supporting and driving our industry forward.


GENERAL BACKGROUND AND ACTIVITIES

Founded in 1991, Irish Funds represents fund managers, depositaries, administrators, transfer agents, and professional advisory firms and other specialist firms involved in the international fund services

The Voice of the Funds IndustryRepresenting the industry in discussions with Government, its departments/agencies and the Central Bank of Ireland to ensure that the environment and infrastructure available can support the continued development and growth of the Industry.

An Information Resource for the International Funds IndustryThrough the development of industry policy, guidance papers, technical briefings and the output of our working groups, we assist in the defining of practice across a range of complex areas such as compliance, valuation, accounting, share dealing and registration. The partnership between members ensures that a full range of perspectives and insights are represented in the formulation of guidance papers. In doing so, we provide a valuable service in generating

and disseminating information in an effective and complete way.

Promoting and Profiling Ireland’s Funds IndustryIrish Funds raises the profile of the industry to promote Ireland as the premier centre of excellence to domicile and service international investment funds. We promote awareness of the funds industry both internationally and domestically by hosting conferences, events and seminars and by engaging with the media.

Support the Training and Development of Personnel in the International Funds IndustryIrish Funds is committed to the continued development of its most valuable resource - its people.Through the Certificate and Diploma in Investment Fund Services, the Certified Investment Fund Director Programme,

other industry related programmes run in conjunction with the Institute of Banking and our industry specific and technical seminars, we actively support the professional development of those working in the industry.

Representing the Funds Industry at a European/International LevelIrish Funds is a member of the European Fund and Asset Management Association (EFAMA). In cooperation with our European partners, we actively engage in policy discussions at an EU level. We are a member of the International Investment Funds Association (IIFA) which brings together representatives from forty one national and regional fund associations across the globe.

industry in Ireland. Members come from all areas of the international funds industry, and Irish Funds is well-placed to support and complement the continued development of the industry. Irish Funds vigorously pursues

the goal of enhancing and promoting Ireland as the location of choice for the domiciling and administration of investment funds.

Objectives of Irish Funds: The Irish Funds Industry Association (Irish Funds) is the representative body for the international investment fund community in Ireland.

Our main roles include:


REGULATORY & TAX HIGHLIGHTS

During the course of the last year, Irish Funds has responded to a wide range of regulatory and tax issues as well as leading on a number of product related initiatives. Areas covered include:

Capital Markets Union

Private Equity + Venture Capital

Loan Origination

Shanghai-Hong Kong Stock Connect

Audit Directive

ESMA Remuneration Guidelines

Financial Reporting

ELTIFs

Investment Firm Capital

AIFMD

Finance Bill

Treatment of CSDs under AIFMD & UCITS

US Prime Brokers and AIFMD

FinTech

UCITS Share Classes

Central Bank UCITS Rulebook/Regulations

Investor Money and Fund Assets

FATCA + CRS

AML

UCITS V

VAT

Limited Partnership Reform

Brexit

Pensions

Corporate Governance

Asset Segregation

Money Market Funds

OECD / BEPS

CP 86 – Management Company Effectiveness

PAGE 12 - ANNUAL REVIEW 2016 -17PAGE 12 - ANNUAL REVIEW 2015 -16

Annual Global Funds Conference

(Left to right) Alan O’Sullivan, Chairperson, Irish Funds, Mr Michael Noonan TD, Minister of FinancePat Lardner, Chief Executive, Irish Funds

Annual Dinner

(Left to right) Pat Lardner, Chief Executive, Irish FundsPeter Leech, Silver Plate recipient, Northern TrustMichael Feeny, Chief Executive, The Institute of Banking

IRISH FUNDS EVENTS & ACTIVITIESAPRIL 2016 - MARCH 2017

Hong Kong Seminar - Ringing the closing bell of the HKEX

(Left to right) Kevin Rideout, HKExConor O Mara, Jeffries Hong Kong LimitedMicelle Lloyd, MaplesPeter Ryan, Consul General, Hong Kong & Mancau Pat Lardner, Chief Executive, Irish FundsMr. Eoghan Murphy, Minister of State for Financial Services, eGovernment and Public ProcurementH.E Paul Kavanagh, Irish Ambassador to China Alan O’ Sullivan, Chairman, Irish FundsTony Rhia, Irish Funds, Hong Kong Paul Molony, Eversheds

Toronto Seminar

Kieran Fox, Irish Funds



A very active program of Irish Funds hosted events was completed during the last twelve months. These events are a mixture of education, member engagement, promotional activity and international representation of our industry.

DATE

07 April 201614 April 201627 May 201607 June 201622 June 201623 June 201618 August 201622 August 201624 August 201612 September 201614 September 201615 September 201605 October 201606 October 201612 October 201627 October 201624 November 201625 November 201601 December 201613 January 201717 January 201720 January 201721 January 201710 February 201706 March 201707 March 201708 March 201709 March 201710 March 201710 March 201713 March 201724 March 201730 March 2017

LOCATION

DublinLondonDublinBerlinDublinDublinSingaporeHong KongTokyoFrankfurtGenevaZurichLASan FranciscoDublinDublinLondonLondonDublinDublinHong KongChinaChinaLondonTorontoBostonBostonNew YorkNew YorkNew YorkCaliforniaDublinLondon

EVENT

Annual DinnerIndustry Seminar Irish Funds AGM and CEO Meeting Fund Forum Networking LunchGolf Outing - Annual Global Funds Conference Irish Funds Annual Global ConferenceIndustry SeminarIndustry SeminarIndustry SeminarIndustry SeminarIndustry SeminarIndustry SeminarIndustry SeminarIndustry SeminarAIF Town HallTechnical SeminarPromoters Dinner Industry SeminarTown Hall EventTechnical SeminarIndustry SeminarIndustry SeminarIndustry SeminarProspective members lunchIndustry SeminarPromoters Dinner Industry SeminarPromoters Dinner Industry SeminarProspective members LunchIrish Funds ICI St. Patricks day event Technical SeminarIndustry Seminar

Hosted Events

We continue to see a large and active participation by member companies in our various events reflecting the important role they play in advocacy and promotion. In the last 12 months we continued our approach of running a series of hosted events.



Regular participation as speakers, panelists and promotional work in conjunction with IDA Ireland continue to be important. Outside of these

events Irish Funds executives are also regularly called upon to provide industry briefings to member firms, diplomatic representatives and companies

considering inbound investment into Ireland.

Given the international dimension of regulation and the importance of representing the industry in regional and global debates Irish Funds are an active participant at board level within both the European Fund and Asset

Management Association (EFAMA) and the International Investment Funds Association (IIFA). Listed are a selection of activities undertaken by the organisation to maintain and build further relationships and understanding

with international groups and bodies similar to our own. In addition to the specific events mentioned Irish Funds executives and committee members actively contribute to industry working groups at European and global level.

DATE06 June 201613 October 201613 October 201625 October 201606 December 201605 January 201716 January 201707 March 2017

LOCATIONFund Forum InternationalNew YorkNew YorkJapanLuxembourgDublinHong Kong Frankfurt

EVENTFund Forum International 2016 SIFMAAsset Management Conference - Speaking 30th IIFA ConferenceAssociation of NA Banks of Luxembourg (AMABL)Presentation to IDA overseas repsAsian Financial Forum WM Gruppe event

International Representation and Other Events

Conference Participation

DATE

19 April 201617 May 201617 May 201617 May 201625 May 201625 May 201607 June 201615 June 201620 June 201621 June 201622 June 201608 July 201612 July 201623 August 201601 September 201613 September 201613 September 201615 September 201622 September 201622 September 2016

LOCATION

BrusselsBrusselsWashingtonWashingtonBrusselsBrusselsBrusselsDublinDublinDublinDublinSeminarDublinTokyoDublinBrusselsBrusselsDublinBrusselsBrussels

EVENT

EFAMA Board of DirectorsEuropean Commission Meeting IIFA Conference CommitteeEFAMA and International Committee Meeting Public Policy ForumIrish Perm Rep MeetingPerm Rep Meeting ETDF / ALFI Meeting on Stock Connect HKEx meeting on Stock Connect Meeting with ICI International Operations CommitteeEuropean Commission Meeting MEP MeetingAustrian Ambassador Meeting Tokyo Ambassador Meeting Embassy of Ireland Luxemberg Meeting Perm Rep Meeting EFAMA Board of DirectorsIreland China Business Association Financial Forum EFAMA Public Policy ForumIrish Perm Rep Meeting



24 October 201626 October 201615 November 201616 November 201606 December 201605 January 201716 January 201717 January 201718 January 201718 January 201720 January 201723 January 201707 February 201708 March 201708 March 201713 March 2017 to 16 March 201721 March 2017 to 22 March 2017

JapanDublinBrusselsBrusselsLuxembourgDublinHong KongBrusselsBeijingBeijingShanghaiDublinDublinBrusselsBrussels

(Palm Springs, CA)

Brussels

IIFA Intl Regulatory Affairs CommitteeCity of London meeting with Irish Financial Services IndustryEFAMA/ICI Joint MeetingEFAMA Investment Management Forum Irish Embassy in Luxembourg MeetingIDA overseas reps meeting Meeting with SFCEFAMA Board of DirectorsAMAC Meeting AMAC SeminarShanghai Asset Management Association Meeting Monetary Authority of Singapore MeetingVideo Conference with Asia Missions - Embassies & ConsulatesEFAMA / AML Working Group Meeting EU Commission Meeting

2017 Mutual Funds and Investment Management Conference

EFAMA Board of Directors Meeting


MARKETING & MEDIA

Creating and delivering the key messages of the Irish funds industry both domestically and internationally is crucial to developing and maintaining the profile of Irish Funds. We distribute and target these messages utilising multiple channels in a strategic and consistent approach. The Marketing & Promotions Steering and Working Groups collaborate with the wider organisational group structure to develop relevant content and materials for our stakeholders that bring attention to the Irish solutions and opportunities available.

Outreach through EventsOur events increase awareness of the solutions we can offer to connect fund managers globally with their crossborder investors. Our continuing goal is to bring awareness and understanding of the contribution and importance of the industry in Ireland. Irish Funds executives, members and key industry experts are frequently at Irish Funds seminars around the world speaking on opportunities, industry updates and why Ireland is the best place to domicile a fund. Surrounding these events are numerous journalist meetings, live social media activity, multimedia promotional pieces and continuous engagement with targeted regional marketing lists and attendees.

Media Influence2016/2017 has seen a continued effort by Irish Funds to broaden its coverage in the media and establish our global reach. We regularly send out press releases and our spokespeople and representatives participate in a large amount of media opportunities on a monthly basis.

These media opportunities include market commentary, introductory media briefings and contributed articles with coverage appearing across a varied range of target national and trade media on nearly every continent. We also regularly submit articles on timely topics to industry publications. Publications we have featured in include Financial Times, FTfm, Irish Times, Sunday Business Post, Bloomberg, Reuters, Opalesque, Portfolio Adviser, Funds Europe, Ignites Europe, Asian Investor, Ignites Asia, Hedge Week, Institutional Asset Manager and Global Investor.

Key AchievementsKey achievements during the course of the year included:• Increased traffic to the Irish Funds

website (30,000 page views monthly) and ongoing content development and updates to focus on our members and the industry by providing up-to-date news, information on funds, Ireland as a jurisdiction and key regulatory and tax topics

• Launch of the Brexit Resource area, highlighting the Irish funds industry response to the challenge of Brexit and the resources provided by member firms

• Launch of the enhanced Global Distribution area of the website

• Extensive use, monitoring and fine-tuning of our mailing system for more efficient, targeted and high quality communications

• Increase in social media followers and engagement on both our Linkedin and Twitter accounts

• Dissemination of regular seasonal newsletters

Irish Funds PublicationsIrish Funds publications are regularly updated with key facts and figures and have been redesigned throughout the year, as well as featuring new publications to the suite of materials.• Why Ireland (Euro)• Why Ireland ($USD)• Why Ireland (Chinese Language)• Guide to Establishing Money Market

Funds in Ireland (New)• Guide to Establishing Loan

Originating Funds in Ireland (New)• Ireland: A Guide to International

Fund Distribution• Country Distribution Guides

(Members Only) - Switzerland, France, Hong Kong, Singapore, Taiwan (New)

• Liquid Alternatives: Why Ireland for Alternative UCITS

• CCFs: The Tax Efficiency in Asset Pooling

• Why Ireland for ETFs: A Guide to Issuing ETFs (Exchange Traded Funds)

• Irish AIFs: A Guide to establishing Alternative Investment Funds in Ireland

• Membership: Supporting your International Funds Business through Advocacy, Collaboration and Promotion

We also produce other targeted brochures and flyers throughout the year for specific events and campaigns, including for the annual conference, UK seminars, the China promotional visit and a targeted membership benefits flyer for asset managers.


MARKETING & MEDIA

irishfunds.ie

WHY IRELAND Excellence, Innovation, Reach

SPONSORSHIP OPPORTUNITIES - PAGE 1

BECOME A SPONSOR | CONTACT DAV ID SH IRLEY

Direct dial : + 353 1 6753205 | david.shir ley@ i r ishfunds.ie | www.ir ishfunds.ie

irishfunds.ie

Position your brand at our 2017 Events

2017 SPONSORSHIP & PROMOTIONAL OPPORTUNITIES

IRELAND: A GUIDE TO INTERNATIONAL FUND DISTRIBUTION irishfunds.ie

MEMBERSHIPSupporting your International Funds Business through Advocacy, Collaboration & Promotion

irishfunds.ie

Digital Reach

www.irishfunds.ieMonthly page views: 25,000-30,000

From April 2016 to March 2017: 288,102 page views

TwitterFollowers 1,331

Linkedin Followers: 2,316Impressions: 247,718

irishfunds.ie


irishfunds.ie



REGULATORY REPORTING BLOCKCHAIN

In 2016, Irish Funds and Deloitte embarked on a 10 week Proof of Concept (PoC) to build a blockchain based regulatory reporting platform, ‘RegChain’. In order to understand how the technology could bring the greatest value, it was essential to understand the challenges related to the traditional regulatory processes prior to the design and build of the Prototype. The choice was made for this PoC to focus on Money Market and Investment Funds (MMIF), which is a quarterly return for all Irish Domiciled funds. However, after discussions with the working group, it was decided that the PoC would be built in such a way that it could be applicable to all regulatory reporting processes which require the sharing of high volumes of data securely. Other examples identified included regulations such as AIFMD Annex IV Reporting.

Industry ResponseFollowing on from the global financial crisis, regulators across the globe have begun focusing on increasing financial stability whilst still protecting the investor. This has resulted in an increasing regulatory burden which is impacting the bottom line of many financial institutions. As a result the industry has reacted in a variety of ways:• Additional resourcing to meet the

new regulatory requirements.• Offshoring functions and teams to

lower costs and help manage the cost of servicing.

• Re-engineering internal processes for more effective regulatory processing.

• Shoe horn new bespoke solutions into the legacy system architecture.

Although these actions have helped in the short term, they have not fixed the bigger problem which is the sustainability of current processes. MMIF reporting is operationally inefficient due to its heavy reliance on Microsoft Excel to crunch the numbers. As with many processes which are largely manual, there is the potential risk of data manipulation and human error. Furthermore, the ever changing nature of these regulations has increased the burden on fund administrators, which naturally, has led to increased costs.

Why blockchain?A blockchain is a highly secure, tamper proof, shared online ledger, enabling organizations to exchange value with no third party involvement, with the ability to store assets, identities, contracts and more. This technology can bring real benefits to the regulatory reporting process due to a number of its features and characteristics which can enhance the overall ability to meet reporting requirements.• Data integrity - Due to the

blockchain’s hashing capability, data that is entered on the blockchain is extremely difficult to alter. Once approved by consensus it is immutable. Any change to data can be tracked in the chain reducing the

possibilities for fraud or malpractice.• Reliability - Blockchain does not

have a central point of failure and is better able to withstand malicious attacks. Disaster recovery is inherently built into a blockchain as standard due to all parties having a copy of the ledger.

• Storage and Speed - The blockchain provides for near real time updates of data across nodes. This facilitates faster sharing and access to data, with entities such as a regulator.

• Analytics - By providing a single source of accurate and immutable data, the blockchain, a repository of transactional and fund data, can be used to develop greater analytics. A singular view of each participant’s positions across all asset classes can be made available assisting in overall management efforts and MIS collation.

Project next steps The next steps for the project team and industry group will be to review the Proof of Concept and the practical production questions it has raised. Following this, a business decision will be made on whether or not to continue with the solution and advance to a pilot stage. However, what we have learnt from the Proof of Concept is that blockchain has the potential to fundamentally change the way we operate in the asset management industry, and Irish Funds has been a visionary in trialing the technology at such an early stage in the blockchain journey.

Regulatory reporting is a key obligation for our members and an area of focus for the Central Bank of Ireland in 2017. Ireland aims to be at the centre of the blockchain revolution, Irish Funds in collaboration with its members and Deloitte, advanced ‘Project Lighthouse’ to develop a blockchain proof of concept on regulatory reporting.


WHO’S ALREADY HERE

887 Fund Managers from 53 Countries

KEY

40 + Companies

10 - 40 Companies

1 - 9 Companies

352 189 56 68 222UK COMPANIES US COMPANIES SWISS COMPANIES ASIAN COMPANIES OTHER COMPANIES

SOURCE: Monterey 2016


IRISH FUNDS AROUND THE GLOBE

KEY

Global Offices

Cities 1 -14

12

3

4

5

67

8

9

10

12

14

13

11

14 Offices Globally (In Conjunction with IDA Ireland)

4 1 3 5 1NORTH AMERICAN SOUTH AMERICAN EUROPEAN ASIAN AUSTRALIAN

1. New York2. Boston3. Chicago4. Atlanta5. Sao Paulo6. Dublin7. London

8. Frankfurt9. Singapore10. Shanghai 11. Hong Kong12. Beijing13. Tokyo14. Sydney


ASSOCIATION STRUCTURE

An elected council of 13 members governs Irish Funds. The work of the council is supported by a network of steering and working groups and the day to day affairs of the association are managed by a full time secretariat.

The working group structure is summarised below:

AMarketing / Promotion

BDistribution

CTax

DOperational

EAIF Product Dev Group

FUCITS Product

Dev Group

GFront Office

A

Marketing

Promotion

Events

Conference

Membership

Comms /

Publications

B

Distribution

UK

Europe

Asia

Latin

America

Switzerland

North America

C

Tax

International

VAT

FATCA/CRS

Domestic

D

Operational

Legal

Transfer

Agency

Depositary

Financial

Reporting

HR &

Training

Head of

Operations

D

Operational

(Cont’d)

AML

Middle Office &

Related Operations

Management

Company

Effectiveness

Regulatory

Reporting

Fintech

E

AIF Product

Hedge Funds

Private Equity

Real Estate

AIFMD

ELTIFs &

Loan Funds

F

UCITS Product

UCITS V

ETFs

MMFs

UCITS

RuleBook

& Other issues

G

Front Office

Investement Risk

Asset Management

Regulation

Capital

Markets Union

Organisational risk

Council

Programme Office

Steering Groups

Working Groups

Executive


IRISH FUNDS STEERING GROUPS

1. Marketing and Communications Steering Group

The Marketing and Communications Steering Group is made up of 4 working groups including; Membership, Events, Conference and Communications and Publications. Collectively the Steering Group has responsibility for on-going engagement with our members and prospective members to create and deliver the key messages that promote the industry and Irish Funds, as an association, domestically and internationally.

Update on key activities/initiatives:This year Irish Funds hosted a series of membership drive lunches in London and New York, with a focus on asset managers. This tactic has proven successful in that we have surpassed the target for new membership revenue for 2017. Further lunches are planned with Edinburgh, a specific target for later in 2017. The success of this approach requires constant fuelling of the pipeline of prospective new members. The focus of the membership team now is building the 2018 pipeline. Other initiatives for 2017/2018 include developing membership testimonials on video/You Tube/digital media to encourage membership. Irish Funds added 14 new members to the association in 2016.

ConferenceThe Irish Funds Annual Conference 2016 took place on Thursday, 23 June 2016. The theme was ‘Collective Strength – Growing Together.’; and

the conference brought together hundreds of global CEOs and industry executives with European policy makers and regulators to explore and debate the key issues of the industry. 2016 marked the 25th anniversary of the Irish Funds Industry Association and having seen Ireland develop as a global centre for excellence for funds, the programme focused on the opportunities which the industry should be embracing in the next 25 years.

Events An extensive calendar of over 33 networking events and industry seminars took place across US, Asia and Europe in 2016. The Events committee focused on making changes to enhance attendance and expand the brand as wide as possible including holding the first Irish Funds event in Toronto. The annual events in Boston and New York continue to resonate as demonstrated in the breadth and calibre of attendees. We have made inroads in the Alternatives community and in new locations with further work needed to build out our networks (traditional and alternative) in Los Angeles, San Francisco and Toronto.

Communications & PublicationsThe primary focus of the communications group in 2016/2017 was the newsletter/ brochures content and delivery. The team coordinated the spring 2016 newsletter adding contributions from various working groups. We worked on how to improve the presentation of the articles and the photo addition was warmly received by all contributors. The Brexit Brochure was a focal point in between the Autumn and Spring newsletters.

We received some excellent contributions and feedback on the brochure. The autumn 2016 and spring 2017 brochures were completed in a timely manner, with current topics, such as cyber security, outsourcing, UCITS cross boarder distribution to name a few. While it is often challenging to get articles, we always managed to meet the deadline.

Social MediaThe Marketing & Communications Group urge greater promotion of Irish Funds LinkedIn & Twitter page among staff at member firms. With 14,000 people working in Funds in Ireland – the Irish Funds social media platforms can be a better source to disseminate Irish Funds information around our industry and be a better way to promote industry events to member contacts. Since promoting these platforms we have seen an increase of over 1,000 followers from these platforms and an increase of over 5,000 page views per month.

The Marketing & Communications team are supportive of initiatives to establish US and European “Chapters” or the like to better exploit the power of our collective networks.

2.Distribution Steering Group

2016/17 has been a very busy period for the Distribution Steering Group (DSG). The DSG meets monthly and coordinates the activities of the six Distribution Working Groups covering the UK, Switzerland, Continental Europe, Asia, North America and Latin America.



As a reminder, the mission statement and objectives of the distribution working groups are to:

• Promote Ireland as a domicile for internationally distributed investment funds;• Capture and promote key statistics regarding the distribution of Irish domiciled funds across the Investment Management community;• Ensure Ireland’s competitive advantages from a Distribution perspective are understood and marketed from a: - Service - Regulatory - Tax Perspective• Identify new ways and emerging opportunities to facilitate the ease of distribution for funds domiciled and serviced from Ireland; and• Identify and work to remove any barriers or obstacles to the successful distribution of Irish funds in all key markets.

The Working Groups have continued to engage with managers and other relevant stakeholders in their respective target markets to enhance Irish Funds understanding of the dynamics of fund distribution in each market. It’s also exciting that we have a number of manager members participating as active members on some of the Working Groups and we would encourage those who would like to get involved to contact Irish Funds.

effectively to domestic, regional and global tax developments impacting the industry in order for Ireland to continue to have a competitive tax regime providing certainty, stability, and transparency.

Update on Key Activities/Initiatives

BEPSThe OECD BEPS (Base Erosion and Profit Shifting) project continues with a majority of the actions finalised. In November 2016, the OECD issued the multilateral instrument (Action 15) which aims to implement BEPS measures including provisions on treaty abuse and permanent establishment in the context of double tax treaties. The multilateral instrument is a result of negotiations with in excess of 100 jurisdictions. It is intended that the multilateral instruments will be signed by the jurisdictions in June 2017.

Treaty access for both CIV and non-CIV funds continues to be a key area of focus for the committee. In particular, the future application of the ‘Principal Purpose Test’ included in the multilateral instrument is of great importance to ensure that funds are not inappropriately denied the benefits of double tax treaties. In January 2017, the OECD issued a public consultation on the treaty entitlement of non-CIV funds and, in particular, draft examples on the application of the ‘Principal Purpose Test’ to transactions involving non-CIV funds. The International Tax

In 2016 the DSG ran the first Irish Funds Distribution workshop in conjuction with the IF Annual Global Funds Conference. The workshop, which took place on June 24th, was attended by over 60 international delegates. Videos of the workshop sessions covering distribution trends and topics across a range of markets are available to IF members via the IF Sharepoint site.

Ireland: A Guide to International Fund Distribution 2016 which was published in 2016 turned the spotlight on key distribution facts and figures, regulatory developments and taxation considerations impacting fund distribution. Since then the Irish Funds Distribution web pages have also been overhauled to include a large amount of distribution related information. The DSG working groups have also been working hard to produce a number of distribution guides which will be published in due course.

Preparations are well advanced for the second Irish Funds Distribution Workshop which will take place on May 26th. Topics being discussed include MiFID II, the impact of Brexit on European fund distribution and digital disruption to fund distribution.

3.Tax Steering Group

The purpose of the Tax Steering Group is to develop the Irish tax environment in pursuit of business opportunities for the Irish funds industry and to respond



WG submitted a detailed response to this public consultation in comments on widely held non-CIV funds and the examples included therein. The committee continues to monitor this important topic and engage with the relevant stakeholders.

In June 2016, the ECOFIN approved the Anti-Tax Avoidance Directive (‘ATAD’) covering hybrid mismatches, controlled foreign companies, interest restrictions, exit taxation and a general anti-abuse rule. The committee continues to monitor the progress of the implementation of ATAD including Ireland’s adoption of the measures to ensure there are no unintended consequences from Irish domiciled funds.

Common Reporting StandardThe Common Reporting Standard (CRS) is effective in Ireland from 1 January 2016. The first reporting under CRS is due to be submitted by Irish financial institutions (including Irish domiciled investment funds) to the Irish Revenue by 30 June 2017. The CRS/FATCA WG continues to engage with the Irish Revenue in order that the administrative requirements (including CRS schemas and ROS set-ups) are in place with supporting guidance to allow funds fulfil their reporting requirements.

Other Tax IssuesThe committee continues to focus on other topics both domestically and internationally including both administrative and policy issues.

leading asset managers, legal advisors, auditors and consultants. This Working Group helped ensure that Ireland established a robust but pragmatic framework for investment fund governance.

UCITS V also presented a significant challenge for all industry participants. The Depositary Working Group – working closely with many other Working Groups – helped ensure a smooth implementation of this far reaching regulation with the Level II regulations coming into effect in October.

Anti-Money Laundering continued to be a focus for international regulators and Ireland was no exception in seeing increased focus in this area. The Anti-Money Laundering Working Group – working with the Transfer Agency, Legal and Head of Operations working groups – helped our industry navigate this increasingly complex and challenging area. In addition to their analysis of discontinuing business relationships, this group also managed developments around SI 560 (Beneficial Ownership Register), the 4th and 5th AML Directives and also participated in FATF’s National Risk Assessment of Ireland.

As our industry becomes increasingly global and cost efficient, the outsourcing of activities to locations and entities outside of Ireland is an important but complex topic. The Head of Operations Working Group

4.Operational Steering Group

The Operational Steering Group covers a wide range of Working Groups. These include:1. Head of Operations Working Group2. Financial Reporting Working Group3. Depositary Working Group4. Legal Group5. Transfer Agency Working Group6. Anti-Money Laundering Working

Group7. HR & Training Working Group8. Middle Office & Related Ops

Working Group9. Management Company Effectiveness

Working Group10. Regulatory Reporting Group11. FinTech Working Group12. Client Assets Working Group

It is almost impossible to list all of the activities undertaken by this Steering Group. By its design, this group brings together teams to focus on many of the core activities of our member firms. The Association’s framework which allows these Working Groups to work together on industry issues proved very valuable again this year and a few of the highlights are listed below.

The Central Bank’s consultation process on management company effectiveness was a significant matter for all participants in our industry this year. The Management Company Effectiveness Working Group brought together representatives from many categories of member firms – located both in Ireland and abroad – including



The Finance Act 2016 introduced of the Irish Real Estate Fund (IREF) legislation which applied taxation to non-exempt investors in Irish funds holding Irish real estate. The speed of implementation of the legislation in respect of a complex issues has resulted in uncertainty on the application to the rules due to the devise and complex nature of funds and their investors holding Irish real estate. The committee through, a dedicated WG, continues to engage with Irish Revenue on the development of detailed guidance notes on the application of the legislation.4.Operational Steering Group

The Operational Steering Group covers a wide range of Working Groups. These include:1. Head of Operations Working Group2. Financial Reporting Working Group3. Depositary Working Group4. Legal Group5. Transfer Agency Working Group6. Anti-Money Laundering Working

Group7. HR & Training Working Group8. Middle Office & Related Ops

Working Group9. Managerial Company Effectiveness

Working Group10. Regulatory Reporting Group11. FinTech Working Group12. Client Assets Working Group

cimportant role in informing government policy on the development of our industry. An employment survey across all member firms was completed by the HR & Training Working

Also with a view to the future, the Middle Office & Related Operations Working Group undertook a major survey on the provision of middle office services by member firms. This survey, which was presented to Council in March, identified a number of opportunities to expand the level of these services and will form the basis for activities for this Working Group going forward.

Given the increasing breadth of issues being channelled through this Steering Group, the Programme Office have recommended to Council that the constitution of this group be reviewed for the coming year to ensure that it continues to be appropriately structured to deliver on its important mandate.

Group. This employment survey is an important activity for our Association and it is essential that member firms continue to assist in the gathering of this important data.

Across the working groups, significant materials were generated to benefit member firms. This included the publication of numerous practice papers, white papers and industry seminars. For example, the Financial Reporting Group produced a paper on IFRS 9, a white paper on Financial Reporting, a guidance paper on disclosures relating to SFTR and ran a joint seminar with the Tax Working Group in October. Other practice papers were produced by the AML, Transfer Agency and Depositary Working Groups. A new development this year was the first quarterly briefing for In-House Counsel from the Legal Working Group and these briefing will be repeated throughout the year.

IF is also focussed on the future of our industry. An exciting development this year was the establishment of the FinTech Working Group. As well as providing an important clearing house for industry developments in this area, the FinTech Working Group also lead a cross-firm project on the use of blockchain technology for regulatory reporting. This prototype project – supported by the Financial Reporting and Regulatory Reporting working groups – was a great example of how the Irish Funds ecosystem can come together to create advantage for the overall industry. We can expect that the FinTech working group will lead similar initiatives in the coming months.


brought together a wide range of Administrators and Depositaries to establish a Statement of Best Practice on outsourcing. The paper – along with an inventory of current industry challenges on outsourcing – provides a very valuable reference for framing engagement with the Central Bank as this subject continues to evolve in the coming year.

All of our industry’s activities are dependent on the availability of sufficient numbers of skilled personnel to service our clients in a professional and cost-effective manner. The HR & Training Working Group undertook a major review of talent and skills development in our industry during the year. This review provided Council with an analysis of the current status of talent and skills development within our industry as well as an outline of the challenges which our industry is facing in this important area. The 10 recommendations included in this report were approved by Council and are being implemented to ensure that Ireland continues to develop its talent pool and remains an attractive location for the provision of our services.

Accurate statistics on the levels of employment in our industry play an important role in informing government policy on the development of our industry. An employment survey across all member firms was completed by the HR & Training Working Group. This employment survey is an important activity for our Association and it is essential that member firms continue to assist in the gathering of this important data.

office services by member firms. This survey, which was presented to Council in March, identified a number of opportunities to expand the level of these services and will form the basis for activities for this Working Group going forward.

Given the increasing breadth of issues being channelled through this Steering Group, the Programme Office have recommended to Council that the constitution of this group be reviewed for the coming year to ensure that it continues to be appropriately structured to deliver on its important mandate.

5.AIF Product Development Steering Group

The AIF Product Steering Group monitors and provides strategic guidance on legal, regulatory and product initiatives which impact Irish alternative investment funds whether at a domestic, EU or global level.

The aim of the AIF Steering Group is to further develop and enhance Ireland’s reputation as the leading EU domicile for the establishment, management and distribution of AIFs.

The Steering Group’s mandate covers the entire alternative asset sector and has formed specific Working Groups in the areas of hedge funds, real estate funds, private equity, European Long-term Investment Funds (ELTIFs) and loan funds and wider developments in AIFMD.

Across the working groups, significant materials were generated to benefit member firms. This included the publication of numerous practice papers, white papers and industry seminars. For example, the Financial Reporting Group produced a paper on IFRS 9, a white paper on Financial Reporting, a guidance paper on disclosures relating to SFTR and ran a joint seminar with the Tax Working Group in October. Other practice papers were produced by the AML, Transfer Agency and Depositary Working Groups. A new development this year was the first quarterly briefing for In-House Counsel from the Legal Working Group and these briefing will be repeated throughout the year.

Irish Funds is also focussed on the future of our industry. An exciting development this year was the establishment of the FinTech Working Group. As well as providing an important clearing house for industry developments in this area, the FinTech Working Group also lead a cross-firm project on the use of blockchain technology for regulatory reporting. This prototype project – supported by the Financial Reporting and Regulatory Reporting working groups – was a great example of how the Irish Funds ecosystem can come together to create advantage for the overall industry. We can expect that the FinTech working group will lead similar initiatives in the coming months.

Also with a view to the future, the Middle Office & Related Operations Working Group undertook a major survey on the provision of middle



Hedge Fund Working Group updateA key objective of the Hedge Fund Working Group this term was to carry out an extensive review of the competitiveness of Irish hedge funds. Part of that review resulted in the creation of a fund product matrix, which will be available at the Annual Conference. The fund product matrix analyses the main AIF structure available in Ireland and breaks these down into specific sectors and associated asset classes. Allocations to Irish AIFs continue to grow as investors, and institutional investors especially, look for diversification and alpha against a broader backdrop of difficult market conditions and low performing returns. This search for diversification and alpha allied with the trend of convergence between traditional and alternatives asset management means new distribution channels are available as avenues for growth for managers with strategies linked to these asset classes.

In addition, the Hedge Fund Working Group produced a paper comparing the Irish QIAIF to other EU products. The paper outlines key similarities and differences across a sub-set of many areas ranging from legal structure requirements, tax considerations and minimum sizes, etc.

Finally, the Hedge Fund Working Group also contributed to the production and review of AIMA’s Guide to Sound Practices for the Selection and Periodic Assessment of Administrators which is due for issue in June 2017.

Private Equity Working GroupThe objective of the Private Equity Working Group is to enhance Ireland’s offering and reputation as a domicile and servicing centre for private equity funds. In order to create the right environment for this to occur, the key objectives that were identified at the outset were: i. a significant overhaul of the

existing limited partnership legislation (LP) in order to bring it in line with competitor jurisdictions;

ii. in addition to creating the right legislative framework, a number of amendments need to be made to the regulatory framework supporting the legislation; and

iii. closer to home, we need to create the right environment for this to happen by raising awareness within the public sector (through both Government and public sector bodies) of the benefits of real economy investing.

In terms of progressing these initiatives, the following key milestones have been reached: i. amendments to LP legislation:

significant progress has been made, both through the LP legislative sub-group and the Private Equity Working Group. We are at an advanced stage of the process and are hoping for Heads of Bill to be published shortly;

ii. CBI interaction/amendments to AIF Rulebook: a considerable amount of work has been undertaken and we submitted a paper to the CBI last November

and have had two follow-up meetings with them. Progress has been made but a further submission is required;

iii. awareness of benefits of real economy investing: Irish Funds held a seminar on 17 May to discuss the benefits of real economy investing and the enhancements that will be made to the environment by amending the legislative and regulatory framework governing real asset funds. The European Investment Bank (EIB), as a significant investor in this sector, participated in the event, along with a PE manager and industry representatives. It is hoped that by adding to the regulated funds framework a “fit for purpose” LP structure should enhance Ireland’s overall attractiveness as a regulated funds jurisdiction for domiciling and servicing real asset/PE funds.

Real Estate Working Group updateThe Real Estate Working Group’s focus has mainly been on the introduction of the IREF tax and a number of the members contribute to the Irish Funds IREF group.

In addition, the Real Estate Working Group produced a paper on “Why Ireland For Real Estate Funds?” and, separately, a shorter marketing document.



AIFMD. While the transposition date for the Directive fell in March 2016, delays in the publication of Commission Delegated Regulation (EU) 2016/48 (The “Level 2 Regulations”), supplementing the UCITS V Directive, meant that the Level 2 Regulations only came into effect on 13 October 2016. The UCITS V Working Group worked with the Central Bank in relation to the transitional provisions which would apply to UCITS prior to the Level 2 implementation date. It also worked with industry participants in relation to the rules which would apply where depositary agreements were still undergoing negotiation and / or regulatory approval by the 13 October implementation date.

The working group co-ordinated the Irish Funds response to ESMA’s consultation on Remuneration Guidelines in October 2015. Following the publication of the final ESMA Guidelines on Sound Remuneration Policies under the UCITS Directive in October 2016 (the “Remuneration Guidelines”), with an effective date of 1 January 2017, the working group prepared an industry guidance paper in December 2016. The guidance paper assessed in particular the application of the Remuneration Guidelines to delegates appointed by UCITS management companies, having regard, amongst other factors, to the principle of proportionality as outlined in the UCITS V Directive

ETF Working GroupThe ETF working group continued its process of engagement with the Central Bank in 2016 with a view to further enhancing Ireland’s position as the

Investments Seminar in March and is now part of the regular suite of Irish Funds materials. The ELTIF and Loan Funds Working Group is also involved in ongoing discussions with key policy stakeholders as industry seeks to enhance Ireland’s offering in this space.

6.UCITS Product Steering Group

The objective of the UCITS Product Steering Group is to manage the engagement of the industry regarding the UCITS regulatory and legislative landscape with key local and European government stakeholders and regulators; primarily the Department of Finance, the Central Bank and ESMA. The Steering Group is divided into four key areas;

• UCITS V/VI; • Exchange Traded Funds (“ETFs”); • Money Market Funds (“MMFs”); and• UCITS Rulebook and Other Issues.

UCITS V/VI Working GroupThe transposition date for Directive 2014/91/EU on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (the “UCITS V Directive”) fell on 18 March 2016 and resulted in a number of significant changes to the UCITS regime in relation to the responsibility and liability of depositaries. It also introduced to UCITS many of the remuneration provisions which had been applied to alternative investment funds under

AIFMD Working GroupThe AIFMD Working Group has continued to monitor developments in the implementation of AIFMD at a domestic and an EU level. It has been involved with opening a dialogue with ESMA in respect of the ESMA advice that issued in July 2016 on the potential introduction of the third country passport and has been heavily involved in the EFAMA response to ESMA’s Q&A on the delegation of the management functions set out in Annex I of AIFMD.

ELTIF and Loan Funds Working GroupFollowing recent enhancements to the Central Bank’s regime for loan originating QIAIFs (L-QIAIFs), the ELTIF and Loan Funds Working Group produced a brochure on loan originating funds in Ireland that demonstrated the L-QIAIF’s ideal structure to meet both the requirements of the direct lender and institutional investor alike. Ireland was one of the first EU member states to introduce a specific regulatory framework for loan originating investment funds. The Central Bank took a leadership position on loan origination, first consulting on the topic in 2013, before publishing a dedicated loan origination framework in 2014. Recent enhancements to this regime make loan origination funds even more attractive for promoters, managers and, most importantly, investors. The ELTIF and Loan Funds Working Group produced ‘A Guide to Establishing Loan Originating Funds in Ireland’, which was printed and distributed at the London Alternative



7.Front Office Steering Group

The working groups within the Front Office steering group focus on the market and regulatory developments most directly relevant to asset managers within the Irish funds industry. This involves consideration of matters having an internal impact on the funds asset managers (e.g. operational and governance considerations in meeting existing obligations) and external developments that may create opportunities for funds asset managers or which will, in the future, have a practical impact on their business (e.g. adding individual portfolio management to their funds management business or implementation of EMIR or MiFID II requirements to their existing business model).

The Front Office Steering Group has undergone some structural changes in the past year. The existing Risk working group was split out into two working groups (organisational risk and investment risk) to account for distinct priorities in terms of risk governance. In addition, the Management Company Effectiveness working group moved from the Operational steering group into the Front Office steering group. As a result, there are now five working groups, namely:• the Organisational Risk working

group;• the Investment Risk working group;• the Asset Management Regulation

working group;

completed the trilogue review of the MMF Regulations in late 2016.

Plans for 2017-2018 include engagement with the Central Bank in relation to the implementation of the MMF Regulation in Ireland. The working group will also commence a series of seminars and public information events, highlighting the options which will become available to the promoters of Irish MMFs following the implementation of the MMF Regulation.

UCITS Rulebook and Other Issues Working GroupThe UCITS Rulebook group engaged with the Central Bank over the period in relation to the completion of updates to the Central Bank UCITS Regulations 2015. This included input to the Central Bank in the form of an Issues Tracker outlining those matters which industry believes needs to be addressed in future iterations of the Regulations and engaging with the Central Bank in relation to changes proposed by the Central Bank to the legislation.

The working group has more recently been involved in the analysis of the ESMA Opinion on Share Classes of UCITS, published on 30 January 2017 (the “ESMA Opinion”), which restricts the ability of UCITS to offer hedging arrangements at share class level. As part of this process, the working group has engaged with the Central Bank in relation to its proposals to implement the ESMA Opinion in Ireland and has highlighted some of the practical issues created by the ESMA Opinion.

largest EU domicile for ETFs. This included four separate meetings over the period each of which were focussed on ETFs. This engagement process will further develop in 2017 and beyond, following the recent publication of the Central Bank’s Discussion Paper on ETFs in May 2017 (the “Discussion Paper”). The Discussion Paper, which outlines Central Bank’s thinking in relation to the current structure and likely future development of ETFs, is a significant piece of thought leadership by the regulator of over 50% of European ETF assets and should provide industry participants with a valuable opportunity to contribute to and shape the future development of the global ETF industry.

The working group contributed to Irish Funds presentations over the course of the year, including a series of ETF focussed panel sessions at the Annual UK Symposium held in London on 16 November 2016.

MMF Working GroupThe MMF working group’s primary focus has since September 2013 been on legislative proposals relating to EU MMF reform, when the European Commission first released its proposals for a European MMF Regulation. This process of engagement with legislators and regulators at domestic and European level has continued right through to the publication of the final compromise text in December 2016. In this capacity the working group has ensured that Irish Funds has been in a position to outline and defend the role of constant NAV money market funds and to provide evidence-based arguments to legislators as they


• the Capital Markets Union (“CMU”) working group; and

• the Management Company Effectiveness working group.

In addition, sub-groups within certain of the working groups have been formed to deal with some of the more specific and topical areas of existing and future regulation affecting asset managers. For example, a sub-group has been formed to deal the requirements of EMIR implementation across the industry and a sub-group has been created with individuals having specific expertise in relation to MiFID requirements.

The Organisational Risk Working Group is focused on organisational risk areas to ensure that best practices are discussed in relation to (i) risk governance, (ii) risk frameworks, (iii) appetite statements (iv) risk and control assessments, (v) stress testing and scenario analysis, (vi) culture and people, and (vii) emerging risks. The Organisational Risk working group will be responsible for the interaction between industry representatives to ensure that discussions in relation to the effectiveness of organisational risk management are active and productive. Appropriate topics, both from the industry and from regulations, are identified in order to originate guidance/industry papers for circulation to the industry – current papers being worked on include a guidance paper on the Central Bank’s letter on Thematic Review of Risk Management, a general risk management framework for member consideration and guidance on production of risk appetite statements.

with industry participants, various regulators and the EU Commission. The working group then plans to hold a “roundtable” with asset managers to discuss the potential opportunities presented by introducing pension-passport arrangements. The CMU working group has also considered/monitored (i) EU loan origination products and jurisdictional comparisons, (ii) developments in limited partnership structures, (iii) potential impact of Brexit on CMU priorities, (iv) developments within the retail financial services market, and (v) potential for introducing efficiencies in cross border distribution requirements.

The Management Company Effectiveness Working Group primary focus was in relation to the industry engagement with the Central Bank in settling the CP86 consultation process. This was a significant engagement which was of interest to the broader industry and has now been concluded. Amongst other things, the working group was responsible for the drafting of the industry responses to CP86. Currently, and as a natural follow-on to its role in the CP86 process, the working group is working to redraft the industry code of governance (incorporating elements of CP86). In addition, it is also involved in looking at the requirements of MiFID II (product governance aspects) and feeding into the MiFID II sub-group outputs on that topic.

The Investment Risk Working Group is currently focusing on two themes: (i) liquidity risk in funds, and (ii) leverage measurements, interpretation and usage. It is expected that a “thought-leadership” paper on both themes will be produced by the end of the year.

The Asset Management Regulation Working Group has focused this year on monitoring MiFID II and PRIIPS proposals, which included reviewing the EU Legislation, Technical Standards and other relevant documentation and developments. The working group has liaised closely with other industry participants with similar interests in monitoring such developments. Key issues of relevance to asset managers in the funds industry have been identified and separate MiFID II and PRIIPS issues trackers are being prepared for the purpose of providing guidance to Irish funds asset manager members. With respect to MIFID II, the Group considered the issues raised by the Department of Finance in its MIFID II Consultation document and drafted the response of Irish Funds to that Consultation. In addition, the working group has been monitoring the risks and opportunities associated with Brexit closely.

The CMU Working Group has been mainly focussed on one key theme – the potential for the introduction of pension pass-porting arrangements within the EU. To this end, a whitepaper has been drafted with publication expected shortly and a “roadshow” is anticipated to present the paper and discuss content



TRAINING & DEVELOPMENT

Education Programmes

Professional Certificate in International Investment Fund ServicesDesigned and delivered by the industry, the Professional Certificate in International Investment Fund Services is a unique and specific programme which provides a broad view of the structure, purpose and operation of an investment fund from its establishment right through its life cycle and supports the industry’s day-to-day activities.

Professional Certificate in Investment Fund Services Risk Management (Operational Risk, Conduct Risk and Risk Culture)This programme is designed in conjunction with operational risk professionals working in investment funds services and it is a benchmark risk management qualification for the industry in Ireland. It is designed to provide an in-depth understanding of the key practical and relevant operational risk, conduct risk and risk culture challenges facing investment fund services professionals in Ireland today. The syllabus covers areas of the 2016 programme of themed inspections published by the Central Bank.

This programme is a graduate qualification and a progression for those who have completed the Professional Certificate in International Investment Fund Services. Successful candidates are also awarded the globally recognised PRMIA Operational Risk Manager Certification.

The Summit Finuas Network – Training and Grant FundingThe Summit Finuas Network was established in mid-2009 to provide enterprise led training to international financial services companies operating in Ireland. Since then over 3800 employees from Irish Funds member companies have completed network funded courses. Funds companies have invested over e1.1 million in training and benefited from over e 500 thousand in grant funding. Courses have ranged from e-learning solutions to fully accredited training courses such as the Professional Certificate in International Investment Fund Services. The Network recently partnered with Accenture to conduct a sector wide skills gap analysis to determine the current and future skills gap facing the sector.

Professional Diploma in Applied Alternative InvestmentsIncreasingly, alternative assets, which include hedge funds, commodities, private equity, structured products and real asset investments such as infrastructure investments are becoming mainstream investments which are predicted to grow significantly.

Given the breadth of alternative assets, this programme will appeal to professionals seeking specific knowledge, insight and skills in alternative investments which can be immediately applied in the day-to-day working environment and is a unique opportunity to gain a UCD postgraduate qualification in this area.

Certified Investment Fund Director ProgrammeWe are also very proud to support the Certified Investment Fund Director Institute, specialist body of the Institute of Banking, and their Certified Investment Fund Director Programme.The Certified Investment Fund Director Programme is a unique programme and first of its kind in Europe. The programme deconstructs investment fund governance in the context of the distinctive characteristics of investment funds versus other financial organisations and is designed for all investment fund directors, senior management, regulators or directors.

Irish Funds actively supports the professional development of funds industry employees and offers opportunities for people to enter the sector. In association with the Institute of Banking, Irish Funds participates in a suite of UCD accredited professional education programmes and the Certified Investment Fund Director Programme. 550 students are taking these qualifications with the Institute in 2016/2017, 60 firms have participating students. Irish Funds is also an active instigator and host of a schedule of training programmes and industry-specific seminars and briefings.


ABOUT IRISH FUNDS

Established in 1991 the Irish Funds Industry Association (Irish Funds) is the representative body of the international investment fund community in Ireland.

We represent the fund promoters / managers, administrators, custodians, transfer agents and professional advisory firms involved in the international funds industry in Ireland, with more than 13,500 funds and net assets of $4.1 trillion.

The objective of Irish Funds is to support and complement the development of the international funds industry in Ireland, ensuring it continues to be the location of choice for the domiciling and servicing of investment funds.

Through its work with governmental and industry committees and working groups, Irish Funds contributes to and influences the development of Ireland’s regulatory and legislative framework. Irish Funds is also involved in defining market practice through the development of policy and guidance papers and the promotion of industry-specific training

Irish Funds Industry Milestones 1989

Introduction of the UCITS Directive to Ireland and launch of the first Irish UCITS fund.

1991 Irish Funds Industry Association is founded, then called the Dublin Funds Industry Association (DFIA)

First Money Market Fund launches in Ireland.

1995 Collective Investor Schemes introduced by

The Finance Act 1995.

ISE becomes independent, forming The Irish Stock Exchange Limited.

2003 The Common Contractual Fund (CCF), an Irish

tax transparent structure, is established.

2008 Memorandum of Understanding signed by the

Irish and Chinese Regulators.

2009 Ireland’s combined assets under administration reach €1 trillion.

2011 Ireland is amongst the first in EU to implement

the UCITS IV Directive.

Irish domiciled investment funds reach €1 trillion

2012 Irish funds industry surpasses €2 trillion in total assets under administration.

2014 The Irish Funds Industry Association and the Asset Management Association of China sign MoU to promote closer co-operation.Ireland provides home for first China A-Shares ETF in Europe under RQFII

2013 Ireland ranked as the best place in the world

to do business by Forbes Magazine.

Ireland is first in EU to open AIFMD application process.

Ireland has the highest rating in OECD Global Forum on Transparency and Exchange of

Information for Tax Purposes.

2000 Launch of the first European Exchange Traded Fund (ETF).

2007 Dublin Funds Industry Association (DFIA) renames to the Irish Funds Industry Association (IFIA).

Financial Regulator can now authorise QIFs within 24 hours of receipt of completed documentation.

1990 Ireland is first European jurisdiction to offer a

regulated alternative investment fund product, the Irish Qualifying Investor Fund.

2015Enactment of the Irish Collective Asset-management Vehicle (ICAV) Legislation.IFIA (Irish Funds Industry Association)

rebrands as ‘Irish Funds’.

Central Bank Permits Investment in Chinese Shares via Stock Connect.

2016Ireland granted RMB 50 billion RQFII quota.

Access to Stock Connect extended to include Shenzhen.

Irish Funds Celebrates 25th Year Anniversary.

2017Irish funds industry surpasses €4 trillion in

assets under administration.

Net assets domiciled in Ireland surpasses €2 trillion.

1987 IFSC established


Irish Funds10th Floor, One George’s Quay Plaza,George’s Quay, Dublin 2, Ireland.

t: +353 (0) 1 675 3200

e: [email protected]: irishfunds.ie

May 2017

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