IRELAND: Central Bank of Ireland Updates UCITS Questions and Answers

Monday October 12 2020

On the 9th October 2020, the Central Bank issued the 30th edition of the Central Bank UCITS Q&A, which includes new a Q&A ID 1098 in relation to liquidity stress testing in UCITS.

The Q&A clarifies the Central Bank’s expectations in relation to liquidity stress testing in UCITS, particularly in relation to the application of the ESMA “Guidelines on liquidity stress testing in UCITS and AIFs”. The Q&A sets out the Central Bank’s reporting expectations where a stress test reveals a material risk.

ID 1098

A. The ESMA Guidelines on liquidity stress testing in UCITS and AIFs, Section V.3 “Interaction with National Competent Authorities” states that managers should notify NCAs of material risks and actions taken to address them. How should this notification be made and what should be included in the notification?

Q. Notification to the Central Bank takes the form of a two-stage process. Initial notification: The Central Bank requires that it be immediately informed via an ONR IF Regulatory Report if a stress test performed reveals a material risk. Subsequent notification: In addition to this initial notification, where a stress test reveals a material risk, the manager should draw up an extensive report with the results of the stress testing and a proposed action plan. Where necessary, the manager should take action to strengthen the robustness of the UCITS including actions that reinforce the liquidity or the quality of the assets of the UCITS. The manager shall again immediately inform the Central Bank via an ONR IF Regulatory report of the measures taken, to include the extensive report and the action plan.

Click on the above link of further information.