IRELAND: Consultation on Enhancements to the Central Bank Client Asset Requirements, as Contained in the Central Bank Investment Firms Regulations

Thursday December 3 2020

On 03^rd December 2020, the Central Bank published Consultation Paper 133 “Consultation on enhancements to the Central Bank Client Asset Requirements, as contained in the Central Bank Investment Firms Regulations”.

The consultation seeks stakeholders’ views on proposed enhancements to the Central Bank Client Asset Requirements (the CAR). This includes broadening the scope and application of the CAR to credit institutions, targeted enhancements to include investment firms and credit institutions holding client assets in the context of conducting wholesale activities as well as other amendments applicable to all investment firms currently in scope of the CAR

This Consultation Paper is structured as follows:

• Section I sets out proposals to extend the scope and application of the CAR to credit institutions undertaking MiFID investment business;
• Section II contains details of proposed enhancements to the CAR, including those designed to capture business lines associated with wholesale market activities;
• Section III sets out future considerations in respect of the Central Bank’s client asset regime; and d. Section IV sets out proposed amendments to the Investment Firms Regulations, other than those related to the CAR.

The key aspects of the proposed enhancements to the CAR include:

• Extending the scope and application of the CAR to include credit institutions undertaking MiFID investment business;
• Introducing new requirements regarding client disclosure and consent, including enhancements applicable to investment firms that have obtained client consent to the use of client financial instruments and investment firms providing prime brokerage services;
• Introducing new CAR guidance to clarify the Central Bank’s expectations as to how client funds should be segregated;
• Introducing new requirements, and placing some existing CAR guidance on a legislative footing, in relation to the performance of reconciliations and the treatment of client asset discrepancies and reconciliation differences, and shortfalls and excesses; and
• Introducing new requirements and CAR guidance on the contents of the Client Asset Management Plan (the CAMP).

The proposals reflect that the protection of client assets continues to be a key priority for the Central Bank, and the Central Bank’s expectation that investment firms and credit institutions afford it sufficient importance within their risk management systems and control frameworks.

Click on the link for further information.