Ireland could benefit from German and French restrictions to private placement rules

26 Sep, 2012

Ireland’s funds industry could be a net beneficiary if French and German regulators impose restrictions to private placement rules.

Irish regulators recently announced at the IFIA Annual Funds Conference in Dublin that they were looking at changing the rules for the country’s $2.1 trillion funds industry.

“The Central Bank has indicated that change is forthcoming in the funds sector. While Ireland intends to fully comply with AIFMD and other EU laws, the Central Bank intends to examine the need for additional domestic requirements over and above EU standards that are not in the public interest,” said Brian Kelliher, partner at Dillon Eustace in Dublin.

“In this regard, it is possible the Central Bank may remove the requirement for fund promoters in non-Ucits QIF funds given the significant requirements on fund managers under the AIFMD. It is also possible that the Central Bank may re-look at the minimum subscription requirement for QIF funds given there is no such requirement under the AIFMD,” he added.

There is speculation that France and Germany could impose restrictions making it harder for non-EU AIFMs to tap their investor base for capital, although regulators at the European Commission have said they had not heard about this. The proactive approach taken by Irish regulators could help attract capital into domestic funds.

However, Kelliher added investor protection would remain a priority at the Central Bank. He said funds would be required to have an appropriate risk profile depending on investor type, as well as adequate risk disclosures.

The country is also pushing to be a leading domicile for Islamic funds. Rough statistics indicate Ireland is home to 20% of Islamic funds outside of the Middle East. Ireland, for example, just saw its first Malaysian promoter set up shop offering an Islamic Ucits fund which is being sold into Europe and the Middle East.

“We have seen a lot of Islamic funds in Ireland. A lot of promoters offering Shariah compliant funds like the fact Ireland is an OECD jurisdiction and a member of the EU with a robust regulatory framework and expertise in establishing and servicing funds. Furthermore, domiciling in Ireland enables these firms to push their products into Ucits. The Central Bank has a dedicated team focused on Islamic funds and the government is highly supportive of boosting the presence of Islamic funds in the country,” said Kelliher.

Nevertheless, concerns remain about the broader economy in Ireland with one industry expert in London saying business had been muted in the one-time Celtic Tiger. This was disputed by Kelliher.  “It is important to distinguish between Irish banks and the domestic credit crisis, and the international financial services industry in Ireland. We have seen funds’ AuM grow substantially through the crisis. We also believe the funds industry and the international financial services industry will be essential to the economic recovery,” commented Kelliher.

AIFMDDillon EustaceFranceGermanyIrelandQIFs