Central Bank’s new online regulatory reporting requirementsConsultation issued on move to new online returns |
Published June 2012
The Central Bank of Ireland has issued a Consultation Paper (CP 59) seeking industry views on its proposed move to online regulatory filing with the addition of new online questionnaires. The aim of the new online reporting format is to enhance efficiencies and improve the overall supervisory process. The move to online reporting will assist in Ireland’s preparations for the new systemic risk reporting obligations under AIFMD. The Central Bank is seeking input from industry by 25 June on how it can best streamline and automate the completion of the online regulatory returns in order to maximise efficiencies.
Two new standardised online returns – an annual Sub-Fund Profile Return and Regulatory Report (only to be provided on the occurrence of certain events) will need to be submitted. Once the changes are implemented, the following reports will need to be filed through the Central Bank’s Online Reporting (ONR) System:
- Annual Financial Statements
- Interim Financial Statements
- KIID annual update (UCITS only)
- FDI Report and Questionnaire (UCITS only)
- Sub-Fund Profile Return
- Suspension Notification (only when required)
- Regulatory Report (only when required)
- Auditor Annual Statutory Duty Confirmation Return and supporting reports
The proposed new online reporting format will include a series of questionnaire based checks with dropdown menu options to assist in categorising returns and monitoring compliance.
FDI Questionnaire
A UCITS must currently submit an annual report to the Central Bank on its derivative positions. This report will in future be uploaded to ONR and accompanied by a new questionnaire on the UCITS sub-fund’s usage of FDI. In addition to questions on breaches of global exposure and counterparty risk, the Central Bank will use the FDI Questionnaire to monitor compliance with recently implemented UCITS IV risk management requirements. The FDI Questionnaire asks for example:
- Does the sub-fund conduct back-testing and stress-testing on at least a monthly basis?
- Has the sub-fund’s back-testing been successful during the year?
- Has the sub-fund been successfully stress-tested during the year with the results clearly documented?
- Has the Value at Risk (VaR) model been subject to validation during the past 12 months?
Click here to read more about the UCITS IV VaR model validation requirements
Sub-Fund Profile Return
The Sub-Fund Profile Return is a new return which must be filed online annually before 30 June. The purpose of this return is to assist the Central Bank in gathering information on the characteristics of CIS. Accordingly, the information sought will form a basis for the Central Bank to engage with the CIS in the future. It will also enable the Central Bank to monitor trends within the fund sector.
The information sought will include, for example:
- Dealing frequency
- Investment strategy
- Geographical and sectoral breakdown of investments
- Confirmations of whether the fund engages in a securities lending or a currency hedging programme
- Confirmation of whether the fund is subject to a performance fee
- Confirmation of whether leverage is used for investment purposes
- Master/feeder relationships
Regulatory Report
The Regulatory Report is a new return that the trustee/custodian will utilise to independently report breaches and errors to the Central Bank. Additionally, the fund can utilise this new return to update the Central Bank on suspensions of net asset value (NAV) calculations or dealings for a CIS sub-fund.
The information to be reported within this new return is currently being submitted to the Central Bank in other forms and through other mediums. The Central Bank is now proposing to streamline the reporting process for breaches, errors and suspensions.
A Regulatory Report is only required on the occurrence of one of the following events:
- A material breach
- A material error
- A significant matter
- An advertent breach
- A NAV/dealing suspension
Who can report?
The fund (i.e. Board of Directors) has responsibility for filing the Annual/Interim Financial Statements, KIID annual update, FDI Report and Questionnaire, Suspension Notification and Sub-Fund Profile Return and may elect to file these itself or nominate a third party. The filing of any of the aforementioned can be delegated to the fund’s administrator or legal advisor. Entities responsible for filing will receive a unique login which will enable these firms to see all the returns that have been delegated to them for filing.
The Regulatory Report in respect of breaches and errors can only be filed by the trustee/custodian while the auditor is responsible for the filing of the Statutory Duty Confirmation Return and supporting reports. Neither the trustee/custodian nor the auditor can delegate these duties.
Key Impacts
The move to standardised online returns and the elimination of hard copy filing should enhance efficiencies and an online reporting mechanism will be necessary to meet future requirements on systemic risk reporting. The Central Bank has solicited comments with respect to how the new online returns can be best streamlined/automated.
A key factor will be determining responsibility for the filing of various reports on behalf of the fund and ensuring that delegated parties have the access they need to the information required to complete the return.
It is likely that much of this reporting will fall to third party providers who may need to streamline their current data extraction and reporting processes in order to complete the reporting in the most efficient manner possible. The importance of maximising operational synergies with a view to future reporting requirements under AIFMD will be important in that regard.
Timeframe and next steps
The Central Bank is requesting comments on Consultation Paper 59 by 25 June 2012 and proposes to implement the new online reporting by the first quarter of 2013.
The filing of the monthly Net Asset Value returns or quarterly OFI1 returns are not within the scope of this project. The Statistics Division of the Central Bank will be separately consulting with industry with a view to moving the NAV returns to online reporting.
Go to Consultation Paper 59
