With effect from 2 March 2009, the Financial Regulator has withdrawn the derogation it granted in October 2008 which temporarily suspended the requirement for weekly mark to market reviews applicable to money market funds following an amortised cost valuation methodology. The derogation enabled these investment funds to suspend the required weekly reviews of discrepancies between market value and amortised cost value for certain money market instruments with a residual maturity of three months and under. The Financial Regulator has indicated that it would consider re-instating the derogation in the future, if deemed necessary.

On 17 February 2009 the Committee of European Securities Regulators (CESR) launched a call for evidence on the possible implementing measures of the UCITS IV Directive as requested by the European Commission. The Commission has requested assistance on the scope of certain measures to be introduced under the revised Directive. The request for assistance is split into three parts.

Part I of the request focuses on areas where the Commission is obliged to adopt implementing measures. The issues covered in this section mainly relate to the management company passport and include provisions on:

• Organisational requirements and conflicts of interest for management companies;
  
  
• Rules of conduct and conflicts of interest for management companies;
  
  
• Risk management;
  
  
• Measures to be taken by depositaries;
  
  
• On-the-spot verification and investigation;
  
  
• Exchange of information between competent authorities.

Part II of the request covers the implementing measures foreseen by the Directive in relation to key investor information (KII) disclosures.

Part III of the request for assistance covers the other chapters of the UCITS Directive for which the Commission also received implementing powers in the areas of mergers, master/feeder structures, and the notification procedure.

Representatives from the Irish Funds Industry Association (IFIA) met with the Financial Regulator in November 2008 to discuss the Financial Regulator's approach to the Minimum Activities rules. Following the meeting with the IFIA, the Financial Regulator confirmed its continued willingness to consider and grant derogations from these rules on a case by case basis.

The agenda for the meeting included a discussion on the challenges faced by Irish service providers in relation to Irish funds trading in the Asian market. In this regard, the Financial Regulator also confirmed that it would be willing to consider submissions for derogations from its minimum activities rules where Irish authorised funds trading in Asia need to produce a net asset value and dealing price (NAV) in the Asian time zone. Derogations will be considered on a case by case basis and if granted, will be specific to named investment funds. Any derogation granted will be subject to conditions imposed by the Financial Regulator, including a timely subsequent check of the NAV in Ireland. Discussing the wider Minimum Activities regime the Financial Regulator has agreed to consider the implications and merits of moving from a minimum activities regime to that of a control based environment.

The Financial Regulator has recently confirmed that it is establishing a dedicated regulatory unit for the authorisation of Shari'ah funds in Ireland. This welcome development gives Ireland a further advantage as a domicile of choice for establishing Shari'ah compliant funds. The move is designed to ensure consistency and efficiency in the authorisation process for Shari'ah funds, in reaction to the increased numbers of Middle East and North Africa (MENA) promoters who are choosing Ireland as the location for their investment funds. The Financial Regulator is actively engaging with its MENA counterparts to enhance its understanding of their regulatory regimes in order to further facilitate the authorisation process for Shar'iah funds. The creation of a dedicated Shar'iah unit within the Financial Regulator will also capitalise on the Financial Regulator's extensive expertise in this product area, along with the high level of expertise of service providers within the Irish funds industry.

Member States were required to transpose the Third Directive on the Prevention of the use of Financial Systems for Money Laundering and Terrorist Financing by 15 December 2007. In Ireland the transposition process remains a work in progress and it is now expected to be completed during the course of 2009. The process is being undertaken in Ireland jointly by the Department of Justice, Equality and Law Reform and the Department of Finance.

March 2009.

For further information please contact Sarah Lyons.