The Central Bank of Ireland (CBI) announced the upcoming release of Q&As which will enable the creation of listed share classes within mutual funds without the ‘UCITS ETF’ moniker at the sub-fund level.
This morning Derville Rowland, deputy governor for consumer and investor protection for the CBI announced the Irish regulator is considering changing their Q&A which will pave the way for the establishment of UCITS ETF share classes within mutual funds.
Following the news, Catharine Dwyer, firm authorisations and complex product advisor, at the CBI said, “The UCITS ETF identifier will be available at the level of the fund or share class.
“This is a significant development which will converge the approach to ETF naming conventions in Europe and reduce the potential for investor confusion where a fund contains a mix of listed and unlisted share classes.”
Shane Coveney, partner for asset management and investment funds at Dillion Eustace, commented: “Great news this morning in Derville Rowland’s speech confirming that the CBI is to amend its naming requirements on UCITS ETF classes.
“We will look forward to the updated UCITS Q&A and amendments to the CBI UCITS Regulations.”
Currently, the CBI and Luxembourg’s financial regulator diverge on their interpretations of ESMA’s UCITS ETF naming convention, with some industry experts calling for the removal of the share class naming convention altogether.
The naming convention requires asset managers to use ‘UCITS ETF’ in the fund name if it offers an ETF share class alongside its mutual fund share class.
Ireland’s financial regulator strictly follows ESMA’s naming convention while Luxembourg’s CSSF is more relaxed, stating the naming convention only concerns the ‘level’ at which the ‘UCITS ETF’ identifier must be used.
HSBC Asset Management launched four ETF share classes of its $12bn global aggregate bond ETF in May and it is the first and only issuer to launch ETF share classes of an existing fund in Ireland.
