Ireland: Central Bank Feedback Statement On Discussion Paper 6 On ETFs

Last Updated: 18 September 2018
Article by Brian Kelliher, Brian Higgins, Shane Coveney and David Walsh
Most Read Contributor in Ireland, September 2019

On 14 September 2018, the Central Bank of Ireland (the "Central Bank") issued its eagerly anticipated 'Feedback Statement' on Discussion Paper 6 - Exchange Traded Funds. The outcome of the discussion paper is the culmination of over a year's analysis into the exchange traded fund's industry. The Central Bank's views on certain matters which were subject to the Discussion Paper consultation have been outlined and, in an Irish context, the Feedback Statement sets out some policy changes which have resulted from industry's dialogue on the specific themes raised.

Discussion Paper 6 sought to address certain key themes which relate to European exchange traded funds including, amongst others, disclosures relating to Authorised Participants and Official Liquidity Providers; portfolio disclosures; share class dealing arrangements; ETF and non-ETF share classes, ETF market liquidity and European ETF Specific Considerations.

The publication of the Feedback Statement is welcomed as it clarifies that the Central Bank will permit listed and unlisted share class in the same ETF and by extension in a traditional mutual fund and that different dealing arrangements may be implemented for hedged and unhedged share classes within the same ETF.

We have set out below the key outcomes from the Discussion Paper 6 Feedback Statement:

Disclosures relating to Authorised Participants and Official Liquidity Providers

A key element of the discussion paper was a consideration of the role played by Authorised Participants and Official Liquidity Providers in the ETF ecosystem. The Central Bank holds a strong belief that information as to the identity and activity of Authorised Participants and Official Liquidity Providers is important for all participants and that transparency relating to such entities is of value. The Central Bank made particular reference to the disclosure of costs which are borne on behalf of the relevant ETF where an Official Liquidity Provider obtains remuneration for its services noting that such costs should be sufficiently clear and should indicate the basis on which all costs including OLP remuneration (either monetary or otherwise) is calculated.

The Central Bank has stopped short of requiring disclosure of the identities of Authorised Participants and Official Liquidity Providers to be disclosed or the remuneration paid to such entities while it seeks to encourage regulatory convergence on the matters.

Portfolio disclosure

A key element of ETFs is transparency and portfolio disclosure which seeks to ensure effective arbitrage and is seen as being integral to pricing. Transparency and portfolio disclosure however is seen by many industry participants as a stumbling block to the development of 'active ETFs' and the Central Bank noted that respondents to the Discussion Paper have advocated full portfolio disclosure to a restricted group of recipients including regulators, stock exchanges and, where bound by confidentiality, Authorised Participants.

The Central Bank noted that it requires daily portfolio disclosure to the public in the context of the authorisation of ETFs as investment funds. The Central Bank further noted that different requirements applied to ETF portfolio transparency across the EU with disclosure related obligations stemming in some cases from investment fund regulation and in others imposed by the regulated market.

While acknowledging the differing views of respondents and that full portfolio information may not be of practical use to retail investors and that other forms of disclosure may be more beneficial, the Central Bank has stated that it will not, at this time, amend its requirement for daily portfolio disclosure to the public in the context of the authorisation of ETFs but would continue to engage in European and international regulatory forums on the issue in the future.

Share Class Dealing Arrangements

A fundamental principle of the Central Bank for investment funds is that dealing deadlines must be the same for all share classes. To date an accepted exception to this requirement was in the case of dealing arrangements for ETFs that accept both cash and in-kind subscriptions. Through the consultation paper, the Central Bank sought to engage with industry in relation to the potential to permit a further exception in the case of hedged and unhedged share classes. Following the Central Bank's consideration of responses received, the Central Bank has proposed to depart from its fundamental principle and permit different dealing deadlines to be implemented for hedged and unhedged share classes.

ETF and non-ETF Share Classes

The Central Bank has not to-date permitted ETF providers to establish unlisted share classes in ETFs due to concerns that the structure may prejudice investors in one class over the other, depending on the circumstances. However, many industry participants have advocated for ETFs pursuing a single investment strategy to be permitted to have both listed and unlisted share classes to facilitate, amongst other issues, primary market and secondary market dealing.

The Feedback Statement provides welcome next to industry participants as the Central Bank has indicated that it will permit listed and unlisted share classes within an investment fund (which may be either an ETF or a traditional mutual fund) and will develop guidance on appropriate disclosure requirements that will apply to both types of classes.

ETF Liquidity

The Central Bank through its engagement noted that liquidity in ETFs is complex and may be impacted by two influences: primary dealing arrangements and liquidity of the underlying assets. The Central Bank noted that ETF liquidity is likely to be the focus of ongoing discussions at European and international work streams and it will continue to engage in relation to this matter, particularly in light of the extensive feedback received.

European ETF Specific Considerations

The Central Bank has noted that the European ETF market suffers from fragmentation in terms of operations which is highlighted through the differing listing rules which apply across European stock exchanges. The Central Bank noted the differing approaches taken throughout Europe in relation to a number of themes, including transparency, the understanding of 'direct redemptions' with the relevant ETF, the use of listed and unlisted share classes and approach to conflicts of interest. The Central Bank has noted that a more homogeneous approach from a structural, listing and regulatory perspective would benefit the continued growth of ETFs in Europe.


The Central Bank of Ireland intends to utilise the feedback received from market participants to assist it with engagement on an international level on the regulation of exchange traded funds. Advocates of more active ETFs who were looking for flexibility in relation to the transparency obligations have been left waiting for an international regulatory position to be adopted and which is likely to result in the more actively managed ETFs remaining in the Fixed Income space.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions