Irish Funds London Alternative Investment Seminar 2018

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2 Irish Funds London Alternative Investment Seminar April

3 Premium Sponsors

4 Event Partners

5 Wi-Fi & Audience Interaction Wi-Fi SSID: THE MONTCALM no password required Audience Interaction - #IrishFunds

6 Welcome Address Tara Doyle Chairperson, Irish Funds Head of Asset Management, Matheson

7 Irish Funds Industry Overview

8 A Global Funds Centre

9 For Global Distribution

10 Total Assets under Administration - split between Irish domiciled & Non-Irish funds Source: Central Bank of Ireland December

11 Irish Domiciled Assets UCITS represent 75% of Irish Domiciled Assets 88 UCITS Man Cos 161 AIFMs Registered or Authorised 642 AIFMs operating in Ireland on cross border basis 410 ICAVs established (since 18 March 2015) 11 Source: Central Bank of Ireland 2018

12 % Growth Growth of Largest European Fund Domiciles 140% 120% 100% 80% 60% 40% 20% 0% Europe 0% 13% 23% 42% 58% 78% 97% Luxembourg 0% 14% 25% 48% 67% 77% 98% Ireland 0% 16% 27% 57% 80% 98% 126% France 0% 9% 10% 14% 21% 29% 37% Germany 0% 13% 24% 40% 53% 66% 80% UK 0% 17% 35% 59% 79% 77% 99% Source: EFAMA Statistics Europe Luxembourg Ireland France Germany UK

13 Net Sales into Irish Domiciled Funds > 30% of net sales into all European funds in 2017 Source: Central Bank of Ireland

14 Other Developments. Updating of Ireland s Investment Limited Partnership Legislation Legislative amendments approved by Irish Government. Entering legislative process Will provide additional scope for private equity and real asset funds. European Commission ESAs Proposals While there are aspects to the European Supervisory Authorities (ESAs) proposals we welcome, there are a number of areas which are of significant concern. We have shared our views in Ireland and in Europe. Strong advocates of delegation to globally based experts. Loan Origination New enhancements have been made to the L-QIAIF. Tax Transparency OECD has awarded Ireland the highest international rating on tax transparency and exchange of information. EU Cross Border Distribution Consultation on removing barriers to Cross Border Distribution submitted 2016 and follow-up questionnaire completed We have subsequently met with the European Commission. Expected Q1 2018

15 Other Developments. Pan European Personal Pension Plan (PEPP) Industry white paper published on PEPP. We have subsequently met with the European Commission. Financial Action Task Force (FATF) Mutual Evaluation Report (MER) of Ireland FATF s assessment of Irelands anti-money laundering and counter terrorist financing concluded that Ireland has a sound and substantially effective regime to tackle money laundering and terrorist financing. In addition the Report highlights National coordination mechanisms and the Private Sector Consultative Forum (PSCF) were fruitful in broadening the understanding of its ML and TF risks across all relevant agencies and with the private sector. CBI engagement re Exchange Traded Funds (ETF) Responded to Central Bank of Ireland (CBI) ETF discussion paper and engaged with the CBI throughout the process. Consultation paper on CIS Liquidity Risk Management Response provided to the International Organization of Securities Commission (IOSCO) Consultation paper.

16 Conclusion EU Member & Strategically Positioned + International Hub for Globally Distributed Investment Funds + Unrivalled Experience and Expertise in the Widest Range of Fund Structures

17 Keynote Address: Brexit - what s next? Miriam Gonzalez Partner, Dechert

18 Realism we are where we are 18 April 2018 London Alternative Investment Seminar 18

19 Political Volatility Inside parties Parliament Generational Society In the EU too! How to handle volatility? 18 April 2018 London Alternative Investment Seminar

20 Preparing the UK-EU FTA General principles Will frame content of FTA Transition A. 50 Heads of Agreement Formal 3 rd Country FTA 18 April 2018 London Alternative Investment Seminar 20

21 EU negotiations 18 April 2018 London Alternative Investment Seminar 21

22 UK-EU FTA: EU Process GUIDELINES Council: Opens negotiations Adopts Negotiating Directives Signs and concludes the FTA European Parliament: Likely to have to consent to the FTA Commission: Leads negotiations and technical discussions. Reports back to Council Structure: 3 broad baskets: Services, Goods, Other (IP, State Aid etc) 18 April 2018 London Alternative Investment Seminar 22

23 UK-EU FTA: Negotiators 3 tiers of negotiators Political Commissioners Member States (in Brussels and capitals) Negotiators DG Trade Relevant expert Commission Directorate Generals on specific issues Experts Addressing sectoral-specific issues, e.g. standards or oversight for type approval etc 18 April 2018 London Alternative Investment Seminar 23

24 Other countries How? Trade Policy Biggest Market Other key markets Key areas: Content more important than political signals Level Playing field Smaller market 18 April 2018 London Alternative Investment Seminar 24

25 Panel Discussion: Digital Assets- the New Alternatives Moderator: Pete Townsend, Norio Ventures Panellists: Breige Tinnelly, AQ Metrics Rupert Watson, Mercer Emmett Kilduff, Eagle Alpha

26 Q & A Interview Session: Developments in Loan Origination Mark White, McCann FitzGerald Lara Winters, Insight Investments Graham Roche, Davy

27 Coffee Break Kindly Sponsored By

28 Digital Disruption in Financial Services - The Future of "Challenger Banks" and the Rise of Cryptocurrencies Tom Hambrett, Head of Legal, Revolut

29 Revolut Tom Hambrett

30 Cryptocurrencies What? Why? How?

31 Cryptocurrencies

32 Regulatory Update MiFID II Donnacha O Connor, Dillon Eustace

33 Establishing an investment manager in Ireland; is MiFID II the most appropriate regime for my firm? Brexit; MiFID II third country rules in Ireland

34 Regulatory Update GDPR Fiona de Burca, PwC

35 Brexit SOS Key steps managers need to take now Gayle Bowen, Pinsent Masons

36 Step 1 Identify how you are impacted o UK AIFM/ManCo to an EU based Fund (currently 265 UK AIFMs operating Irish AIFs) o Distributing to EU investors o Selling an EU fund in the UK o Segregated managed account mandates with EU investors

37 Step 2 Look at the options available Authorisation indicative timeline Activities (PM = portfolio management, RM = risk management) SMIC Super ManCo w/ Delegates ( v1 ) Allow 6 to 8 months during high volume periods Retain oversight of PM & RM but delegate day to day activities Allow 6 to 8 months during high volume periods Retain oversight of PM & RM but delegate day to day activities Super ManCo w/ Add-on Authorisations ( v2 ) Allow 8 to 9 months during high volume periods Performs day-to-day PM & RM Manage other fund umbrellas? No Yes Yes Yes MiFID Firm Allow 9 to 10 months during high volume periods Full range of services Manage/advise Segregated Mandates? No No Yes, via add-on licences without need for MiFID delegate Yes Substance requirements 2 Irish-resident directors 2-3 Designated Persons Irish-resident directors Designated Persons 1&2 2-3 Irish-resident directors 2-3 Designated Persons 1 Chief Investment Officer / Managing Director Head of Risk/Compliance and Finance, internal audit. 2 Substantive presence required in Ireland 3 Specific roles based in Ireland 2 : Legal & compliance Financial control Risk Management Delegation / Outsourcing CBI permits delegation of dayto-day PM and/or RM activities CBI permits delegation of day-to-day PM and/or RM activities CBI permits delegation of day-to-day PM and/or RM activities Outsourcing allowed (including to other EEA states or 3 rd countries) if in line with applicable law and best practice 1. Designated persons not all required to be Irish resident and can be directors or employees of the Investment Manager. For low PRISM rated firms, half of the directors and at least 2 Designated Persons performing half of the managerial functions are required to be EEA-resident. For medium PRISM rating firms, 3 directors or 2 directors plus 1 designated person should be Irish resident. 2. The need for specific roles may differ on a case-by-case basis, depending on complexity and number of branches. 3. Substantive presence for MiFID: the firm s board and management run the firm from Ireland and make decisions in Ireland with sufficient staff and resources to manage the risks. 37

38 SMIC Super ManCo w/ Delegates ( v1 ) Super ManCo w/ Add-on Authorisations ( v2 ) MiFID Firm Capital Required 300,000 initial capital (which can be met using shareholder funds) One quarter of its total expenditure in its most recent annual accounts and 125,000 plus an additional amount of up to 0.02% of any AUM exceeding 250m whichever is greater, subject to a maximum amount of 10million One quarter of its total expenditure in its most recent annual accounts and 125,000 plus an additional amount of up to 0.02% of any AUM exceeding 250m whichever is greater, subject to a maximum amount of 10million Will be calculated in accordance with CRD IV / CRR requirements Pros Works well if no other funds managed Less staff on the ground Can manage multiple fund umbrellas Can passport to other EEA jurisdictions Less staff on the ground than v2 or MiFID option Can perform full PM activities or delegate Can manage multiple fund umbrellas & mandates Can passport to other EEA jurisdictions Less staff on the ground than MiFID option Wide range of permissions/potential business lines available Can passport throughout EEA without seeking additional authorisations Cons Cannot perform all PM activities Cannot manage or advise mandates Must delegate to regulated investment manager Cannot perform all PM activities Cannot manage mandates More staff on the ground than SMIC or v1 option Add-on authorisations possible, which may be subject to local review when passporting to other EEA jurisdictions More staff on the ground Subject to CRD IV / CRR requirements MiFID 2 changes in Jan

39 Step 3 Decide which licence is appropriate for your activities Do you manage UCITS? No Do you manage AIFS? No Do you distribute/advise third party funds/manage segregated accounts? Yes Yes Yes Do you also manage AIFS? Do you also manage UCITS Funds? MIFID AUTHORISATION No Yes Do you manage/advise on segregated accounts? Do you manage/advise on segregated accounts? Do you manage more than 2 funds? No Yes Yes No Yes No Do you manage more than 2 funds? UCITS Management Company with addon permissions (V2) Super MANCO with add on permissions (V2) Super MANCO External AIFM (V1) Self-managed AIF(S) No Yes Self managed UCITS UCITS Management Company 39

40 Step 4 Take action Time is now running out There are still a significant number of managers that have not finalised their Brexit strategy plan Could be significant delays if all managers apply at the same time.

41 Questions

42 Panel Discussion: Brexit Moderator: Killian Buckley, Duff & Phelps Panellists: Miriam Gonzalez, Dechert Rena Morjaria, Amber Capital Lorcan Murphy, ACOLIN Fund Services

43 Closing Remarks Pat Lardner, Chief Executive, Irish Funds

44 Annual Global Funds Conference 2018 Now in its 20th year, the Irish Funds Annual Global Funds Conference is a highlight of the international funds industry calendar. The conference brings together prominent industry speakers to discuss current issues and challenges facing the global funds industry. For further information on registration, sponsorship and exhibition please visit /conference2018.

45 Drinks Reception kindly sponsored by

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