Central Bank of Ireland: UCITS Permitted Markets Regulation

Who is affected?

The UCITS PMR primarily affects UCITS funds, their management companies, and their custodians. These entities must ensure that the markets in which they invest comply with the eligibility criteria set out in the regulation.

What it intends

The aim of the UCITS PMR is to ensure that UCITS funds invest in markets that provide sufficient transparency, liquidity, and investor protection. The regulation sets out specific criteria that a market must meet to be considered a “permitted market” in terms of UCITS investments. These criteria typically include:

1. Regulation and oversight: The market must be regulated and under ongoing supervision by a competent authority to ensure it operates in a fair, transparent, and orderly manner.
2. Transparency requirements: The market must have transparent trading rules and publicly disclose relevant information to enable investors to make informed decisions.
3. Liquidity: The market must be liquid enough to allow for the execution of transactions without significant price impact.
4. Adherence to international standards: The market should adhere to international standards and best practices, for example those set by the International Organization of Securities Commissions (IOSCO).

Penalties for non-compliance

The Central Bank has a range of penalties that it can impose for failure to comply with the UCITS PMR, including:

1. Financial penalties: These can be significant and may vary depending on the nature and severity of the non-compliance.
2. Enforcement actions: These could include public censures, fines, or other disciplinary actions.
3. Restrictions or prohibitions: In severe cases of non-compliance, the Central Bank may impose restrictions or prohibitions on the UCITS fund or its management company, preventing them from investing in certain markets or conducting certain activities.

Firms should also consider that non-compliance with the UCITS PMR can also result in reputational damage for the entity or individuals involved, which can harm their ability to attract investors or do business in the future.

Lighten the load

At Thomas Murray, we recognise that ensuring UCITS PMR compliance can be a manual, labour-intensive process – and potentially an inefficient use of resources for Irish UCITS fund managers.

As a risk intelligence business with over 30 years’ experience supporting financial institutions, Thomas Murray offers a solution to alleviate this regulatory burden.

Our UCITS-focused Market Eligibility Due Diligence data eliminates the need for extensive manual data collection, providing comprehensive reports that track market eligibility and operational suitability across more than 100 global markets. Consistently maintained and updated, the reports can be accessed at any time.