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Irish Funds

Boston Seminar

8 March 2017

55 irishfunds.ie

Kindly sponsored by Connecting Cork

Breakfast

Boston Seminar

8 March 2017

66 irishfunds.ie

Chairperson, Irish Funds

Alan O’Sullivan

Welcome Address

Brown Brothers Harriman

77

Moderator:

Panellists:

irishfunds.ie

Evolution of Product Design and Distribution

Panel Discussion

Bilal Nasreddine, Putnam

Joe LaRocque, Legg Mason

Stuart Fross, Foley Lardner

Matthew Appelstein, RBC Global Asset Management

Chris Christian, Dechert

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Philip Lovegrove, Matheson

Donal O’Sullivan, EY

Brexit Update

Brexit

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Key message

Ireland: Your Brexit solution

► We have a range of options…

► …to suit managers of all shapes and sizes…

► ….available now.

1010 irishfunds.ie

Agenda

► Transitioning investors to a new context

► Maintaining our partnership: Solutions

► Strengthening our partnership: Growth

1111 irishfunds.ie

Transitioning investors to a new context• Ireland is a long-established partner of the

international asset management sector, with over

14K employees in the Irish funds industry and 35K in

the IFSC overall.

• As a leading global domicile and servicing centre

for investment funds, we provide a time-tested

launchpad for:

– Investment in global markets

– Distribution within the EEA and beyond

• The post-Brexit landscape poses a challenge for the

European funds industry as a whole.

• Our response to these challenges focuses on the

continuity and interdependence of:

– UK investors as shareholders in Irish-domiciled

funds

– UK firms providing investment management to Irish-

domiciled funds.

• Simultaneously, the new context presents opportunities

to strengthen our partnership for the benefit of

European and global investors.

DistributionManagement

Models

Growth

“Our three key

themes are

interdependent.”

1212 irishfunds.ie

Maintaining our partnership: Management models

Management

Models

SMIC 1

• Simple option for single/umbrella fund

• Required to delegate day-to-day portfolio management

Super ManCo 2

“v1 & v2”

• ‘v1’: widely used standard model w/ delegation option

• ‘v2’: ‘add-ons’ enable ManCo to operate w/out MiFID manager as delegate

MiFID Firm2

• Wider range of permissions available

• Enables “silo” of business lines into different regulatory entities3

Maintain continuity of UK firms providing

investment management to Irish fundsChallenge

Options

SolutionProvide UK managers with flexible options based

on existing legislation in Ireland.

NOTES:

1. SMIC = Self Managed Investment Company

2. SuperManCo v1/v2 and MiFID options all enable passporting

throughout the EEA

3. Examples of entity types for “silos”: broker-dealer, AIFM, UCITS

ManCo, etc.

1313 irishfunds.ie

Structuring options: Management models

MiFID Firm

Super ManCo w/ Add-on Authorisations (‘v2’)

Super ManCo w/ Delegates (‘v1)

SMIC• Simple option for single umbrella fund

• ‘v1’: widely used standard model w/ delegation option

• ‘v2’: ‘add-ons’ enable operating w/out MiFID manager as delegate

• Wider range of permissions available

DEFINITIONS:

• ‘MiFID Firm’: Investment firms authorised under Markets in Financial Instruments Directive (2007, to be replaced by MiFID 2 / MiFIR in January 2018)

• ‘Super ManCo’: authorised to provide services to UCITS and AIFs w/ the option of add-on authorisations for segregated mandates

• ‘SMIC’: Self-Managed Investment Company

Global

Asset

Managers

Regional

Asset

Managers

Management

Models (‘Delegation’)

1414 irishfunds.ie

Strengthening our partnership: Growth

Growth

‘The Basics’

•Predictability / efficiency of regulatory process

•12.5% corporate tax rate

•Common law system

•Only English-speaking country in the Eurozone

•Less expensive than Zurich, Paris & Luxembourg1

Asset Manager Activity

Infra-structure

Re-affirm Ireland’s attractiveness as an

international asset management centreOpportunity

Benefits

SolutionProvide UK managers with options to support the

establishment of a physical presence in Ireland

NOTES:

1. Source PwC

2. http://www.iaim.ie/why-ireland (STEM = Science, Technology, Engineering &

Mathematics) & http://www.hea.ie/sites/default/files/awards_-

_all_undergraduate_by_level_and_field.xlsx

3. IFS 2020 Action Plan 2017 (http://finance.gov.ie)

4. MiFID firms, UCITS ManCos, Irish AIFMs & Non-Irish AIFMs

• Space for 60K new employees by 2020, 100K new houses3

• Leading global tech centre & fintech location

• London-Dublin: Most flight options in Europe

• 35K+ employed in international financial services in Ireland, 14K in funds industry

• 130K degree-level graduates across business, law and STEM w/ 20K new grads p.a.2

• 800+ investment firms active in Ireland4

• Increased presence of front office activities

• 18 of the top 20 global AMs have Irish funds

• €3.5trn total AuM, €300bn managed from Ireland2

• AM counterparties already in transit from UK

1515 irishfunds.ie

Cillian Leonowicz, Deloitte

Regulatory Reporting Project

Irish Funds Blockchain

Dublin, January 2017

Irish Funds“Project Lighthouse”

BLOCKCHAIN & REGULATION

Since the GFC Regulators, across the globe, have acted to increase financial stability whilst protecting the investor. This has resulted in an increasing regulatory burden which is impacting the bottom line.

REGCHAIN – CONTEXT & BACKGROUND

Increasing Regulatory Requirements – A Varied Industry Response

Additional Resource Offshore Re-engineer Shoe Horn Excel

Add resources and teams to existing capability to meet the new requirements

Move functions and teams to lower cost centres to help manage the cost of servicing

Re-engineer internal processes for more effective regulatory processing

Shoe horn new and regulation bespoke solutions into the legacy system architecture

Develop working models in excel for the completion of regulatory reports

Result

Increasing Servicing Cost Lower Profitability No Real Customer Differentiation

MMIF is the primary control for Irish Domiciled Funds into the Central Bank of Ireland. It is reported on a quarterly basis and populated via Microsoft Excel.

REGCHAIN – MMIF: A CASE IN POINT

As-Is Process

Transfer Agent Regional Regulator

Domestic Regulator

Pro

cess

Ch

allen

ges

Esti

mate

d C

ost

Data Extraction Maker Review Control Checks Beta Checkers Submit via ONR

Manual Processing Data Integrity Regulatory Changes Cost

400 90 600

Total Irish

Domiciled Funds

Average time (in

minutes) taken to complete process

Total hours spent

completing MMIF reports per Quarter

43.5 14

Total hours

available to complete MMIF

reports

Number of

resources required for

MMIF/qtr

x = ÷ =

Number of

resourcesrequired

Annual cost for non-

revenue generating MMIF

report**

€840K60Kx =

Our vision is operational efficient regulatory reporting, providing insightful analytics whilst increasing transparency, auditability and overall industry safety.

REGCHAIN – OUR VISION

Admin 1 Admin 2 Admin 3 Admin N

Domestic Regulator Regional Regulator

Data Integration Services / Interfaces

- Access to submitted

regulatory reports- Ability to run industry level analytics both domestically and regionally

- Have a single view of

data- Ability to receive industry level and firm level analytics in line with data privacy- Streamline regulatory reporting

- Create an immutable repository for all fund information - A RegChain that is regulation agnostic- Central point of change for new regulatory updates

REGCHAIN –Funds Blackbox Reports

Engine

Smart

ContractsPermissioned Blockchain

Immutable Ledger

Analytics Engine

Document Storage

REGCHAIN – OUR PROOF OF CONCEPT FOCUS

Our vision is operational efficient regulatory reporting, providing insightful analytics whilst increasing transparency, auditability and overall industry safety.

REGCHAIN –Funds Blackbox

Admin 1 Admin 2 Admin 3 Admin N

Domestic Regulator Regional Regulator

Data Integration Services / Interfaces

PoC Focus

Reports Engine

Smart Contracts

Immutable Ledger

Analytics Engine

Platforms

1

2

Document Storage

3

4

5

6

1

2

3

4

5

6

6

Upload data to the RegChain

Encrypt and store data with IPFS

Maker reviews data and runs report

Executes requirements of the regulation

Checker reviews and submits to the regulator

Regulator reviews filings and assesses industry analytics

Permissioned Blockchain

4

Streamlining compliance with ancillary benefits for industry.

REGCHAIN – THE BENEFITS

The Benefits

Process Efficiency Security Analytics

Access IFPS

Decrypt the file

Modify the file

Encrypt the file

Access to RegChain

Modify Smart Contract

Network accept modification

To hack the proposed technical structure of RegChain you must:

DEMO

SEE THE DEMO AT OUR STAND DEMO

2525

Moderator:

Panellists:

irishfunds.ie

Innovation Initiatives

Panel Discussion

Shane Brett, Gecko

Hicham Allouani, Pioneer Investments

Meredith Moss, Finomial

Cillian Leonowicz, Deloitte

2626 irishfunds.ie

Kieran Fox

Closing Remarks & Thank You

Irish Funds

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