Central Bank of Ireland publishes Markets Update No 1 of 2025

On 10 March 2025, the Central Bank of Ireland (the Central Bank) published Issue No 1 2025 of its regular Markets Update, in which it sets out alerts of interest to Irish regulated firms and other market participants. For our summaries of the previous issues, please see the right-hand column of this page..

The new Update contains the following two items:

1. Updated AIFMD Q&As on (i) delegating portfolio or risk management to non-supervised undertakings established outside the EU and (ii) holding client money

On 6 January 2025, ESMA published two Q&As that had been submitted to the European Commission for clarification:

• ESMA QA 2229 confirms that AIFMs are not allowed to delegate portfolio or risk management to non-supervised undertakings established outside of the EU.

  Article 20(1)(d) of the AIFMD requires that, before portfolio or risk management functions can be delegated to an undertaking established outside the EU, cooperation is ensured between the AIFM's home NCA and the supervisory authority of the third-country undertaking. The minimum conditions needed to ensure the relevant cooperation are set out at Article 78(3) of the AIFMD Level 2 Commission Delegated Regulation.

• ESMA QA 2230 confirms that AIFMs may not hold client money, either now or when the AIFMD 2.0 amendments come into effect in April 2026.

  Although Article 6(4)(b)(ii) of the AIFMD allows an AIFM to be authorised to provide safekeeping services in relation to shares or units of collective investment undertakings, it does not permit it to safekeep clients' money. This will not change despite the scope of ancillary services having been extended under the revised AIFMD.

2. Central Bank publishes the 50th Edition of its AIFMD Q&A

On 7 March 2025, the Central Bank published the fiftieth edition of its AIFMD Q&A document, with the inclusion of three further Q&As to clarify the application of the prohibition on AIFs acting as guarantors for third parties.

• Q&A ID 1160 confirms that guarantees are permissible in respect of investments and/or intermediate vehicles for such investments in which a QIAIF has a direct or indirect economic interest, subject to a number of important safeguards and investor disclosures.

• Q&A ID 1161 confirms that the definition of financial institution in the AIF Rulebook is aligned with that set out in the revised AIFMD loan origination rules which cross refers to the Solvency II Directive (transposed into Irish law through the European Union (Insurance and Reinsurance) Regulations 2015).

• Q&A ID 1162 clarifies that the prohibition on lending to persons intending to invest in equities or other traded investments or commodities does not prevent lending to a borrower with the intention of acquiring a controlling interest in a target company.