Ireland: Financial Sector Assessment Program-Technical Note on Oversight of Market-Based Finance: Investment Funds and Special Purpose Entities

IMF Staff Country Reports, July 27, 2022

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Canonical URL: Ireland: Financial Sector Assessment Program-Technical Note on Oversight of Market-Based Finance: Investment Funds and Special Purpose Entities

Ireland has made good progress in implementing MBF-relevant recommendations from the 2014 and 2016 Financial Sector Assessment Programs, but some gaps remain.
As the integrated regulator for the financial services sector, the Central Bank would benefit from:
- greater formal legal independence;
- stronger enforcement powers; and
- more flexibility on individual compensation to attract and retain scarce talent.
There is scope for the Central Bank to leverage its expertise and experience to promote further EU convergence on MBF oversight.
Closing data gaps would further enhance the Central Bank’s robust regulation and supervision of the MBF sector.
The Central Bank should intensify its work to assess and mitigate financial stability risks of MBF.
Finalization of work already under way on investment fund pricing errors should be prioritized.
Oversight of special purpose entities (SPEs) deserves regulatory and supervisory attention.
The introduction of a comprehensive framework for pricing errors will lay the foundations for greater investor protection and more consistent industry practices.
Oversight of special purpose entities has improved from the perspective of statistical analysis, but more efforts are needed to strengthen governance practices.

Strengthen Central Bank institutional capacity:
- pursue greater formal legal independence;
- enhance enforcement powers; and
- allow more flexibility on individual compensation to better attract and retain talent.
Close data gaps to support regulation and supervision of MBF.
Intensify financial stability work:
- expand assessment and mitigation of MBF-related financial stability risks;
- prioritize finalization of the investment fund pricing errors workstream.
Improve oversight of SPEs:
- deepen regulatory and supervisory attention beyond statistical analysis;
- strengthen governance practices for SPEs.
Use Ireland’s regulatory experience to promote EU convergence on MBF oversight.