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

International Monetary Fund

No 2022/242, IMF Staff Country Reports from International Monetary Fund

Abstract: This considers the regulation and supervision of the market-based finance (MBF) sector in Ireland. 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, while oversight of 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.

Keywords: central bank of Ireland; investment fund Aum; SPE governance; MARKET-BASED finance; MBF sector; market structure; supervisory tools pyramid; Mutual funds; Financial sector stability; Special purpose vehicle; Stress testing; Global (search for similar items in EconPapers)
Pages: 43
Date: 2022-07-27
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