Central Bank Introduces Additional Portfolio Transparency Flexibility for Irish ETFs

Recent changes to the Central Bank of Ireland’s UCITS Questions and Answers document are extremely welcome, allowing for the option to establish Irish ETFs with periodic portfolio disclosure provided certain conditions are satisfied. Our Investment Funds team examines these developments.

The Central Bank of Ireland released a revised version of its UCITS Questions and Answers document (the Revised Q&A) on 17 April 2025. The Revised Q&A follows on from the Irish Department of Finance Fund Sector 2030 Report, which issued in October 2024 (the Funds Sector Report). One of the key recommendations identified in the Funds Sector Report is for the Central Bank to support the growth of ETFs by continuing to keep under consideration its requirements regarding portfolio transparency for ETFs, recognising the possibility of alternative approaches.

The Revised Q&A now provides for the ability of a UCITS ETF or UCITS ETF share class of a UCITS to disclose its portfolio holdings on either a daily basis or a periodic basis. The Revised Q&A provides that where a UCITS ETF or UCITS ETF share class of a UCITS discloses its portfolio holdings on a periodic basis, the responsible person (generally the management company of the UCITS) must ensure that:

1. Appropriate information is disclosed on a daily basis to facilitate an effective arbitrage mechanism
2. The prospectus discloses the type of information that is provided in point 1
3. This information is made available on a non-discriminatory basis to authorised participants and market makers
4. There are documented procedures to address circumstances where the arbitrage mechanism of the ETF is impaired
5. There is a documented procedure for investors to request portfolio information, and
6. The portfolio holdings as at the end of each calendar quarter are disclosed publicly within 30 business-days of the end of the quarter

Comment

The flexibility introduced by the Revised Q&A is a welcome development and a positive indicator of the Central Bank’s commitment to further cementing Ireland’s position as the preeminent jurisdiction for ETFs in Europe. The Revised Q&A differs from corresponding portfolio transparency requirements in Luxembourg. In Luxembourg periodic portfolio disclosure is only available for active ETFs, needs to be published on a monthly basis with a maximum time lag of one month and no discretion is allowed on the information which is to be provided to authorised participants and market makers.

Given the ongoing market interest from both asset managers and investors, these developments will be of significant interest for participants considering entering the ETF market. In particular, managers considering a launch of an active ETF who were previously concerned that other market participants might be able to read into trading patterns through the daily release of portfolio holdings will take comfort from these changes. Irish ETFs continue to have a preferable withholding tax rate on dividends from US stocks.

For more information and expert advice, contact a member of our Investment Funds team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.