Speech by Minister D’Arcy, A&L Goodbody Annual Asset Management & Investment Funds Seminar – 26th October 2017

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Speech by Minister of State Michael D’Arcy TD

A&L Goodbody Annual Asset Management & Investment Funds Seminar

A&L Goodbody, North Wall Quay, Dublin 1

26th October 2017

 

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Good afternoon ladies and gentlemen, I would like to start by thanking A&L Goodbody for inviting me to address you this afternoon.

In respect of the funds industry, this subsector of financial services has served Ireland very well for many years and I certainly believe there is further scope for the sector’s continued development. Events like today are vital in continuing to promote and facilitate dialogue across the sector.

As Minister of State for Financial Services and Insurance, I lead the Government’s International Financial Services 2020 Strategy. As many of you in the room will be aware, the IFS2020 Strategy was launched by the Government in 2015 to respond to the ever changing and increasingly competitive environment for international financial services. IFS2020 has a vision for Ireland to be recognised as a global location of choice for specialised international financial services. 

The Strategy aims to increase the numbers employed in international financial services by 30% or 10,000 new jobs over the five years of the Strategy. In the first two years we saw a 13% increase in the numbers employed in IFS, placing us on track for achieving our jobs target by 2020.

Of course a key part of our development as a centre for financial services has been the growth of the fund industry.  Ireland is the third largest fund jurisdiction in the world, and the second largest in Europe. At the end of 2016, we had some 6,000 funds domiciled in Ireland, managing over €2 trillion of assets with €4.3 trillion of assets under administration.

8 of the top 10 global fund administrators are operating in Ireland with over 40% of the world’s hedge funds by value serviced from Ireland.

Ireland welcomes the efforts of the Commission to further the goals of the Capital Markets Union. However, in the recent Commission Consultation on the ESAs we made clear, as did a large number of other Member States, that there was no need for significant reform of the European System of Financial Supervision at this stage. A number of the proposals recently put forth by the Commission go beyond what we consider necessary to achieve these aims.

We believe that the use of the powers already available to the ESAs, such as binding mediation, breach of union law, and especially Peer Reviews, can achieve the objective of supervisory convergence. We do not accept the argument that direct supervision of certain activities is required to ensure supervisory convergence.

The Commission’s proposals may increase costs for industry and increase timelines for authorisation and approvals. None of which will help us achieve deeper and more integrated Capital Markets. The ESAs have only been in existence since 2011, which is a short space of time to evaluate their performance.

At the recent meeting on the proposals, officials have made clear our concerns and we will continue working with other Member States to try and ensure we achieve a positive outcome on this file in Council.

As you will be aware, in July the Government approved the legal drafting of the Investment Limited Partnership (Amendment) Bill, 2017. Heads of legislation have been prepared by my Department and submitted to the Office of the Parliamentary Counsel. A draftsperson has been appointed and my officials will continue to engage with the drafting process.

I want to acknowledge the recent engagement between officials and Irish Funds on the Heads of the Bill. This engagement has been helpful in the process of preparing for pre-legislative scrutiny and will also feed into the drafting process. 

The Department is seeking that pre-legislative scrutiny for the legislative proposals be facilitated as quickly as possible and I have written to the Chair of the Committee requesting an early date for pre-legislative scrutiny of the proposals.

In the past year we’ve seen a key development in respect of not only the funds industry but also in increasing trade diversification in respect of financial services.

In December 2016, we were pleased with the announcement from the People’s Bank of China (PBoC) and Central Bank of Ireland that Ireland had been granted a Renminbi Qualified Institutional Investor (RQFII) quota. The quota of 50 billion yuan (around €6.9 billion) allows Irish-domiciled financial institutions to invest in China’s domestic bond and equity markets using China’s own currency. Irish financial service providers will now be able to offer this additional service to European markets.

The granting of a quota for Ireland aligns with the objectives of the Government’s IFS2020 Strategy. The quota improves Ireland’s financial services ecosystem and increases Ireland’s attractiveness for foreign direct investment.

I cannot speak at events such as today without discussing Brexit. It goes without saying that Ireland remains 100% committed to the EU. The EU is a market of 500 million people and in 2016, our goods exports to the rest of the EU were nearly three times what we exported to the UK.

Our overall priorities are clear – protect the peace process, no hard border, maintenance of Common Travel Area, an effective transitional arrangement leading to the closest possible trading relationship with UK, and work for the future of our Union.   

Ireland has developed strong relationships with both the EU and the UK and we’re intent on keeping both following the UK’s exit from the EU.

From a financial services perspective I believe Ireland is perfect location for firms looking for a base in the EU to enable them to passport financial services across the Union. Aside from our commitment to the EU we also have a number of other factors which make Ireland an attractive location for investment.

Ireland will become the EU’s only jurisdiction which is both English speaking and a common law jurisdiction after the UK’s departure. Ireland has a strong pro-business environment with a stable and consistent 12.5% corporation tax rate. For funds Ireland is an established global hub for the industry, and with developments such as RQFII (R-Quiffy) and the upcoming Investment Limited Partnership legislation I believe we will continue to create an attractive environment for the further development of the sector. 

In looking to the future, officials in the Department of Finance have begun engaging with stakeholders on the development of IFS2020’s Action Plan 2018. IFS2020 has always been a flexible and adaptable Strategy, with annual action plans focusing the direction of the Strategy with measureable deliverables.

Before I conclude I’d like to highlight the third annual European Financial Forum which is due to take place 31st January 2018 in Dublin Castle. The EFF is a key deliverable as part of the IFS2020 Strategy. Last year’s Forum was attended by 650 delegates, representing over 400 companies from 20 countries around the world and across the spectrum of international financial services. I can promise you that our speakers next year will worth coming to hear and I am looking forward to making some announcements very shortly. The EFF is becoming a flagship event of the financial services calendar and we want to make sure it stays there.

I’d like to thank you once again for the opportunity to speak at today’s event. I hope I have been able to highlight to you the Irish Government’s commitment to not only international financial services as a whole but also the funds sector. All that remains for me to do is to wish you a productive and informative evening.

Thank You

ENDS

 

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