Welcome Address Kevin Rideout Hong Kong Exchanges and Clearing - - PowerPoint PPT Presentation

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Hong Kong Exchanges and Clearing Limited

Kevin Rideout

Welcome Address

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Irish Funds

Kieran Fox

Welcome Address

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Total Assets Under Administration – Split between Irish & Non Irish Funds

434 584 728 807 646 748 964 1,055 759 1,344 1,664 1,899 2,085 2,231 636 838 965 1,394 1,398 1,443 1,883 1,886 2,199 2,722 3,375 3,806 4,095 4,251 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 June- 17

EUR Billion

Total Assets Under Administration

Net Assets Domiciled Net Assets Non Domiciled

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Irish Domiciled Assets

• UCITS represent 75% of Irish

Domiciled Assets

• 86 UCITS Man Cos
• 156 AIFMs Registered or Authorised
• 597 AIFMs operating in Ireland on

cross border basis

• 364 ICAVs established (since 18 March

2015)

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Ireland’s Relationship with European Investment Fund Landscape

• €13 trillion in assets
• €8 trillion UCITS
• €5 trillion Alternative Investment Funds (AIFs)
• €1 trillion of net inflows into UCITS over last 3 years
• €463 billion net inflows into European funds 2016 (>30% of which went to

Irish domiciled funds)

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Growth of Largest European Fund Domiciles

2012 2013 2014 2015 2016 Europe 113 123 142 158 178 Luxembourg 114 125 148 167 177 Ireland 116 127 157 180 198 France 109 110 114 121 129 Germany 113 124 140 153 166 UK 117 135 159 179 177

• 50

100 150 200 250 % Growth 116 127 157 180 198

Source: EFAMA Statistics

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Irish Funds: Passport to Europe & Beyond

UCITS funds & AIFMs benefit from an EU wide passport and can be sold in any other EEA member state without need for additional authorisation

Top 10 countries where Irish Funds registered for sale

• 1. UK
• 6. Austria
• 2. Germany
• 7. Luxembourg
• 3. France
• 8. Sweden
• 4. Switzerland
• 9. Italy
• 5. Netherlands
• 10. Spain

Global Distribution of Irish Funds: 70 countries

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Irish Funds – Maximising Distribution

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Irish Domiciled Funds – Net Sales

• 30.0

20.0 70.0 120.0 170.0 Dec-13 Dec-14 Dec-15 Dec-16 YTD June 2017

Net Sales into Irish funds by type € Bn

Equity Funds Bond Funds Balanced Funds Money Market Funds AIF

Net sales for YTD June 2017 have already surpassed the total for 2016 – which itself was a record year

98,463 85,465 135,668 114,706 139,416 161,500 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 2012 2013 2014 2015 2016 YTD June 2017 EUR Mn

Net Sales - Total Domiciled Funds

Net Sales - Total Domiciled Funds

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ETFs - An Irish Success

Ireland as a Domicile for European ETFs Total Assets

• f European

ETFs - € Bn

Source: Irish Funds, June 2017

Ireland 310 Rest of Europe 248

€ bn 56% 44% € bn

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Net Sales into All European ETFs 2016 €Bn

Ireland Rest of Europe Bn

93%

7%

Bn

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Looking Ahead - Technology

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Looking Ahead – Brexit Three interdependent themes

Distribution Management Models (‘Delegation’) Growth OVER 2,000 IRISH FUNDS SOLD TO UK INVESTORS1 €613 bn2 IN IRISH FUND ASSETS MANAGED BY 170+ UK FIRMS IN IRELAND2 Continuity in UK investor access to EU/Irish funds Continuity in UK firm management

• f Irish funds

Increase Ireland’s growth trajectory as an international asset management centre

SOURCE: 1-Lipper IM Dec 2015 2-Monterrey Ireland Fund Report 2016

Current context Target outcome

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International asset management centre

Growth ‘The Basics’

• Predictability / efficiency of

regulatory process

• 12.5% corporate tax rate
• Common law system
• Only English-speaking

country in the Eurozone

• Less expensive than Zurich,

Paris & Luxembourg1

Asset Manager Activity Infra- structure

Re-affirm Ireland’s attractiveness as an international asset management centre Opportunity Benefits Solution Provide UK managers with options to support the establishment of a physical presence in Ireland

NOTES: 1. Source PwC 2. http://www.iaim.ie/why-ireland (STEM = Science, Technology, Engineering & Mathematics) & http://www.hea.ie/sites/default/files/awards_- _all_undergraduate_by_level_and_field.xlsx 3. IFS 2020 Action Plan 2017 (http://finance.gov.ie) & IDA Ireland 4. MiFID firms, UCITS ManCos, Irish AIFMs & Non-Irish AIFMs

• Space for 100K new employees by 2020, 100K

new houses3

• Leading global tech centre & fintech location
• London-Dublin: Most flight options in Europe
• 35K+ employed in international financial

services in Ireland, 14K in funds industry

• 130K degree-level graduates across business,

law and STEM w/ 20K new grads p.a.2

• 800+ investment firms active in Ireland4
• Increased presence of front office activities
• 18 of the top 20 global AMs have Irish funds
• €4trn total AuA, €300bn managed from Ireland2
• AM counterparties already in transit from UK

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Moderator: Panellists:

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Hong Kong Equity Capital Market Update

Panel One

Tae Yoo, HKEX Conor O’Mara, Jefferies Patrick Wong, HSBC Michelle Lloyd, Maples and Calder Panellists Moderator

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Barnaby Nelson, Standard Chartered Julien Martin, Bond Connect Company & HKEX

Bond Connect Update

Fireside Chat

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Northern Trust

Ian Headon

Are Alternatives Becoming Mainstream? How to get ahead by leveraging the Evolving Product & Regulatory Environment

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Mountains of Regulation

Alongside the continuing impact of existing legislation, there are a number of initiatives expected to be implemented over the course of the next few years.

EMIR European Markets Infrastructure Regulation AIFMD Alternative Investment Fund Managers Directive FATCA Foreign Account Tax Compliance Act CSDR Central Securities Depositories Regulation CRD IV Capital Requirements Directive UCITS V Undertakings for the Collective Investment in Transferable Securities SFTR Securities Financing Transactions Regulation CRS OECD’s Common Reporting Standard Solvency II Revised EU Solvency Directive MAD II/MAR Revised Market Abuse Directive/Regulation PRIIPs Packaged Retail & Insurance-based Investment Products 4MLD The 4th revised EU Anti-Money Laundering Directive BMR Benchmarks Regulation MiFID II Markets in Financial Instruments Regulation & revised Directive IDD Insurance Distribution Directive GDPR General Data Protection Regulation IORP II Revised Directive on Institutions for Occupational Retirement Provision NISD Network & Information Security Directive MMFR Money Market Fund Regulation

4MLD PRIIPs MiFID II IDD BMR GDPR NISD

2017-2018

IORP II MMFR

2019

EMIR AIFMD FATCA CSDR CRD IV

NOW

UCITS V SFTR CDOT/CRS Solvency II MAD II/MAR

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Brexit: The Start of a Change

The key themes contained within EU legislation can largely be traced back to regulatory commitments made at Global level, resulting from EU Member States’ membership on a number of international fora.

TAX/REVENUE PROTECTION TRANSPARENCY RISK REDUCTION INVESTOR PROTECTION MARKET ABUSE/ACCOUNTABILITY

DAC2

Implements the OECD’s Common Reporting Standard in the EU

EMIR

G20 commitment on centrally clearing, margining and transaction reporting

4MLD

Closely linked to work

• n AML undertaken by

FATF

CRD IV

Implements international standards

• n bank capital

adequacy and liquidity as developed by the Basel Committee

ATAP

Implements the base erosion and profit shifting (BEPS) Action Plan

SFTR

Forms part of the G20 work on shadow banking

Remuneration

AIFMD, UCITS, CRD III / IV

MMFR

FSB recently concluded MMFs are insufficiently regulated

MAR/MAD II

A key FSB aim is to minimise market abuse to mitigate systemic risk

Individual Accountability

Basel principles provide a framework to achieve robust and transparent risk management and decision-making

MiFID II

Introduces organised trading facilities to move OTC to trading venues

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EU Investors and Alternatives

Marketing to EU Investors

Reverse Solicitation Exempt

Timeframe EU Fund Marketing Passport for EU AIFM’s Non EU AIF Private Placement 2016 - 2018 EU AIFM – EU AIF = full compliance, and access to Passport EU AIFM – Full Compliance for AIFM; Depositary (Depot – Lite) Non EU AIFM’s need to comply, but with a lighter depositary liability Non EU AIFM – Minimal compliance, and dependent upon local marketing rules 28 member states each require compliance with N.P.P.R NB, we understand that pursuant to Article 42, marketing to Germany / Austria / Denmark, will trigger a Depositary (Depot Lite) requirement. There may be an impact for use of subsidiaries / feeders (lookthrough) 2018 - 2021 Subject to Passporting being made available to the Non EU AIFM location Potential for NPPRs to be switched off, requiring Passporting, and therefore full compliance

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Time Requirements of Regulation

Compared with the time you have spent dealing with new requirements over the past year, do you anticipate the upcoming regulatory environment will demand:

• A. Less of your time
• B. More of your time
• C. An equal amount of time

Source: Northern Trust’s 2016 Regulatory and Depositary Conference Survey Questions (approx. 150 attendees)

A B C

6% 68% 26%

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Marketing Passport Extension

Do you think that the potential extension of a marketing passport to third country funds and managers:

• A. Presents a significant opportunity

for your distribution network

• B. Is irrelevant to your asset

gathering strategy

• C. Depends on the outcome of

Brexit discussions

Source: Northern Trust’s 2016 Regulatory and Depositary Conference Survey Questions (approx. 150 attendees)

C B A

16% 21% 64%

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By the end of 2017 do you expect your investors to:

• A. Prefer a regulated fund
• B. Remain satisfied with a

non-EU fund with less regulatory oversight

• C. Not be engaged in

UCITS/AIFs debate

Investor Sentiment

Source: Northern Trust’s 2016 Regulatory and Depositary Conference Survey Questions (approx. 150 attendees)

63% 28% 9%

A B C

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Fund Structure Preference

15 28 32 63 31 35 27 28 54 37 41 9 10 20 30 40 50 60 70 80 90 100 2013 2014 2015 2016

% Investor Engagement Not engaged in debate Offshore non EU fund (eg Cayman)

Source: Northern Trust’s 2016 Regulatory and Depositary Conference Survey Questions (approx. 150 attendees)

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Conclusions

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Thank You

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Moderator: Panellists:

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Are Alternatives Becoming Mainstream?

Panel Two

Paul Moloney, Eversheds Paul Martin, PwC Patrick Robinson, Bridge Consulting Clive Bellows, Northern Trust Panellists Moderator

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Irish Consul General to Hong Kong and Macau

Peter Ryan

Closing Remarks

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Drinks Reception

Kindly Sponsored by Northern Trust