The Irish Investor Money Regulation (IMR) aims to protect investors' money held by an Irish fund service provider in a collection account for both subscriptions and redemptions. The transfer agents in Ireland who operate collection accounts in their own name for the funds they service are the fund service providers most impacted by IMR. Vestima's Fund Issuance Account (FIA) model helps address this challenge.
Impact of IMR
The money held in a Collection Account flowing into a fund, that is, subscription money and out of a fund, that is, redemption and distribution money, falls under the scope of the regulation. As a result, transfer agents in Ireland who operate Collection Accounts in their own name for these flows will be subject to the new rules.
Any cash received before the currency cut-off point on dealing day is deemed to be investor money and any cash received after that point will be considered a fund asset. At the cut-off point, the cash should be removed from the collection account in line with the fund service provider's contractual commitment to pay those proceeds to an account owned by the fund. In most cases, this would be the fund's cash account at the depositary or subject to its oversight.
Delivery versus payment settlement process
As part of its centralised settlement facility, Vestima provides an FIA to fund service providers such as depositaries and transfer agents through which subscription and redemption monies are settled.
Fund assets and related oversight duties
Cash held in the FIA in relation to a subscription or redemption transaction belongs to the fund and is thus clearly out of scope of IMR. Therefore, the FIA itself should also be excluded from the IMR framework. However, it will still fall under the fund's depositary oversight duties prescribed by the AIFMD and UCITS V regulations.
Vestima – Investor Money Regulation (IMR) ( 620 kb, pdf )