By: Minister of State with responsibility for Financial Services, Credit Unions and Insurance; Sean Fleming
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Thank you for the invitation to open the Irish Funds Annual Conference in its new setting of – it says here – “a fully online experience”.
Hasn’t the shift to online events during the pandemic been a mixed blessing? On the one hand, it has allowed us all to get back to holding the meetings and conferences that we need in order to share information and ideas, to learn about developments, and to make deals. And these online events can sometimes be better than an in-person event because you can attend without using up the time it takes to travel to a venue, whether that venue is 40 minutes away on the other side of the city or a whole morning away at the other end of a flight to Brussels or Berlin.
But on the other hand, don’t we miss a lot in the absence of face-to-face interaction? A smile or a nod – or even a raised eyebrow – just isn’t the same when it’s been filtered by the camera at one end and flattened onto a digital screen with that slightly tweaked sound of the human voice at the other end.
I’ll let you in a secret, if Lisa or Olga haven’t already spilt the beans. I’m not actually ‘live’ at the conference this afternoon. Because of Dáil business, I have recorded this opening presentation last night. And I cannot attend live tomorrow either because I will be in the Seanad taking the next session of the Committee Stage of the Investment Limited Partnerships Bill.
This is the first opportunity since my appointment in the summer for me to introduce myself and to have the chance to learn more about the dynamic funds industry that is an important part of the International Financial Services sector here in Ireland. The Programme for Government includes a commitment for the completion of Ireland for Finance strategy, which is focused on protecting and growing the community of people who work in the sector, including many thousands in the funds industry.
Let me congratulate Irish Funds on an impressive line up of speakers over the next two half-days. I would like to offer a virtual welcome, a Céad Míle Fáilte, to our international guests, and in particular Steven Maijoor from ESMA. I know Steven has spoken in Dublin Castle at the European Financial Forum and much has changed since his last visit in February, but we all look forward to when we can safely welcome you all to Ireland in person once more.
In opening this conference today I would like to make some remarks to frame the work that the Government, the Department of Finance and the team behind the Ireland for Finance strategy are doing to support the development of the IFS sector and in particular how that connects to the response to Covid and the impact of Brexit.
I would like to start with what has probably been the priority domestic issue for the funds industry in Ireland.
The Investment Limited Partnerships (Amendment) Bill 2020 was published in September, and it is an important step to maintain Ireland’s place as a leading funds domicile in Europe.
It fulfils a commitment made in the Programme for Government to progress the revision of the Investment Limited Partnership structure.
This Bill both caters for the modernisations of the investment limited partnership and caters for various best practices in the area of transparency and money laundering. The Bill is also making a number of technical amendments to the Irish Collective Asset Management Vehicles Act of 2015 to enhance the efficiency of the structure.
The importance attached to the Bill as a means to promote investment and Ireland’s competitiveness and sound regulatory environment in international financial services is more acute in the wake of the economic impact caused by COVID-19.
This is reflected in the fact the Bill is on the Government’s priority list in this term in the Oireachtas.
The Bill passed Second Stage in the Seanad on 23rd of September and the Committee Stage will resume tomorrow, Thursday the 22nd of October. I hope we can make swift progress on the Bill in the remaining stages in the Oireachtas in the coming weeks.
Turning to market infrastructure and the impact of Brexit, as many of you will be aware, the Dublin and London Stock Exchanges have a long and close history, and were one entity until 1995 when they separated. This close linkage previously allowed for the sharing of market infrastructure such as Central Securities Depositories or “CSDs” based in London which will no longer be possible going forward.
The Department of Finance and other State Authorities have actively engaged with market participants, Euroclear and Euronext, to assist in the delivery of the post-Brexit settlement solution since the referendum result. The State Authorities have supported this project at all stages, which has included legislative changes when seen as appropriate and necessary for the migration to be a success.
This has included legislation to aid the migration enacted last year and other taxation related changes that will be will be included in this year’s Finance Bill. In addition, the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2020 will include changes to the Companies Act relevant to the migration project.
We must remember it is now over four years since the United Kingdom decided to leave the European Union, and as a result of that decision the Irish market cannot use the CREST system into the future. This long and difficult project must be now come to completion and the Irish market needs to work together in the final stages of the migration project to ensure its success.
This will require the Commission to grant a temporary and time limited equivalence decision to allow the Irish market continue to use the CREST settlement system based in London until the end of March 2021.
It is important for the Irish market to note that such equivalence decisions are decided based on the interests of the European Union as a whole, not in the interests of a single Member State or individual firms.
Therefore it is critical that Issuers, Euronext, the Irish Legal community, Euroclear, Registrars and other market participants use the remaining five months to complete the necessary work to ensure the Irish equity market migrates to the new settlement system by the end of March next year.
It is the responsibility of the Irish market as a whole to ensure that there is no disruption to the trading and settlement of Irish equities post the end of March 2021 and this can only be achieved if the different market participants work together to make the migration project a success.
I mentioned the commitment of the new Government to the ‘Ireland for Finance’ strategy and the attention of my officials is now turning to the action plan for 2021. I want to acknowledge the work of Irish Funds in offering proposals for action measures to be included in the 2021 Action Plan.
We received proposals for over 70 measures, and my officials are working through them and sharing them officials in the other relevant departments such as Foreign Affairs and the Department of Enterprise and the two enterprise agencies, namely the IDA and Enterprise Ireland.
In various meetings I’ve had since I was appointed a Minister of State for Financial Services, I’ve already indicated some priorities I see for the roll-out of the strategy. They can be summed up in four words: first, digital – second, green – third, diverse – and fourth, regions.
On the first of those four words, which is ‘digital’, one of the four pillars of the ‘Ireland for Finance’ strategy is ‘Technology and Innovation’. Since the strategy was launched in April last year, the digital agenda has changed gear. Last month the European Commission published its Digital Finance Package, including the formal Communication to the European Parliament and the Council on a Digital Finance Strategy for the EU. We will need to use the Action Plan for 2021 to prioritise a set of key actions that will enable Ireland’s financial services sector to maximise the opportunities that the new EU agenda offers.
On the second of those four words, which is ‘green’, another major policy development that is driven by the European Union is sustainable finance. Climate change is both a policy priority and a commercial imperative. Key to our collective response will be the IFS sector delivering sustainable investments as part of the climate transition.
The work on sustainable finance under the ‘Ireland for Finance’ strategy has focussed on raising awareness in the sector on the need for change and on developing and delivering the knowledge and skills that professionals in the industry simply must have if your industry is to play its part in that essential mission for humanity. I hope that you will all be able to join me in some of the sessions taking place during Climate Finance week that the Department of Finance is hosting with Sustainable Nation from the 2nd to the 6th of November. A lot of the agenda for that week will be of direct relevance to the funds industry and we hope you will find it useful in refining your thinking in relation to sustainable finance.
On the third of those four words, which is ‘diversity’, some of you will know from the Marriage Equality Referendum in 2015 that I have a personal commitment to equality, and that my interest in the diversity priority in the ‘Ireland for Finance’ strategy is not a new-found concern that I acquired on taking up this post as Minister of State for Financial Services.
We made some progress this year with a step towards gender balance on the Ireland for Finance Industry Advisory Committee, and I am pleased to hear that progress is being made on the development of a Women in Finance charter for the financial services industry in Ireland.
On the fourth of those four words, which is ‘regions’, it will not be a surprise to you that a TD from a midlands constituency has a keen interest in the role that the ‘Ireland for Finance’ strategy has in developing our regions. What might surprise you is that it is not only non-Dublin TDs who want to see the industry support that regional development.
It was raised in the first set of parliamentary questions I took in the Dáil three weeks ago since becoming Minister of State. The parliamentary question was a broad one, and asked “what is the strategy for the financial services sector here?” My answer was a summary – in the time allowed for these things – of the main points of the strategy. But the Dublin TD used his oral supplementary to remind me that a key commitment is developing financial services jobs outside of Dublin. Now, I have to acknowledge that the TD concerned is Eoghan Murphy who previously held the post I now have and has an above-average knowledge of the brief, but it was heartening to hear a Dublin TD back the need for balanced regional development.
My allotted time is coming to an end now, so let me conclude by wishing you well for the rest of the conference. You are holding it in the time of Covid and the online format with all its benefits and disadvantages reflects that, and I urge you all to stay safe, wherever you are in the world and I hope that we will all get the chance to revert to normal ways of holding a conference and human interaction sooner rather than later.
ENDS