Funds Quarterly Legal And Regulatory Update: 1 January 2026 - 31 March 2026

1 APPROACHING DEADLINES/DATES OF INTEREST

2 UCITS & AIFMD

2.1 Publication of LMT Regulatory Technical Standards in Official Journal of the European Union

Directive (EU) 2024/927 (Omnibus Directive), which amends both the UCITS and AIFMD directives, imposes an obligation on UCITS funds and AIFMs managing open-ended AIFs to select and provide for at least two liquidity management tools (LMT) in relevant fund documentation from 16 April 2026 onwards. These LMTs must be selected from a list set down in the Omnibus Directive.

On 27 February 2026, the regulatory technical standards specifying the characteristics of each of the LMTs listed in the Omnibus Directive adopted by the European Commission on 17 November 2026 were published in the Official Journal of the EU (Official Journal).

The LMT regulatory technical standards comprise of:

• Commission Delegated Regulation (EU) 2026/466 specifying the characteristics of LMTs under the UCITS Directive (UCITS LMT RTS);

• Commission Delegated Regulation (EU) 2026/465 specifying the characteristics of LMTs under AIFMD (AIFMD LMT RTS).

The UCITS LMT RTS and AIFMD LMT RTS will apply from 16 April 2026 in respect of all UCITS and AIFS constituted on or after 16 April 2026.

UCITS and AIFs constituted before 16 April 2026 are not required to comply with the RTS until 16 April 2027.

A copy of the UCITS LMT RTS is available here.

A copy of the AIFMD LMT RTS is available here.

2.2 Central Bank of Ireland finalises filing processes for updates to fund documentation for UCITS and AIFs arising from AIFMD II

On 27 February 2026, the Central Bank of Ireland (the Central Bank) issued a publication outlining its streamlined filing process for Irish investment funds updating their constitutive documents/prospectuses to address requirements introduced under the Omnibus Directive.

The streamlined filing process opened on 2 March 2026 and there is no set date for its closure.

The publication can be accessed here.

A Dillon Eustace briefing, which provides a detailed overview of the publication, is available here.

2.3 Central Bank of Ireland finalises streamlined authorisation process for Irish AIFMs engaging in loan origination under AIFMD II

On 29 January 2026, the Central Bank published a note outlining the streamlined authorisation process for Irish-authorised AIFMs seeking to extend their permissions to include loan origination.

Under AIFMD II, AIFMs that currently manage QIAIFs engaged in loan origination must obtain approval from the Central Bank to extend their permissions to include loan origination by 16 April 2026.

The note sets out the information that an AIFM must submit in order for the Central Bank to consider an application to extend its permissions to cover loan origination activities.

A copy of the note is available here.

2.4 European Commission publishes consultation on reform of venture and growth capital funds

On 15 January 2026, the European Commission (the European Commission) launched a targeted consultation on reforming the regulatory framework applicable to EU venture and growth capital funds (the Consultation).

The Consultation sought feedback from fund managers on challenges they face under the European Venture Capital Funds Regulation, as well as under AIFMD. This feedback will inform the European Commission’s proposal for the reform of the applicable regulatory framework for these funds. This forms part of its broader Savings and Investment Union strategy “to boost [the EU’s] competitiveness and innovation capacity by addressing current investment gaps”.

The Consultation closed on 12 March 2026 and the European Commission intends to publish its finalised proposal for reforms in the third quarter of 2026.

Details of the European Commission’s consultation is available here.

A Dillon Eustace briefing, which provides a detailed overview of the Consultation, is available here.

3 CENTRAL BANK OF IRELAND

3.1 Central Bank of Ireland publishes Regulatory & Supervisory Outlook Report 2026

On 26 February 2026, the Central Bank published its third Regulatory & Supervisory Outlook (the Report). The Report was brought to the specific attention of senior management teams of all Irish regulated firms via a “Dear CEO” letter issued by the Central Bank on the same day (the Letter).

In the Report, the Central Bank identifies the key trends and risks faced by the whole of the financial sector – including the Irish funds sector – for the next two years. It also outlines the Central Bank's current supervisory priorities and key regulatory initiatives that will impact the sector over the coming period.

The Central Bank also indicates in the Report that it intends to carry out themed inspections and reviews on the following topics over the next two years, which are relevant to Irish fund management companies (FMCs) and Irish-domiciled funds:

• Delegation frameworks in FMCs

• AML Transaction Monitoring and Suspicious Transaction Reporting

• Valuation of hard-to-value assets

• Liquidity risk management in bond funds

• Review of progress of relevant AIFMs on leverage reduction and maintenance plans across property funds

• UCITS VaR model review

It also outlines some other areas of supervisory focus of relevance to FMCs and Irish-domiciled funds, including without limitation implementing and monitoring the requirements of DORA, continued engagement on costs and fees and considering the appropriateness of industry approaches and processes for monitoring investment restrictions and reporting regulatory breaches.

A copy of the Report is available here.

A copy of the Letter is available here.

A Dillon Eustace briefing which provides a detailed overview of the Report is available here.

3.2 Central Bank of Ireland publishes consultation on prohibition notices under its Fitness & Probity Regime

On 1 January 2026, the Central Bank published a Consultation Paper on Prohibition Notices Under the Fitness and Probity Regime (CP166), in which it sought feedback on proposals relating to prohibitions under its fitness and probity (F&P) regime.

Prohibition notices are an enforcement tool used to ensure that persons performing CF/PCF roles within regulated firms for failing to meet the required standards of F&P. They may be issued where the Central Bank determines that an individual has engaged in misconduct or has otherwise fallen below the requisite standards. A person subject to a prohibition notice is prohibited from performing a CF/PCF role to which the prohibition notice relates, and the relevant firm is required to ensure that the prohibition notice is complied with.

In April 2023, the Central Bank published its Guidance on Fitness and Probity Investigations, Suspensions and Prohibitions (the Main Guidance).

In CP166, the Central Bank sought feedback on additional draft guidance relating to prohibitions which, once finalised, will supplement the Main Guidance (the Draft Supplemental Guidance).

In particular, the Draft Supplemental Guidance sets out:

• the circumstances that a decision maker will consider when determining the nature of a prohibition, including its scope and duration; and

• the Central Bank’s approach to the cessation, termination and publication of a prohibition notice.

CP166 closed for feedback on 25 March 2026.

CP166 can be accessed here.

A Dillon Eustace briefing, which provides a detailed overview of CP166 is available here.

3.3 Central Bank of Ireland publishes industry letter on 2025 Thematic Inspection on Outsourcing Risk in Fund Administrators and Depositaries

On 6 March 2026, the Central Bank issued a letter outlining the results of its 2025 thematic inspection of outsourcing risk in Irish fund administrators and Irish depositaries (Letter).

The thematic inspection assessed the robustness of the outsourcing oversight frameworks implemented by Irish fund administrators and Irish depositaries (FSPs) taking into consideration the existing outsourcing regulatory framework applicable to those entities. The thematic inspection assessed (i) the outsourcing lifecycle, (ii) governance and (iii) operational oversight.

The Letter notes that the Central Bank identified that deficiencies continue to exist in the outsourcing oversight frameworks established by FSPs. It also sets out a list of non-exhaustive examples of good practices observed during the thematic inspection which should be reviewed by FSPs which should evaluate if enhancements are necessary in the identification, assessment, monitoring and reporting of outsourcing risk going forward.

The Central Bank expects FSPs to bring the Letter to the attention of their board of directors and senior management.

A copy of the Letter is available here.

4 SUSTAINABLE FINANCE

4.1 ESMA publishes thematic note on ESG strategies used in sustainability-related claims

On 14 January 2026, the European Securities and Markets Authority (ESMA) published its second thematic note on clear, fair and not misleading sustainability-related claims.

The note outlines ESMA’s expectations for how market participants should describe ESG strategies in a manner that is clear, fair and not misleading, as part of ESMA’s broader strategy to address greenwashing risks. It relates to sustainability claims in non-regulatory communications which include marketing materials and voluntary reporting.

ESMA highlights that market participants should adhere to four principles when describing ESG strategies: Accuracy, Accessibility, Substantiation and Timeliness (the Principles).

ESMA places particular focus on the terms “ESG integration” and “ESG exclusion strategies”, which it identifies as being widely used but inconsistently defined by market participants. The Note provides standardised definitions for these terms and includes examples of good and poor practices when using these terms in communications.

While the Note does not create new disclosure requirements for market participants, ESMA expects market participants to familiarise themselves with the Principles and ensure that all ESG‑related claims contained in non-regulatory communications adhere to the standards of being clear, fair and not misleading.

A copy of the Note is available here.

4.2 European Commission consults on EU Taxonomy Climate Delegated Act and EU Taxonomy Environmental Delegated Act

On 17 March 2026, the European Commission initiated a consultation on proposed amendments to the technical screening criteria which must be used to determine whether an economic activity can qualify as environmentally sustainable under the EU Taxonomy Regulation (Consultation).

The objective of the proposed amendments, which will amend Delegated Regulation (EU) 2021/2139 (EU Climate Delegated Act) and Commission Delegated Regulation (EU) 2023/2486 (EU Environmental Delegated Act), is to improve the usability of the EU Taxonomy framework by updating and simplifying the technical screening criteria underpinning the framework.

The draft delegated acts contained in the Consultation incorporate feedback received from stakeholders in response to a related call for evidence published by the European Commission in November 2025.

The Consultation closes on 14 April 2026 with the European Commission intending on adopting the finalised delegated acts in Quarter 2 2026.

A copy of the proposed amendments to the EU Climate Delegated Act is available here.

A copy of the proposed amendments to the EU Environmental Delegated Act is available here.

4.3 Delegated acts to simplify reporting obligations on companies under the EU Taxonomy framework published in Official Journal

On 8 January 2026, Commission Delegated Regulation (EU) 2026/73 was published in the Official Journal (CDR).

The CDR, which was adopted by the European Commission on 4 July 2025, amends Delegated Regulation (EU) 2021/2178 and Delegated Regulation (EU) 2021/2139, which apply to issuers required to report on Taxonomy-related activities under Article 8 of the Taxonomy Regulation.

Simplification measures included in the CDR include an exemption for in-scope companies from assessing Taxonomy eligibility and alignment for economic activities that are not financially material for their business as well as simplifying key performance indicators and reducing the number of reported data points for in-scope companies.

The changes to the EU Taxonomy framework do not impact the disclosure obligations imposed on financial market participants (including fund management companies) under the EU Taxonomy framework.

The CDR applies from 1 January 2026.

A copy of the CDR is available here.

4.4 Omnibus Sustainability Directive Published in the Official Journal

On 26 February 2026, Directive (EU) 2026/470 which amends the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) as well as the EU Taxonomy Regulation was published in the Official Journal (Omnibus Sustainability Directive).

Under the Omnibus Sustainability Directive, Irish fund management companies now only fall within the scope of the CSRD reporting framework (as well as issuer-level reporting obligations under Article 8 of the EU Taxonomy Regulation) if they have an average of 1000 or more employees and exceed a net €450 million in net turnover during the financial year. In addition, the Omnibus Sustainability Directive also restricts the scope of the CSDDD to EU companies which exceed in the last financial year 5000 employees on average and have a net worldwide turnover of at least €1.5 billion, meaning that only the largest of EU companies fall within its scope. 

A copy of the Omnibus Sustainability Directive is available here.

5 MONEY MARKET FUNDS

5.1 ESMA Confirms Date of Application of Guidelines on Stress Test Scenarios under the MMFR

On 26 March 2026, ESMA published updated guidelines on stress test scenarios (2025 Guidelines).

The 2025 Guidelines are to be used by EU money market funds (MMF) when performing mandatory stress testing under Article 28 of the EU Money Market Funds Regulation (MMFR).

The updates contained in the 2025 Guidelines relate solely to the calibration of scenarios for the 2025 reporting period. ESMA has highlighted these amendments in red within the document.

MMFs must incorporate these updated calibrations into their stress testing and report the results to their competent authority on a quarterly basis, in accordance with Article 37 of the MMFR.

The changes will take effect from 26 May 2026.

A copy of the 2025 Guidelines, with the changes highlighted in red, is available here.

6 CROSS BORDER DISTRIBUTION

6.1 ESMA publishes third report on marketing requirements and communications under the Cross Border Distribution of Funds Regulation

On 6 January 2026, ESMA issued its third report on marketing requirements and marketing communications under Regulation (EU) 2019/1156 on cross-border distribution of collective investment undertakings (CBDR).

Under the CBDR, ESMA is required to report to the European Parliament, the Council and the European Commission every two years on Member State marketing requirements and their effects. The report is based on information provided to ESMA by national competent authorities across the EU.

In this year’s report, ESMA confirms that marketing rules in Member States have remained largely unchanged since its previous report.

The report also provides statistics on the volume of cross-border fund notifications. In particular, ESMA notes that:

• UCITS notifications account for 56% of total fund notifications, with AIFs representing the remaining 44%;

• Germany, Italy, France and Spain receive the highest number of inbound notifications (each exceeding 10,000), with UCITS forming the majority in all four jurisdictions; and

• Luxembourg and Ireland are the leading notifying jurisdictions, representing 59% and 30% of all notifications respectively.

A copy of the report can be accessed here.

7 AML & CTF

7.1 EBA and AMLA complete handover of AML/CFT mandates

On 1 January 2026, a press release was issued by the European Banking Authority (EBA) and EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) announcing the completed transfer of all AML/CFT mandates and functions from EBA to AMLA. 

Under the new framework AMLA will:

• complete the EU’s Single Rulebook.

• advance supervisory convergence.

• co-ordinate the work of FIUs.

The EBA and AMLA will continue to work together to ensure a coherent framework is maintained. A formal ESAs-AMLA Memorandum of Understanding has been put in place to allow for smooth information exchange, joint initiatives and engagement with the private sector.

All existing EBA AML/CFT guidelines and standards will remain in force until replaced by AMLA to guarantee regulatory continuity for industry and supervisors.

The press release can be accessed here.

7.2 AMLA consults on draft RTS on pecuniary sanctions, administrative measures and periodic penalty payments

On 9 February 2026, AMLA published a consultation paper on draft regulatory technical standards (RTS) on pecuniary sanctions, administrative measures and periodic penalty payments under the Sixth Money Laundering Directive² (MLD6).

The AMLA public consultation closed on 9 March 2026. AMLA is currently analysing feedback and preparing the final draft RTS. The text of these draft RTS has remained largely unchanged from the version submitted by the EBA in its response to the Call for Advice³. AMLA is expected to submit the final draft versions of these RTS to the European Commission for adoption by 10 July 2026.

The consultation paper can be accessed here.

7.3 AMLA consults on draft RTS on customer due diligence (CDD)

On 9 February 2026, AMLA published a consultation paper on customer due diligence (CDD) under Article 28(1) of the AML Regulation⁴. The draft regulatory technical standards aim to harmonise the way in which AML and CFT requirements are applied in the EU.

The AMLA public consultation will close on 8 May 2026. AMLA is expected to submit the final draft version of the RTS to the European Commission for adoption by 10 July 2026.

The consultation paper can be accessed here.

7.4 AMLA consults on draft RTS on criteria for identifying business relationships, occasional and linked transactions and lower thresholds

On 9 February 2026, AMLA published a consultation paper on the criteria for identifying business relationships, occasional and linked transactions and lower thresholdsunder Article 19(9) of the AML Regulation. The draft regulatory technical standards again aim to harmonise the way AML and CFT requirements are applied in the EU.

The AMLA public consultation will close on 8 May 2026. AMLA is expected to submit the final draft version of the RTS to the European Commission for adoption by 10 July 2026.

A copy of the consultation can be accessed here.

7.5 Final Report on the draft RTS on the inherent and residual risk profile of obliged entities

On 27 February 2026, AMLA published the Final Report on the RTS on the assessment of the inherent and residual risk profile of obliged entities under Article 40(2) of MLD6⁵.

The draft RTS establishes a common methodology for supervisors to assess: (i) inherent ML/TF risk; (ii) quality of AML/CFT controls; and (iii) residual ML/TF risk of financial‑sector obliged entities. The draft RTS reflects the feedback received during a three-month public consultation on a version of the draft RTS, which took place between March and June 2025.

To address the current fragmentation to entity-level ML/TF risk assessment, the draft RTS introduces a risk-based methodology that is fully harmonised. The draft RTS applies to NCAs and to financial sector obliged entities.

The draft RTS will be submitted to the European Commission for adoption before being published in the OJ.

The Final Report can be accessed here.

7.6 AMLA launches data collection exercise to test risk assessment models for financial sector

On 16 March 2026 AMLA published a reporting package for its data collection exercise to test and calibrate risk assessment models for the financial sector.

The exercise tests and calibrates AMLA’s risk assessment models to:

• inform the selection of up to 40 obliged entities (operating cross-border) for AMLA’s direct supervision beginning in 2028.

• ensure the money laundering risks of credit institutions and financial institutions are assessed consistently by supervisors across the EU.

Participating financial institutions have already been notified by their national supervisors. Participating entities are requested to submit their data by 22 April 2026.

The exercise will enable AMLA to collect high quality data from the private sector which will contribute to the development of a common EU-wide risk assessment methodology.

The press release announcing the launch of the data collection exercise can be accessed here.

8 EMIR & SFTR

8.1 RTS on conditions of Active Account Requirement under EMIR 3.0 published in OJ

On 6 February 2026, Commission Delegated Regulation (EU) 2026/305 containing regulatory technical standards on the active account requirement (AAR) and the representativeness obligation under EMIR 3.0⁶ (the AAR RTS) was published in the Official Journal of the European Union (OJ).

The AAR RTS lay down uniform minimum standards that apply to all counterparties.

The AAR RTS specifies the operational conditions that must be met to demonstrate that an active account at an EU CCP is permanently functional as required under Article 7a(3) of EMIR⁷. It also specifies how counterparties that are subject to the representativeness obligation must comply with Article 7a(3)(d) EMIR.

The RTS requires counterparties to report, on a periodic basis, information enabling national competent authorities (NCAs) to assess:

• compliance with the operational conditions, including the completion of stress testing at least annually;

• compliance with the representativeness obligation, where applicable; and

• relevant clearing activity and exposures.

The RTS establishes (i) bi‑annual reporting to NCAs and (ii) the use of standardised templates, which are set out in Annex II (operational conditions) and Annex III (representativeness and activity data) respectively.

The AAR RTS entered into force on 26 February 2026.

The AAR RTS can be accessed here.

8.2 ESMA publishes Supervisory Briefing on the Representativeness Obligation

On 20 February 2026, ESMA published a supervisory briefing on the representativeness obligation which forms part of the AAR under EU EMIR 3.0.

The supervisory briefing helps to clarify how aspects of compliance with the representativeness obligation should be performed and reported by in-scope counterparties in accordance with EU EMIR and the AAR RTS.

The supervisory briefing:

• Identifies the most relevant subcategories

• Outline reporting on the representativeness compliance

• Provides a worked example of compliance

The ESMA press release and supervisory briefing can be accessed here.

8.3 ESMA consults on guarantees as CCP collateral and on certain aspects of CCP investment policy

On 23 February 2026, ESMA launched a public consultation on draft RTS amending Commission Delegated Regulation 153/2013 that sets out the detailed prudential and operational requirements for central counterparties (CCPs).

ESMA is encouraging all relevant stakeholders to share their views on the following:

• The conditions under which public guarantees, public bank guarantees and commercial bank guarantees may be accepted by central counterparties (CCPs) as collateral.

• The conditions under which debt instruments can be considered as eligible financial instruments for the purpose of CCP investment policy.

• The arrangements in which emission allowances posted as margins or default fund contributions can be deposited.

The deadline for responses is 30 April 2026. Based on the responses received, ESMA will prepare the final report and submit the final draft technical standards to the European Commission by the end of 2026.

The ESMA press release and consultation paper can be accessed here.

8.4 ESMA publishes a Final Report setting out new clearing thresholds under EMIR 3.0

On 25 February 2026, ESMA published its final report and draft regulatory technical standards (RTS) setting out new and revised clearing thresholds (CTs) under EMIR 3.0.

The draft RTS seeks to amend Delegated Regulation (EU) No 149/2013 which sets out the currently existing clearing thresholds for OTC derivatives; and how those thresholds must be calculated by counterparties, for the purposes of Articles 4a (financial counterparties (FCs)) and 10 (non‑financial counterparties (NFCs)) of EMIR.

To avoid unnecessary complexity and additional compliance burdens, ESMA has:

• retained five CTs categories, avoiding additional categories or more granular thresholds.

• clarified the timing of calculation of positions (allowing counterparties to apply the new CTs during their usual assessment window or earlier) and transition mechanics

• increased the thresholds in the commodity, interest rate and credit derivatives asset classes compared to what was previously proposed in the consultation paper in April 2025.

ESMA has submitted the final draft RTS to the European Commission for endorsement, following which they will be subject to adoption. The revised clearing‑threshold regime will apply 20 days after the adopted RTS are published in the OJ.

The final report can be accessed here.

8.5 ESMA consults on draft RTS on post-trade risk reduction services under EMIR

On 26 February 2026, ESMA published a consultation paper on draft regulatory technical standards (RTS) relating to requirements for post-trade risk reduction (PTRR) services for the purpose of the clearing obligation exemption under EMIR.

Article 4b of EMIR contains a conditional exemption from the clearing obligation exemption for transactions resulting from PTRR services subject to certain requirements. ESMA is mandated under EMIR to draft RTS specifying the requirements for benefitting from the PTTR exemption.

The proposed draft RTS contains provisions on:

• The requirements for the different types of PTRR services that can benefit from the exemption.

• The requirements for PTRR exercises.

• Operating conditions for the PTRR service providers.

• The process for competent authorities to monitor the application of the PTRR exemption.

The deadline for responses is 20 April 2026. ESMA expects to publish a final report on the RTS and submit them to the European Commission for endorsement in Q4 2026.

The consultation paper can be accessed here.

8.6 ESMA publishes a Final Report on the RTS on margin transparency and a Final Report on the cost of clearing under EMIR

On 2 March 2026, ESMA published a Final Report on the draft RTS on margin transparency. The final draft RTS outlines the detailed information which CCPs are required to provide to their clients on their margin models and their initial margin simulation tools to their clients.

On the same date, ESMA also published a Final Report on the draft RTS on information on clearing fees and associated costs. The final draft RTS contain provisions on, among other things, on-boarding fees, fixed fees and transaction fees charged by CSPs.

ESMA will now submit the draft RTS to the European Commission for endorsement.

The Final Report on draft RTS on margin transparency requirements can be accessed here.

The Final report on draft RTS on information on clearing fees and associated costs can be accessed here.

ESMA will now submit the draft RTS to the European Commission for endorsement.

8.7 ESMA announces the publication of standardised reporting templates and instructions for the Active Account Requirement

On 13 April 2026, ESMA announced the publication of standardised reporting templates and instructions for the AAR under EMIR 3.0. The new templates and instructions set out in detail how entities subject to the AAR should report the required information to their NCAs.

ESMA has indicated that it expects the first AAR reporting submissions by July 2026 covering the period from 25 June 2025, when the AAR became applicable, to 30 June 2026. The AAR RTS indicates that the annual reporting shall take place bi-annually on the last day of January and on the last day of July in each year each covering a twelve‑month reference period.

ESMA has also indicated that it will develop additional instructions on how to report according to the RTS templates.

A copy of ESMA’s press release, reporting templates and instructions are available here.

9 DATA PROTECTION

9.1 FAQ on EU-U.S. Data Privacy Framework for European businesses (Version 2.0) adopted

On 15 January 2026, the European Data Protection Board adopted Version 2.0 of the EU-U.S. Data Privacy Framework - F.A.Q. for European businesses.

The EU-U.S. Data Privacy Framework (DPF) is a self-certification mechanism for companies in the U.S. Companies that opt to self-certify under the DPF must comply with the relevant rules and obligations related to the processing of personal data of EEA individuals.

The FAQ can be accessed here. 

10 MISCELLANEOUS

10.1 Central Bank publishes Discussion Paper on DLT and Tokenisation

On 5 March 2026, the Central Bank published its much-anticipated Discussion Paper 12 on Distributed Ledger Technology (DLT) and Tokenisation in Financial Services (Discussion Paper).

The Central Bank highlights a range of potential benefits associated with tokenisation, including:

• increased efficiency;

• support for innovation and the unlocking of economic opportunities;

• enhanced transparency and auditability; and

• improved integration within European capital markets.

It also acknowledges that the introduction of these technologies presents a number of risks. The Central Bank categorises these into four groups:

• new and structurally distinct risks;

• transition and integration risks;

• technology and operational risks; and

• risks to effective supervision and regulation.

The Discussion Paper also considers potential applications of tokenisation within the funds sector, including its relevance to liquidity management practices, money market funds and exchange‑traded funds.

Responses to the Discussion Paper can be submitted through the Central Bank’s online portal on or before 5 June 2026. The Central Bank intends to consider the feedback received and publish a feedback statement in due course.

A copy of the Discussion Paper is available here.

A Dillon Eustace briefing, which provides a detailed overview of the discussion paper is available here.

10.2 Amendments to Irish MiFID Client Asset Provisions

On 10 March 2026, the European Union (Markets in Financial Instruments) (Amendment) (No.2) Regulations 2026 were published (Amending Regulations).

The Amending Regulations amend the existing European Union (Markets in Financial Instruments) Regulations 2017 to set down the steps to be taken if client funds or financial instruments are held by a third party in a jurisdiction in which it is not possible to ensure that such client funds or financial instruments are separately identifiable.

The Amending Regulations, which apply to any Irish UCITS management company or Irish AIFM which holds client assets, will come into force on 31 August 2026.

A copy of the Amending Regulations is available here.

10.3 European Commission publishes call for evidence and public consultation on SRD II

On 11 February 2026, the European Commission published a call for evidence and public consultation to assess how effectively the Shareholder Rights Directive (SRD) is functioning and whether further amendments are needed.

This exercise forms part of the European Commission’s broader Savings and Investment Union strategy and is aimed at strengthening the competitiveness of EU companies and encouraging private investment by ensuring shareholders can exercise their rights easily and efficiently, especially across borders.

As part of the call for evidence, the European Commission is seeking feedback from companies, shareholders and investors on:

• the challenges and shortcomings of the current SRD;

• existing barriers to the efficient functioning of the market that hold back intra-EU investment; and

• possible solutions and changes to the SRD which would help unlock investment, increase Europe’s competitiveness, streamline and digitalise processes, simplify rules and reduce administrative and financial burdens.

In parallel, a public consultation has also been issued by the European Commission, where feedback can also be communicated by completing a questionnaire.

Feedback shared with the European Commission via the call for evidence and public consultation will feed into the evaluation and impact assessment for a potential review of the SRD.

The feedback period remains open until 6 May 2026.

Details relating to the European Commission’s call for evidence and public consultation can be viewed in its entirety here.

10.4 ESMA publishes report on Costs and Performance of EU Retail Investment Products 2025

On 3 March 2026, ESMA published its 2025 Market Report on the Costs and Performance of EU Retail Investment Products, which provides an overview of key developments up to the end of 2024.

For UCITS, ESMA observed a decline in costs across all categories of funds, when compared to 2023. Additionally, UCITS funds’ gross returns improved in 2024 and real returns were positive, contrary to 2023.

Annualised returns of AIFs offered to retail investors significantly improved from 2023 to 2024 for funds-of-funds, while other AIFs and the rest of the market reported similar returns for the two years. Real estate funds reported slightly declining gross and net performances.

As in 2023, ESMA also observed that the ongoing costs of ESG funds are lower compared to non-ESG equivalents but noted that ESG funds underperformed their non-ESG equivalents in 2024.

A copy of the report can be accessed here.

10.5 ESMA publishes TRV Risk Monitor

On 11 March 2026, ESMA published its first Trends, Risks and Vulnerabilities of 2026.

In the report, ESMA notes that risks across EU financial markets remain persistently elevated. In particular ESMA highlights the following risks:

• Stretched global equity valuations are heightening the risk of abrupt market corrections and potential systemic contagion.

• Tariff driven inflation pressures may complicate monetary policy decisions and contribute to increased volatility in bond and currency markets.

• The continued expansion of private credit introduces additional leverage and liquidity vulnerabilities, with the potential for setbacks to spread into the wider financial system.

• Growing interconnections between crypto‑assets and traditional markets – including through stablecoins – may amplify negative spillovers.

• Rising cyber and hybrid threats pose operational risks to firms across the financial sector.

A copy of the report can be accessed here.

10.6 Statutory instruments implementing ESAP framework in Ireland published

On 10 February 2026, the Irish Minister for Finance signed three statutory instruments implementing the European Single Access Point (ESAP) framework in Ireland into law.

ESAP is an EU-wide centralised platform that will provide public access to information on EU companies and investment products with the intention of improving the visibility of EU firms and products for both European and international investors and, in turn, broaden their potential funding sources.

Under the new framework, disclosures that were previously dispersed across national registers will now be accessible through a single digital interface. It will also revise certain EU regulatory frameworks to require in-scope entities to disclose regulatory information on the ESAP in a standardised, machine-readable format. This includes the Irish UCITS and AIFMD frameworks as well as the Irish frameworks underpinning the SFDR, the MMFR and SFTR regimes amongst others. It designates the Central Bank as the collection body for information by firms regulated by it.

The ESAP framework will be implemented in a staggered manner, with application dates differing depending on the relevant regulatory framework. For example, the rules revising the Irish UCITS framework apply from 10 January 2028 while the rules revising the Irish AIFMD framework apply from 10 January 2030.

A notice on the Central Bank’s website announcing the signing of the statutory instruments implementing the ESAP framework into Irish law is available here.

10.7 ESMA publishes Report on its 2025 Call for Evidence on Retail Participation in Capital Markets

On 12 March 2026, ESMA published a report on its Call for Evidence (CfE) on the retail investor journey issued in May 2025 (Report).

The CfE sought to identify regulatory barriers that may deter retail investors from engaging with capital markets, and to assess whether the MIFID II framework effectively balances investor protection with continued accessibility to investing. Additionally, the CfE sought feedback from stakeholders on non-regulatory barriers that may limit retail investors’ ability or willingness to invest.

ESMA notes in its Report that retail participation is hindered by a combination of regulatory and non‑regulatory factors, rather than any single dominant obstacle. On that basis, it concludes that enhancing the retail investor journey must be a “continuous priority for the foreseeable future”. ESMA will now use the feedback obtained from the CfE to inform its future advice and proposals relating to the overall retail investment framework as part of the EU’s Retail Investment Strategy which is expected to enter into force later this year and will generally apply to in-scope firms 30 months following their publication.

A copy of the report is available here.

10.8 AI Act Round Up

European Parliament and Council of the EU to enter Trilogue Negotiations on Targeted AI Act Amendments

In March 2026, the European Parliament and the Council of the EU adopted their respective positions on proposed amendments to the AI Act.

This follows the publication by the European Commission in November 2025 of the seventh omnibus package (the Digital Simplification Package), which proposed targeted amendments to several EU digital laws, including the AI Act.

On 13 March 2026, the Council of the EU adopted its position on the proposed AI Act amendments. The Council’s proposals include:

• setting fixed dates for the postponement of certain provisions applicable to high-risk AI systems;

• postponing the deadline for the establishment of AI regulatory sandboxes until 2 December 2027; and

• clarifying the allocation of supervisory responsibilities between the EU AI Office and national authorities for AI systems based on general purpose AI models.

On 26 March 2026, the European Parliament adopted its position by voting in plenary to approve amendments to the European Commission’s proposals put forward by the Parliament’s Internal Market and Civil Liberties Committees. Like the Council, the Parliament supports inserting fixed dates for the postponement of provisions applicable to high-risk AI systems. In addition, it proposes:

• extending certain support measures currently available to SMEs to also cover small mid-cap enterprises; and

• shortening the proposed postponement of the implementation of rules on watermarking AI generated audio, image, video, and text content to clarify its origin, from 2 February 2027 (as proposed by the European Commission) to 2 November 2026.

The Council and the Parliament will now enter trilogue negotiations with a view to agreeing a consolidated set of proposals to amend the AI Act.

A copy of the European Commission’s proposed amendments to the EU AI Act contained in the Digital Simplification Package is available here.

An FAQ published by the European Commission on the Digital Simplification Package is available here.

A press release by the Council of the EU on the adoption of their position on the AI Act amendments is available here.

A press release by the European Parliament on the proposals put forward by the Parliament’s Internal Market and Civil Liberties Committees, which were subsequently endorsed by the Parliament in plenary, is available here.

European Commission publishes second draft of Code of Practice on transparent AI systems

On 5 March 2026, the European Commission published its second draft of a Code of Practice on transparency in AI generated content (Code of Practice).

The Code of Practice addresses key considerations for providers and deployers of AI systems that generate content falling within the scope of Article 50(2) and (4) of the EU AI Act. Its objective is to assist these providers and deployers in complying with the Act’s marking and labelling requirements for AI generated content.

The second draft reflects feedback received by the European Commission from industry, academia, civil society, Member States, and the European Parliament. In particular, it aims to simplifies the drafting and reduces the anticipated compliance burden.

The European Commission intends to finalise the Code of Practice by the beginning of June 2026, in advance of the transparency obligations for AI‑generated content coming into force on 2 August 2026. The final version of the Code of Practice is expected to be published between May and June 2026.

A copy of the second draft of the Code of Practice is available here.

Footnotes

1. Regulation (EU) 2024/2809

2. Directive (EU) 2024/1640) (MLD6)

3. EBA Response to the European Commission’s Call for Advice on six AMLA mandates

4. Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AML Regulation)

5. Directive (EU) 2024/1640

6. Regulation (EU) 2024/2987 of the European Parliament and of the Council of 27 November 2024 amending Regulation (EU) No 648/2012 (EMIR), Regulation (EU) No 575/2013 (CRR) and Regulation (EU) 2017/1131 (MMF Regulation) as regards measures to mitigate excessive exposures to third‑country CCPs and improve the efficiency of Union clearing markets

7. Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) as revised by EMIR 3.0

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