On 23 July 2019, the Central Bank of Ireland (the “Central Bank”) revised its guidance on UCITS Financial Indices (“Guidance”), clarifying the circumstances where an index certification is now not required.

In a welcome change, the Central Bank has confirmed that a responsible person that proposes to use a financial index for tracking or replication, investment or efficient portfolio management purposes for a UCITS is not required to submit an index certification (of compliance with the relevant regulatory requirements) if, on a “look-through” basis, it would be possible for the UCITS to directly invest in the constituents of the index as allowed by the UCITS Regulations.

UCITS proposing to use a financial index for which there is no requirement to submit an index certification should state, when making the application for authorisation to the Central Bank, that such indices meet the regulatory requirements.

The Guidance states that an index certification will be required where (i) it would not be possible for the UCITS to invest directly in the underlying eligible assets of the index without transgressing the risk-spreading limits of the UCITS Regulations; and (ii) it is not possible for the UCITS to invest directly in the underlying constituents of the proposed index (e.g. a commodities index).