Pearse Doherty (Donegal, Sinn Fein)
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44. To ask the Minister for Finance the rationale for allowing less transparency for passively traded exchange traded funds; and if he will make a statement on the matter. [21472/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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An Exchange Traded Fund (ETF) is an investment fund that can be traded on exchange similar to other listed stocks or securities.

In order to facilitate the trading of shares in the ETF, it relies on Authorised Participants and Market Makers to provide market liquidity and pricing.

Authorised Participants and Market Makers play an important role in arbitraging any pricing differential that may arise from trading activity that results in fluctuations in the ETF’s share price that deviate from the underlying net asset value of the fund’s investment portfolio.

In order to support the effective operation of the arbitrage mechanism, the ETF will disclose daily information on its portfolio to its Authorised Participants and Market Makers.

In 2014, the Central Bank of Ireland (CBI) published UCITS Q&A ID 1012 www.centralbank.ie/docs/default-source/regulation/industry-market-sectors/funds/ucits/guidance/4-gns-4-4-8-1-2-ucits-qa-no-4.pdf?sfvrsn=22bd71d_6 which required active ETFs to disclose their portfolio holdings on a daily basis as it was understood at the time that this was necessary to ensure the effective operation of the arbitrage mechanism.

In 2018, the CBI published its feedback statement to Discussion Paper 6 – Exchange Traded Funds (DP6) www.centralbank.ie/news/article/feedback-statement-exchange-traded-funds-14-septermber-2018. DP6 covered a number of themes including portfolio transparency, acknowledging that there are alternative approaches to daily portfolio disclosure that can still support the effective operation of the arbitrage mechanism, and DP6 committed to keeping this issue under review. DP6 further noted that unlisted UCITS were not required to disclose their portfolio holdings on a daily basis and that market practice was to issue such disclosures on a quarterly basis.

The CBI was a member of the International Organization of Securities Commissions (IOSCO) Working Group that developed the Good Practices Relating to the Implementation of the IOSCO Principles for Exchange Traded Funds. www.iosco.org/library/pubdocs/pdf/IOSCOPD733.pdf In 2023, IOSCO published its final report that included a series of recommendations including on portfolio disclosures concluding that ‘Regulators are encouraged to consider requirements regarding the transparency of an ETF’s portfolio and/or other appropriate information provided to market participants so as to facilitate effective arbitrage’.

ETF portfolio disclosure was also considered as part of the Department of Finance Funds Review 2030 that recommended the CBI ‘continue to keep under consideration its requirements regarding portfolio transparency for ETFs, recognising the possibility of alternative approaches’.

The issue of ETF portfolio disclosure has been an area of focus for the CBI as the international regulatory environment and ETF markets generally have moved away from requiring daily disclosure. This also reflects the increasing sophistication of Authorised Participants and Market Makers and their ability to effectively arbitrage the ETF without the need for full disclosure of the portfolio.

In implementing the IOSCO and Funds Review 2030 recommendation, the CBI engaged with stakeholders in early 2025, resulting in www.centralbank.ie/docs/default-source/regulation/industry-market-sectors/funds/ucits/guidance/42nd-edition-ucits-qa.pdf?Status=Master&sfvrsn=941d671a_10 to permit UCITS ETFs to disclose their portfolio holdings on a daily or periodic basis subject to the following requirements:

1. appropriate information is disclosed on a daily basis to facilitate an effective arbitrage mechanism;
2. the prospectus discloses the type of information that is provided in point (i);
3. this information is made available on a non-discriminatory basis to Authorised Participants and Market Makers;
4. there are documented procedures to address circumstances where the arbitrage mechanism of the ETF is impaired;
5. there is a documented procedure for investors to request portfolio information; and,
6. the portfolio holdings as at the end of each calendar quarter are disclosed publicly within 30 business-days of the end of the quarter.

At the same time, www.centralbank.ie/docs/default-source/regulation/industry-market-sectors/funds/ucits/guidance/42nd-edition-ucits-qa.pdf?Status=Master&sfvrsn=941d671a_10 ensures that investors are provided with regular disclosures of the portfolio holdings and confirms that there is a documented process in place so allowing investors to request portfolio information more frequently if required.

Pearse Doherty (Donegal, Sinn Fein)
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45. To ask the Minister for Finance further to Parliamentary Question No. 357 of 8 April 2025, of the 500 complaints currently active with the FSPO that were received 7 April 2020 the number that were placed on hold at some stage; the average duration of the hold; the number of the 500 were closed and reopened; the average duration between closing and reopening; and if he will make a statement on the matter. [21473/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I wish to advise the Deputy that it was not possible to collate the information sought in the time available and, therefore, I will make arrangements to provide the information to the Deputy as soon as possible and in line with Standing Order 42A.