RNA interference systems depend on the synthesis of small RNA precursors whose sequences define the target spectrum of these silencing pathways. The Drosophila Heterochromatin Protein 1 (HP1) variant Rhino permits transcription of PIWI-interacting RNA (piRNA) precursors within transposon-rich heterochromatic loci in germline cells. Current models propose that Rhino’s specific chromatin occupancy at piRNA source loci is determined by histone marks and maternally inherited piRNAs, but also imply the existence of other, undiscovered specificity cues. Here, we identify a member of the diverse family of zinc finger associated domain (ZAD)-C2H2 zinc finger proteins, Kipferl, as critical Rhino cofactor in ovaries. By binding to guanosine-rich DNA motifs and interacting with the Rhino chromodomain, Kipferl recruits Rhino to specific loci and stabilizes it on chromatin. In kipferl mutant flies, Rhino is lost from most of its target chromatin loci and instead accumulates on pericentromeric Satellite arrays, resulting in decreased levels of transposon targeting piRNAs and impaired fertility. Our findings reveal that DNA sequence, in addition to the H3K9me3 mark, determines the identity of piRNA source loci and provide insight into how Rhino might be caught in the crossfire of genetic conflicts.

The heptad repeats of the C-terminal domain (CTD) of RNA polymerase II (Pol II) are extensively modified throughout the transcription cycle. The CTD coordinates RNA synthesis and processing by recruiting transcription regulators as well as RNA capping, splicing and 3’end processing factors. The SPOC domain of PHF3 was recently identified as a CTD reader domain specifically binding to phosphorylated serine-2 residues in adjacent CTD repeats. Here, we establish the SPOC domains of the human proteins DIDO, SHARP (also known as SPEN) and RBM15 as phosphoserine binding modules that can act as CTD readers but also recognize other phosphorylated binding partners. We report the crystal structure of SHARP SPOC in complex with CTD and identify the molecular determinants for its specific binding to phosphorylated serine-5. PHF3 and DIDO SPOC domains preferentially interact with the Pol II elongation complex, while RBM15 and SHARP SPOC domains engage with writers and readers of m6A, the most abundant RNA modification. RBM15 positively regulates m6A levels and mRNA stability in a SPOC-dependent manner, while SHARP SPOC is essential for its localization to inactive X-chromosomes. Our findings suggest that the SPOC domain is a major interface between the transcription machinery and regulators of transcription and co-transcriptional processes.