Regulatory Client Update / February 2021

11 February 2021



Regulation (EU) 2019/2088 (“SFDR”) will go into effect on 10 March 2021. The CSSF has implemented a fast-track procedure specifically for the SFDR to facilitate the submission/approval of the prospectus/issuing document updates. Updates must however be limited to reflect the changes required under the SFDR to use the fast track. Alternative Investment Fund Managers (AIFMs) will also have to update the prospectus/issuing documents of AIFs under the form of Specialized Investment Funds (SIFs) and Part II Undertakings for Collective Investment (UCIs). As part of this fast-track procedure, each updated prospectus/issuing document that requires a visa stamp will have to be accompanied by a confirmation letter published by the CSSF.


Luxembourg Market Update:

Aggregate assets under management of Luxembourg-domiciled investment funds amounted to €4.97trn at the end of last year, a 1.87% increase from €4.88trn at the end of November and up 5.4% over the previous 12 months, according to the CSSF. The monthly increase of €91.4bn included net inflows of €33.03bn, with the rest down to rising financial markets. The number of fund structures fell from 3,627 to 3,611, comprising a total of 14,590 funds and sub-funds.


Regulatory Developments in and beyond Luxembourg:

18 December 2020:

CSSF publishes application of ESMA guidelines on performance fees

The CSSF has published circular 20/764 concerning ESMA's guidelines on performance fees for UCITS and certain types of AIFs. The CSSF informed the market that the regulator, in its capacity as competent authority, applies the guidelines of ESMA on performance fees for UCITS and certain types of AIFs (Ref. ESMA34-39-992) (the Guidelines), published on 5 November 2020.

The Guidelines applied as from 6 January 2021. Managers of any new funds with a performance fee created after the date of application of the Guidelines, or any funds existing before the date of application that introduce a performance fee for the first time after that date, should comply with these Guidelines immediately. Managers of funds with a performance fee existing before 6 January 2021 should apply these Guidelines in respect of those funds by the beginning of the financial year following 6 months from 6 January 2021. The Guidelines are also applicable as of 6 January 2021 for any newly created compartments of an existing umbrella, i.e. in relation to any new compartment setting up a performance fee at compartment or classes of units/shares level.


21 December 2020:

ESMA guidelines on SFTR

ESMA has published guidelines on Reporting under Articles 4 and 12 of the Securities Financing Transaction Regulation (SFTR).  These guidelines apply to counterparties to SFTs as defined in Article 3(2) SFTR, the trade repositories as defined in Article 3(1) SFTR and competent authorities, and are intended to provide clarity on the: 

  • Reporting start date when it falls on a non-working day;
  • Number of reportable SFTs;
  • Population of reporting fields for different types of SFTs;
  • Approach used to link SFT collateral with SFT loans;
  • Population of reporting fields for margin data;
  • Population of reporting fields for reuse, reinvestment and funding sources data;
  • Generation of feedback by TRs and its subsequent management by counterparties, namely in the case of (i) rejection of reported data and (ii) reconciliation breaks;
  • Provision of access to data to authorities by TRs.

The guidelines apply from the day following their publication on ESMA’s website or from the date on which the relevant provisions to the entities as determined by Article 33(2) SFTR apply, whichever date is later. The counterparties, entities responsible for reporting and the report submitting entities are encouraged to use them starting from the first day on which the relevant reporting obligation in accordance with Article 33(2)(a) SFTR becomes applicable.


22 December 2020:

Sustainable Finance – CSSF publishes Thematic Review on issuer’s climate-related disclosures

The CSSF has published the results of its first thematic review to examine the current status of climate-related information reported by issuers.  

The publication of non-financial information is governed by Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (the NFRD). In 2017, the European Commission published its Guidelines to help companies to disclose environmental and social information in compliance with the NFRD. This was followed by the recommendations on corporate transparency on climate issues, released by the Taskforce on Climate-related Financial Disclosures (the TCFD). Finally, in June 2019, the European Commission published a Supplement to its Guidelines on reporting climate-related information which will complement the TCFD recommendations.  

The Supplement to the Guidelines proposes climate-related disclosures for each of the five reporting areas listed in the NFRD: (a) business model, (b) policies and due diligence, (c) outcomes of policies, (d) principal risks and risk management and (e) key performance indicators. 

The CSSF has examined the content and presentation of climate-related reporting for a selection of issuers under its supervision – 49 in total across 9 different sectors. The report of the CSSF sets out the key findings of the review by following the structure of the NFRD.

The CSSF concludes that there are still significant gaps to fill and that further improvements in the quality and comparability of climate-related disclosures are required to meet the needs of investors and other stakeholders.


31 December 2020:

CNPD updates guidance on consequences of Brexit for international data transfers

The national commission for data protection (CNPD) has published updated guidance on the consequences of Brexit for international data transfers. This guidance aims to help companies, public bodies and Luxembourg associations that are transferring personal data to the United Kingdom (UK).


6 January 2021:

ESMA announces common supervisory action on costs and fees of UCITS

ESMA announced that it is launching a Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union. The CSA will be conducted during 2021. 

The CSA aim is to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework, and the obligation of not charging investors with undue costs. For this purpose, the NCAs will take into account the supervisory briefing on the supervision of costs published by ESMA in June 2020. 

The CSA will also cover entities employing Efficient Portfolio Management techniques to assess whether they adhere to the requirements set out in the UCITS framework and ESMA Guidelines on ETFs and other UCITS issues.

13 January 2021:

ESMA reminds firms of the rules on reverse solicitation

 ESMA has issued a public statement to remind firms of the MiFID II rules that apply in case of reverse solicitation, i.e. when the product or service is marketed at the client’s own exclusive initiative. Background to this statement is that, according to ESMA, with the end of the UK transition period on 31 December 2020, some firms appeared to be using certain practices in an attempt to circumvent MiFID II requirements. 


20 January 2021:

CSSF updates FAQ on the Luxembourg AIFM law

The CSSF published an updated version (version 17) of its FAQ document on the Luxembourg AIFM law. Among others, a question and answer concerning accounting standards has been added.


25 January 2021:

Luxembourg vertical assessment of AML/CTF risks related to virtual asset service providers

The Luxembourg Ministry of Justice released the first Luxembourg vertical assessment of money laundering and terrorist financing risks (in English) related to virtual asset service providers (VASPs). This document is a complement to the National Risk Assessment updated in December 2020 and implements  Recommendation 15 of the Financial Action Task Force (FATF) which states that countries and financial institutions should identify and assess the money laundering or terrorist financing risks that may arise in relation to (a) the development of new products and new business practices, including new delivery mechanisms, and (b) the use of new or developing technologies for both new and pre-existing products. In accordance with  the interpretative note to Recommendation 15, countries should identify, assess and understand the money laundering and terrorist financing risks emerging from virtual asset activities and the activities or operations of VASPs.

In terms of methodology, the inherent risk is assessed in this paper in relation to the threats and vulnerabilities specific to VA and VASPs; mitigation measures implemented by public and private actors specific to VA and PSAVs are also presented. The effectiveness of mitigation factors in determining a level of residual risk will be determined in a future update.


27 January 2021:

CSSF issues annual online AML/CTF survey

CSSF issued a Circular letter relating to the annual online survey for the year 2020 collecting standardised key information concerning money laundering and terrorist financing (AML/CTF) risks to which the professionals under supervision are exposed and the implementation of related risk mitigation and targeted financial sanctions measures. This survey will be launched on 15 February 2021 and answers will have to be submitted by professionals through the CSSF eDesk portal by 15 March 2021.


27 January 2021:

FATF postpones rescheduled March visit to Luxembourg

 The persistence of the Covid-19 pandemic has led to the Financial Action Task Force to delay further its visit to Luxembourg to assess the implementation of measures to curb money laundering and the financing of terrorism. A new date to replace the scheduled March visit is expected to be announced at the end of next month. The publication of the group’s final report, which had already been postponed until October, could also be further delayed. FATF officials were originally scheduled to conduct their routine assessment of Luxembourg last November.


1 February 2021:

ESMA publishes final report on standardised information to facilitate cross-border distribution of funds

ESMA has published a final report on implementing technical standards (ITS) under the regulation on cross-border distribution of funds. The ITS focus on the publication of information by national competent authorities (NCAs) on their websites, the notification of information by NCAs to ESMA and the publication of information by ESMA on its website.

The draft ITS set out in this final report have been submitted to the European Commission for  endorsement. From the date of submission, the European Commission shall take a decision on whether to adopt the ITS within three months. The Commission may extend that period by one month.


3 February 2021:

ESAs submit revised PRIIPs RTS to the EC

The European Supervisory Authorities (ESAs) have submitted revised Regulatory Technical Standards (RTS) concerning the PRIIPs Regulation to the European Commission.

While some national competent authorities at EIOPA’s Board continued to express reservations on the draft RTS, they supported the proposal based on further details provided by the European Commission on their approach to the broader review of PRIIPs Regulation, namely that the review will thoroughly examine the application of the PRIIPs framework, including: 

  • How to achieve better alignment between PRIIPs, Insurance Distribution Directive and Markets in Financial Instruments Directive II regarding provisions on costs disclosure;
  • The scope of products as foreseen by the PRIIPs Regulation;
  • How to ensure that the KID contains the key information necessary for retail investors while avoiding too much or too complex information for these investors;
  • How to allow the creation of a digitalised KID allowing layered information and reviewing the default paper basis of the KID, taking into account the specific challenges for different types of products (e.g. multi-option products (MOPs));
  • The need for a more tailored approach, such as for MOPs, in order to maximise understanding and use of the information, while continuing to allow for comparability of similar products.

Following the submission to the European Commission, the ESAs draft RTS is now subject to adoption by the European Commission.


4 February 2021:

European Supervisory Authorities publish final report and draft RTS on disclosures under SFDR

 The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) has delivered to the European Commission (EC) the Final Report, including the draft Regulatory Technical Standards (RTS), on the content, methodologies and presentation of disclosures under the EU Regulation on sustainability-related disclosures in the financial services sector (SFDR).


For further information, please contact:

Tobias Ettlin
tel: +352 2664 1501
m: +352 691 111 931



Tobias Ettlin

tel: +352 2664 1501

m: +352 691 111 931

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