REGULATORY CLIENT UPDATE / JULY 2021
A recent CSSF update to the FAQ on the application of MiFID to Luxembourg IFMs, aims at clarifying under what circumstances and to what extent MiFID applies to IFMs; their third-party delegates; and their investment advisers. Consequently, IFMs should analyse their organization model in order to assess whether or not the IFM’s activities require a MiFID license.
Luxembourg Market Update:
Sustainable funds represent a rapidly growing segment of investment solutions in Europe, according to the first annual European Sustainable Investment Funds Study by Morningstar and zeb, supported by the Association of the Luxembourg Fund Industry (ALFI). The study found that net assets in sustainable fund products have more than doubled since 2018, attracting 52% of all net new flows and reflecting 11% of total net assets domiciled in Europe at the end of 2020.
Regulatory Developments in and beyond Luxembourg:
10 June 2021:
CSSF publishes FAQ on the application of MiFID to Luxembourg IFMs
The CSSF has published an FAQ on the application of MiFID to Luxembourg IFMs. The FAQ clarifies under what circumstances and to what extent MiFID applies to IFMs, their third-party delegates and their investment advisers. Consequently, IFMs should analyse their organizational model in order to assess:
Exemptions are available to third parties that provide investment services to IFMs. These may be (i) specific exemptions under the amended law of 5 April 1993 on the financial sector, such as intragroup service exemptions, or (ii) partial exemptions from MiFID rules, with an obligation upon third parties to be able to prove, at any time, that they indeed fall under the exemption claimed.
The new FAQ has been included in the following CSSF FAQ:
Further to the CSSF, IFMs are expected to comply with the FAQ as soon as possible and by 31 December 2021 at the latest, considering the best interests of investors.
15 June 2021:
Regulation on cross-border distribution
The new Commission implementing regulation on facilitating cross-border distribution of collective investment undertakings (CIUs) was published. It will enter into force on 5 July 2021 and apply in line with the new marketing rules as from 2 August this year (and regarding article 5 from 2 February 2022 respectively). The new implementing regulation deals with the forms, templates, procedures and technical arrangements for the publications and notifications of marketing rules, fees and charges, and specifies the information to be communicated for the creation and maintenance of the central database on cross-border marketing of AIFs and UCITS, as well as the forms, templates and procedures for the communication of such information.
15 June 2021:
Updated CSSF FAQ on PFS
The CSSF adapted its FAQ for Professionals of the Financial Sector (PFS). The FAQ notably focuses on PFS granting loans.
18 June 2021:
EDPB recommendations on data transfers under GDPR
The European Data Protection Board (EDPB) published the final version of recommendations 01/2020 on measures that supplement transfer tools to ensure compliance with the EU level of protection of personal data. Data controllers relying on Standard Contractual Clauses (SCCs) are required to verify, on a case-by-case basis and, where appropriate, in collaboration with the recipient of the data in the third country, if the law of the third country ensures a level of protection of the personal data transferred that is essentially equivalent to that guaranteed in the European Economic Area (EEA).
28 June 2021:
Adequacy decisions on GDPR data exchange with UK
The European Commission has adopted two adequacy decisions regarding data exchange between the EU and the United Kingdom: one under the General Data Protection Regulation (GDPR) and the other under the Law Enforcement Directive. The consequence of these decisions is that personal data can continue to flow freely from the EU to the UK as the Commission has deemed the personal data protection framework in the UK to be equivalent to GDPR.
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Disclaimer: This regulatory update has been prepared for clients of ONE group solutions and its subsidiaries for informational purposes and is not intended to be relied upon as professional advice. Please visit: https://www.one-gs.com/
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