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Highlights:
The EU Commission has published the Delegated Regulation onELTIF Regulatory Technical Standards (ELTIF RTS).
Luxembourg Market Update:
Luxembourgalternative investment funds recorded €6.18bn of net inflows in May, accordingto the European Fund and Asset Management Association (EFAMA).Luxembourg-domiciled UCITS saw €2.99bn of net inflows, the first since Februarylast year. UCITS in Ireland experienced €48.3bn of net inflows, while Irish AIFssaw €1.89bn of net outflows. Throughout Europe, UCITS attracted €34.9bn of netinflows and AIFs €2.1bn of inflows.
Luxembourgwas home to 59 cross-border investment firms in 2023, around 15% of the totalwithin the EU and European Economic Area countries Iceland, Liechtenstein andNorway, according to the European Securities and Markets Authority (ESMA).Luxembourg has the second highest share of cross-border investment businessesbehind Cyprus with 20% and ahead of Germany with 14%. The European cross-borderinvestment market comprises 386 companies serving around eight million retailclients, up around 5% on the previous year; ESMA says the number of complaintsabout such firms has grown by 31% in the past year.
RegulatoryDevelopments in and beyond Luxembourg:
20June 2024: CSSF updates FAQ on the Law of 17 December 2010
TheCSSF has updated its FAQon the Luxembourg Law of 17 December 2010 relating to undertakings forcollective investments (this is version 19). The update concerns Question 1.14on the definition of ancillary liquid assets.
20June 2024: CSSF updates FAQ on Circular CSSF 02/77 (as amended)
TheCSSF has updated its FAQon Circular CSSF 02/77 concerning the protection of investors in case of NAVcalculation error and correction of the consequences resulting fromnon-compliance with the investment rules applicable to undertakings forcollective investment. The FAQ applies to UCITS and UCI subject to Part II of the2010 Law and outlines the principles to be applied by SIFs. The update concernsQuestion 4 on the elements that UCITS have to consider from an investmentcompliance perspective in the context of the US T+1 move.
27June 2024: CSSF updates Annex of Circular 22/822 on high-risk jurisdictions
TheAnnexcontains an update of the list of high-risk jurisdictions under increasedmonitoring by the FATF, and on which enhanced due diligence are necessary.
1July 2024: CSSF updates FAQ on the AML/CTF Summary Report RC
TheCSSF has updated its FAQon the AML/CFT Summary Report RC (SRRC) on compliance with AML/CFT obligationsin accordance with Circular CSSF 24/854. The update concerns the addition ofQuestions 1C, 1D, 2A, 2B, 2C and 2E, and the modification of question 2D. Theupdates provide further information on the entities in scope of reporting.
2July 2024: Law of 1 July 2024 on DORA published
TheLaw on DORA was publishedin the Official Journal in Luxembourg and will apply as of 17 January 2025. TheDORA Law amends a series of laws and transposes the DORA Directive which makesspecific amendments relating to digital resiliency and ICT security in the EU’sfinancial sector.
19July 2024: Commission Delegated Regulation on ELTIF Regulatory TechnicalStandards (ELTIF RTS) published
TheEU Commission has published the Delegated Regulation on ELTIF RegulatoryTechnical Standards (ELTIF RTS)specifying when derivatives will be used solely for hedging the risks inherentto other investments of the ELTIF, the requirements for an ELTIF’s redemptionpolicy and liquidity management tools, the circumstances for the matching oftransfer requests of units or shares of the ELTIF, certain criteria for thedisposal of ELTIF assets, and certain elements of the costs disclosure. The EUParliament and the Council have 3 months to comment on the ELTIF RTS.
25July 2024: ESMA updates consolidated Q&A on SFDR with new ESA FAQs
ESMAhas published a new consolidated version of the Q&Aon SFDR, which includes a number of new questions and answers. While most ofthe fifteen new FAQs are clarifications or provide illustrations, click on thebutton below to discover those that could have a significant impact on the fundindustry.
29July 2024: Communiqué on ELTIF – update of request form
TheCSSF has issued a Communiquéregarding an update of is ELTIF request form.The CSSF is updating its existing ELTIF application questionnaire, lastpublished on 15 December 2023, mainly to simplify the procedures for requestingthe authorisation of an ELTIF in an existing UCI Part II, SIF or SICAR or in anew UCI Part II, SIF or SICAR to be registered on the official list.
TheCSSF underlines that the updated ELTIF application questionnaire aims tostreamline and accelerate new ELTIF authorisation requests as well assubsequent requests for amendment. This will allow the CSSF to clarify keypoints at an early stage of the ELTIF authorisation process.
Inparallel, The CSSF draws the attention of financial market participants andfinancial advisers to a publicationmade on the website of the European Commission on 19 July 2024.
Thedocument published on the website of the European Commission is not final. Itstill has to go through the EU legislative process. However, the CSSF wouldlike to point out that the text as it stands states that the “Regulation shallenter into force on the day following that of its publication in the OfficialJournal of the European Union”, which is expected by the end of the year.
TheCSSF draws your attention in particular to Recital 20 of the text which readsas follows: “Pursuant to Article 2, fourth subparagraph of Regulation (EU)2023/606 of the European Parliament and of the Council, ELTIFs authorisedbefore 10 January 2024 may choose to be subject to that Regulation.Accordingly, ELTIFs that do not choose to be subject to Regulation (EU)2023/606 should remain subject to Commission Delegated Regulation (EU)2018/480.”
TheCSSF will communicate again once the document is final.
Reminder:PRIIPs calculation of implicit transaction costs
The regulatory authorities remind asset managersthat they must calculate implicit transaction costs as of 1 January 2025 usingthe “slippage methodology based on arrival prices” outlined in points 12 ff. ofAnnex VI of the PRIIPs Commission DelegatedRegulation (EU) 2017/653 of 8 March 2017.
For further information, please contact:
Tobias Ettlin
m: +352 691 111 931
Disclaimer: This regulatory updatehas been prepared for clients of ONE group solutions and its subsidiaries forinformational purposes and is not intended to be relied upon as professionaladvice. Please visit: https://www.one-gs.com/