.png)
.png)
Highlights:
The Luxembourg Business Register (“LBR” or “RCS”) recently announced that it will implement new filing requirements as from 12 November2024, which impacts the individuals that are registered or those who will be registered with the RCS.
The CSSF has published its long-awaited guidance on the implementation of ESMA’s ESG fund names guidelines with CSSF circular 24/863which will implement the guidelines into the Luxembourg regulatory framework. As a reminder, new funds in scope will need to start applying the guidelines from 21 November 2024 and existing ones will have until 21 May 2025.
Luxembourg Market Update:
The aggregate net assets of Luxembourg-domiciled regulated investment funds – UCITS and Part II funds, SIFs and SICARs – amounted to €5.64bn at the end of August, up 0.35% from the previous month and 8.53% more than in the same month of 2023,but still below the peak of €5.86trn set at the end of 2021, according to the CSSF.
Aggregateassets under management in Luxembourg-domiciled private debt funds totalled€510bn at the end of June, up 21.5% from six months earlier, according to astudy by consultancy KPMG commissioned by Luxembourg fund industry group ALFI.
Net inflows into Luxembourg-domiciled private equity funds amounted to €49bn in the first half of this year, compared with €60.9bn for the whole of 2023, according to PwC.
RegulatoryDevelopments in and beyond Luxembourg:
6September 2024: New RCS filing formalities as from 12 November 2024
The Luxembourg Business Register (“LBR”) has issued a public notice detailing a new set of rules regarding the filing process with the Luxembourg Trade and Companies Register (“RCS”). These changes were initially announced in 2021 but were postponed.
Inline with the LBR’s objectives to enhance digitalisation as well as facilitating the document filing process with the RCS, these new rules strengthen the requirements for the identification of natural persons and introduce a new technical process in its forms.
What is new? The most significant change made to the existing filing process it that any individual registered with the RCS in any capacity whatsoever will have to be identified by a Luxembourg national identification number upon filing.
Furthermore, as a new technological process will apply, whereby the traditional PDF format will be replaced by HTML forms, a check on the consistency of the Luxembourg addresses referenced in the RCS filing application will be performed against the information in the National Register of Localities and Streets.
ONE group solutions has issued a client update which is appended to this document. The LBR as also issued FAQs.
7October 2024: FAQ on the SRRC
The CSSF published FAQs on the AML/CFT Summary Report RC (“SRRC”) on compliance with AML/CFT obligations in accordance with Circular CSSF 24/854.
7October 2024: Results of the DORA readiness survey
In August 2024, the CSSF launched a DORA readiness survey with nearly 500 entities which will fall under the DORA regulation. The objectives of the survey were two fold:
· to assess the level of readiness as of 1 September by financial entities towards DORA, and capture the main challenges encountered by financial entities.
· to raise once more the awareness to those financial entities that are late in getting ready.
The survey consisted of a limited number of 10 closed questions around the following topics:
· GAP analysis and perceived readiness
· Top challenges encountered
With 90% of respondents having completed their DORA gap analysis, and despite the challenges encountered, the survey shows encouraging progress by financial entities in their DORA compliance work. With more than four months to go before DORA applies, the financial place is still in a preparatory phase. More than two thirds of entities consider themselves to be partially ready, while almost a quarter of entities consider themselves to be almost ready.
The detailed results of this survey have now been published on the CSSF website.
15October 2024: CSSF communication regarding ESMA Q&As
The CSSF communicated that the PDF documents of ESMA’s Questions and Answers on its website have been replaced by a direct link to ESMA’s Q&A Tool. The CSSF reminds that some ESMA PDF documents have not been updated since the end of 2023.
Please note that the link to the Q&A Tool does not include pre-selected items. A search on the relevant topics or legislation must be made from the main page ofthe Tool.
For more information on the functioning of the Q&A Tool, we invite you to consult ESMA’s website.
16October 2024: Reminder of the procedures of transmission for KIDs and official documents (MR/AI)
The CSSF has published a reminder about the following: As announced in the 5 April 2024 CSSF communication regarding the direct submission of filings to the CSSF, the collection procedures for the Key Information Document (KID) and the official documents(MR/AI) will change starting 15 November 2024. These documents will be collected exclusively through the following two methods, free of charge:
· Document upload via the dedicated eDesk procedure
· Automated submission of the documents via API (S3 protocol)
Please note that from 15 November 2024,
· Only the API (S3) channel or thee Desk approach will be authorised for submitting KIDs and official documents
· Any KID or official document submitted using the old transmission method (external channels) will not be processed by the CSSF.
A user guide detailing the submission procedures for the Key Information Document and the official documents is available below.
21October 2024: Communication to the investment fund industry in relation to the ESMA Guidelines on funds’ names using ESG or sustainability-related terms
This communiqué is a follow-up to the CSSF communiqué published on 21 August 2024 announcing the publication of the translations of the ESMA Guidelines on funds’ names using ESG or sustainability-related terms(the “Guidelines”) in all EU official languages on the ESMA website.
Circular CSSF 24/863
This Circular implements the Guidelines into the Luxembourg regulatory framework. The Guidelines will start applying to new funds three months after the publication date of the Guidelines in all EU official languages, i.e. on 21 November 2024,with a further six-month transition period for existing funds, so that the Guidelines will apply as from 21 May 2025 to existing funds.
Supervisory expectations
The CSSF expects market participants, regardless of whether they are disclosing under Article 6, 8 or 9 of the SFDR, to carry out a self-assessment of the applicability of the Guidelines to the products they manage and to ensure compliance of fund names with these Guidelines. Please note the following principles:
· Funds’ names should not be misleading, as the disclosure of sustainability characteristics should be commensurate with the effective application of those characteristics to the fund.
· The CSSF expects adequate disclosure in the precontractual documentation of elements supporting the use of ESG or sustainability-related terms in funds’ name.
· The list of ESG and sustainability-related terms mentioned in the Guidelines is not exhaustive. Accordingly, market participants are expected to review the names of all the financial products they manage and assess, on a case-by-case basis, whether the Guidelines apply to those products.
· Finally, the CSSF expects market participants to closely monitor and take due consideration of any further developments on this topic at European level.
Filing of updated precontractual documentation for existing funds
The CSSF is granting a priority processing procedure (“PPP”) to existing UCITS and AIFs that limit the update of their issuing document/prospectus to amendments required in the context of the entry in to force of the Guidelines. The amendment(s) must be limited to either a name change of at least one sub-fund or minor adjustments to the fund’s/sub-fund’s ESG engagement/SFDR precontractual disclosure. The conditions and modalities for benefiting from the PPP are further explained in the Fund naming confirmation letter.
23October 2024: Communication on the CSSF thematic review on the delegation of the portfolio management function by investment fund managers (IFMs) – CSSF Feedback report
From 2021 to 2024, the CSSF carried out a thematic review on the supervision of the delegation of the portfolio management function by investment fund managers with a view to monitoring compliance with the UCITS and/or AIFMD framework and protecting the investors’ interests.
Following the analysis of the collected information, the CSSF provides the market with feedback on the CSSF’s main findings and recommendations with the publication of the document “CSSF thematic review on the delegation of the portfolio management function by investment fund managers (IFMs)”.
The purpose of this document is to inform the industry of the main findings made by the CSSF in the course of its supervisory activities and the related recommendations for improvement in accordance with the applicable laws and regulations.
In this context, the CSSF invites all IFMs toper form, at the latest by the end of Q1/2025, a comprehensive assessment of how they monitor the delegation of their portfolio management function in the light of the observations mentioned in the thematic review document and of the applicable regulatory requirements.
25October 2024: New ELTIF regulatory technical standards
The ELTIF regulatory technical standards (Commission Delegated Regulation(EU) 2024/2759) have been published in the Official Journal of the European Union and entered into force on 26 October 2024. The ELTIF RTS covers:
· The circumstances in which the use of derivatives is considered as solely serving the purpose of hedging the risks inherent to the investments of the ELTIF;
· The circumstances in which the life of an ELTIF is to be considered compatible with the lifecycles of each of its individual assets;
· The criteria to be used by the ELTIF managers to determine the minimum holding period of an ELTIF which is not closed-ended;
· The requirements in relation to the redemption policy and liquidity management tools of ELTIF not closed-ended, information to be provided to competent authorities thereon and the maximum percentage of liquid assets that can be used for redemption requests, which must be calibrated by the manager of the ELTIF on the basis of either:
o The redemption frequency and the notice period of the ELTIF (Annex I);
o The redemption frequency and the minimum percentage of the liquid assets of the ELTIF (Annex II);
· The criteria to determine the percentage of liquid assets of the ELTIF which could be used to meet redemption requests;
· The requirements in relation to the transfers of units or shares between exiting and new investors in the ELTIF on transparency, assessment of the market for potential buyers, the determination of the execution price and the pro-ratio conditions where transfers are matched, as well as the level of the fees, costs and charges, if any;
· The criteria and relevant deadlines for the valuation of the assets to be divested;
· Definitions, calculation methodologies and presentation formats of costs of the ELTIF.
28October 2024: Annex of Circular CSSF 22/822
The CSSF has published a new Annex of Circular CSSF 22/822 listing (i) high-risk jurisdictions on which enhanced due diligence and, where appropriate, counter-measures are imposed, and (ii)jurisdictions under increased monitoring of the FATF.
For further information, please contact:
Tobias Ettlin
m: +352 691 111 931
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/