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    ALFI News Digest august 11, 2011    
          in this edition      
    1. Headlines
2. ALFI events
3. Other events



Board of Directors meeting on 7 July 2011

On 7 July 2011, the ALFI Board of Directors approved the official composition of the new Executive Committee as follows:

Chairman : Marc Saluzzi

Vice-chairman (National affairs): Gilbert Schintgen

Vice-chairwoman (International affairs): Denise Voss

Treasurer: Julien Zimmer

Director General: Camille Thommes

Further to the resignation of Claude Kremer from the Board of Directors, the members coopted Claude Niedner as a new member of the Board.

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Luxembourg prepares for AIFMD - Law on Specialized Investment funds to be adapted

On the 1st July 2011, the Alternative Investment Fund Managers Directive (AIFMD) was published in the Official Journal of the European Union. This Directive will regulate the activities of entities engaged in the management and administration of funds that are not UCITS funds. It also lays down rules for the marketing of those funds to professional investors within the EU. On the same day, the Luxembourg Government approved a draft bill of law modifying the law on Specialized Investment Funds (SIF), the investment vehicle of choice for non UCITS in Luxembourg.

Please see the ALFI press release in EnglishFrench and German.

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Luxembourg Parliament approved VAT free-zone regime

On 14th July 2011, the Law proposal for the implementation of a VAT free-zone has been approved by the Luxembourg Parliament.

The purpose of the VAT free-zone regime is to put in place a VAT suspension system for transactions concerning goods stored in specific locations. The basic idea of the regime is to suspend all VAT payments while goods are under the regime. As with other Member States operating such schemes, VAT will be payable at the time the goods are removed from the free-zone warehouses into free circulation in Luxembourg. By implementing such VAT free zones, the Government aims at increasing its competitiveness in the logistics sector and positioning Luxembourg as a storage and warehouse site for high added value goods. This regime should also have a positive effects on some connected sectors. This regime should also be beneficial to those investment funds investing in precious physical assets such as works of art or vintage wine.

Read more.

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Commission initiatives for 2011

The European Commission has published an updated table containing estimated dates for the issue of a number of legislative initiatives for the period from 1 June to 31 December 2011 including the following:

  • recast of the operation of the Insider Dealing and Market Manipulation (market abuse) Directives, due October 2011;
  • amendment of the Capital Requirements Directives, due 20 July 2011;
  • legislative initiative on a framework for Bank Recovery and Resolution, due September 2011;
  • review of the Markets in Financial Instruments Directive, due October 2011;
  • Regulation amending the Regulation on credit rating agencies, due Q4 2011;
  • Regulation on Central Securities Depositories, due in October 2011;
  • instrument creating a framework for standardising pre-contractual information for retail investors about packed retails investment products (PRIPs), due Q4 2011;
  • Directive on Insurance Guarantee Schemes, due Q4 2011;
  • review of the Directive on transparency obligations of listed companies, due October 2011; and
  • revision of the Insurance Mediation Directive, due Q4 2011.

Read more.

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Value Added Tax (VAT): publication of new compromise texts

On 1 July 2011, the Polish Presidency issued the new compromise texts for the Directive and Regulation on the VAT treatment of insurance and financial services. The Council VAT working party will discuss the new compromise texts on Wednesday 20 July 2011.

Background information: see ALFI Newsflash of 1 July 2011.

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European Commission: Financial sector taxation

As already mentioned in our Newsflash of 1 July 2011, the Commission presented on 29 June its proposals concerning the multiannual financial framework of the EU for the period 2014-2020.

In terms of the proposed introduction of a Financial Transaction Tax at EU level, the following documents are now available: 

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European Commissions's consultation paper on social business: promoting social investment funds

The European Commission has published its Consultation on social investment funds.

The Commission seeks options for aiding social businesses by means of investments from private individuals channeled through investment funds.  In this context, the Commission considers setting up a separate regulatory framework for social investment funds, next to the UCITS Directive and AIFMD. Replies may be sent to the Commission until 14 September 2011.

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Council publishes outcome of EMIR proposals in EP

The Council has published a report dated 18 July 2011 on the EP's proceedings concerning the proposal for a Regulation on OTC derivatives, central counterparties and trade repositories (EMIR). The report summarises the debate that took place on 4 July 2011 and contains the text adopted by the EP on 5 July 2011. To allow the possibility of a first reading agreement between the Council and the EP on EMIR, the vote on the legislative resolution has been postponed to a later session, potentially in September 2011.

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Money laundering and terrorist financing: European Commission issues list of third country equivalence

The European Commission has published a list of third country equivalence for the purposes of the Anti-Money Laundering (AML) Directive (2005/60/EC). Article 11(4) of the AML Directive contains an obligation for Member States to inform each other, the European Supervisory Authorities and the European Commission of cases where they are of the opinion that a third country meets the AML/Combating the Financing of Terrorism equivalence standards.

This list, which will be assessed on a regular basis, has been agreed by Member States according to a Common Understanding on the Procedure and Criteria for the Recognition of Third Countries’ Equivalence.

Member States list of equivalent third countries.

Member States Common Understanding on the Procedure and Criteria for the Recognition of Third Countries' Equivalence.

Website of the European Commission: Index.

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CESR Annual Report 2010

The European Securities and Markets Authority (ESMA) has published the 2010 Annual Report of its predecessor, the Committee of European Securities Regulators’ (CESR). The topics covered in the report include: (i) trends and risks in the securities markets in 2010; (ii) CESR’s achievements in 2010; (iii) how CESR delivered its objectives in 2010; and (iv) ESMA’s agenda for 2011.

As well as establishing the ESMA organisational structure, ESMA’s key priorities for 2011 include:

  • initiatives surrounding the licensing and supervision of credit rating agencies;
  • provision of the Level 2 measures for the Alternative Investment Fund Managers Directive; and
  • developing policy (as required) around the European Market Infrastructure Regulation.

Click here for the Annual Report.

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ESMA reports on Member States implementation of the Transparency Directive

The European Securities and Markets Authority (ESMA) has published a review of how securities regulators throughout the EU use options and discretions under the Transparency Directive (TD). The report entitled “Mapping of the Transparency Directive – Options, Discretions and “Gold-plating” concentrates on those parts of the TD and its implementing measures which Member States may apply in different ways. The main objective of the review was to ascertain the extent to which Member States have introduced options, discretions, additional requirements and/or more stringent rules in their national legislation in this regard.

Generally, the report indicates that a large majority of Member States have made use of additional requirements. The main findings were:

  • there has been good compliance with the deadlines for the publication of annual financial reports;
  • there have been no additional requirements on public disclosure;
  • most regulators accept multi-language disclosure;
  • most regulators store information in a single officially appointed mechanism; and
  • there have been differences in approach for publication of regulatory sanctions and infringements.

Press release.

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ESMA seeks views on future rules for alternative investment fund managers

ESMA published a consultation paper (ESMA/2011/209) setting out its proposals for the detailed rules underlying the Alternative Investment Fund Managers Directive (AIFMD). This is in response to the request for assistance which the European Commission sent to ESMA’s predecessor, CESR, in December 2010. ESMA has to deliver its final advice to the Commission by 16 November 2011. 

Read more.

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ESMA consults on future regulation of UCITS

ESMA has published a discussion paper on its policy orientations on guidelines for Undertakings for Collective Investment in Transferable Securities (UCITS) exchange-traded funds (ETFs) and structured UCITS. ESMA believes that the existing requirements are not sufficient to take account of the specific features and risks associated with these types of fund. The discussion paper examines possible measures that could be introduced to mitigate the risk that complex products are made available to retail investors. It also discusses the potential systemic risk caused by these types of fund and their impact on financial stability. The deadline for responses is 22 September 2011. ESMA will use the responses to develop draft guidelines for UCITS ETFs and structured UCITS, which will be subject to public consultation.

Discussion Paper: ESMA’s Policy Orientations on Guidelines for UCITS Exchange-Traded Funds and Structured UCITS (ESMA/2011/220)

Press Notice

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Foreign Account Tax Compliance Act (FATCA): New notice and position papers

On 15 July 2011, the US Internal Revenue Service (IRS) issued Notice 2011-53 regarding a modified timeline for implementing the FATCA information reporting and withholding provisions under Chapter 4 of the US Internal Revenue Code.

In June 2011, the European Fund and Asset Management Association (EFAMA) sent its comments on Notice 2011-34 to the IRS/Treasury. EFAMA’s FATCA working group is chaired by Jon P. Griffin, a member of ALFI’s Board of Directors. As in the past, ALFI’s FATCA working group contributed to the work and follows closely new developments. A separate comment letter to Notice 2010-60 was submitted by ALFI at the beginning of 2011.

Draft regulations are expected to be published either at the end of this year or early next year.

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IOSCO: Consultation on issues raised for market efficiency and integrity by technological developments

On 6 July 2011, the Technical Committee of the International Organization of Securities Commissions (IOSCO) has published a consultation report on regulatory issues raised by the impact of technological changes on market integrity and efficiency, which is aimed at developing recommendations to mitigate the risks posed to the financial system by the latest technological developments, such as high frequency trading. The work is being carried out in response to a G20 Leaders request during the Seoul Summit in 2010.

The report analyses the most significant technological developments and related micro-structural issues that have arisen in financial markets in recent years, notably high frequency trading, and their impact on market structure, participants’ behaviour, price discovery and formation and also on the availability and accessibility of liquidity.  It also considers other micro-structural related topics such as co-location, tick sizes, fee structures, indications of interest etc. and presents an analysis on trading control mechanisms.

The report consults on those issues raised by technological developments that it has not previously examined, particularly focusing on the impact of high frequency trading, including: 

  • the impact of technological developments;
  • risk controls;
  • trading controls;
  • regulatory surveillance capabilities;
  • conflicts of interest;
  • fee structures; and
  • co-location.

Additionally the report outlines recent standards and recommendations developed by IOSCO in relation to market integrity and efficiency issues, including its recent work on principles for dark liquidity.

The consultation period will close on 12 August, so that a further report can be prepared before the G20 Finance Ministers meet in October. 

The Technical Committee has also written to the Financial Stability Board outlining the report’s content and its progress on market integrity and efficiency.

In addition to the consultation on the impact of technological changes, IOSCO intends to undertake work designed to address fundamental questions linked to market surveillance and market structure.

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Impact assessment of various measures within CRD 4

In order to assess the overall benefits of the main pillars of the new regulatory framework for banks (capital, leverage and liquidity requirements), the European Parliament’s Committee on Economic and Monetary Affairs has requested an impact assessment study of the different measures within the Capital Requirements Directive (CRD) 4.

The main findings of the assessment are: 

  • Capital requirementsThe new capital regulation will increase the stability of the banking system, but only in the sense of bank failure absorption. The likelihood of bank failures is not necessarily directly reduced. Only if the capital regulations restrict the decisions banks take in respect of their investment portfolios will the likelihood of bank failures decrease.
  • Leverage ratio requirementsLeverage ratios are closely linked with capital regulations. It is an open question whether this additional regulation increases stability, compared with the capital requirements and pro-cyclical capital buffers.
  • Liquidity requirementsLiquidity standards have a modest impact on reducing the bank failure risk, but substantially reduce the risk of financial contagion.

Overall conclusionDecreasing benefits are observed for the capital requirements, levelling off at 13%. This result indicates that increasing capital requirements above this level will not further increase the stability of the banking industry.

In the event of another financial crisis, increased capital and liquidity buffers should substantially dampen its effects.

In addition, the planned combination of capital and liquidity requirements is the most efficient method of increasing the stability of the financial system. It is only when capital requirements are increased beyond 13% and additional liquidity requirements reach more than 5% that there is no evidence of extra gains from increased economic stability.

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BCBS issues guidance on operational risk

The Bank for International Settlements has published guidance on operational risk issued by the Basel Committee on Banking Supervision (BCBS) . The guidance is in the form of two papers: "Principles for the Sound Management of Operational Risk" and "Operational Risk - Supervisory Guidelines for the Advanced Measurement Approaches".

"Principles for the Sound Management of Operational Risk" highlights the evolution of operational risk management since 2003. The principles outlined in the report are based on best industry practice and supervisory experience and cover three overarching themes: governance, risk management and disclosure.

"Operational Risk - Supervisory Guidelines for the Advanced Measurement Approaches" discusses the regulatory capital adequacy framework and envisages that, over time, the operational risk discipline will continue to mature and converge towards a narrower band of effective risk management and measurement practices. The guidance on advanced measurement approaches promotes improvement in this area by setting out supervisory guidelines relating to governance, data and modelling. 

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ALFI events

2011/2012 Confirmed events dates



 6 September

 ALFI Roadshow to Edinburgh

 26 September

 ALFI Golf Tournament

 27-28 September

 ALFI Global Distribution Conference in association with   NICSA & HKIFA  20th Anniversary!

 4-7 October

 ALFI Roadshow to Toronto & USA

 24 October

 ALFI Seminar Frankfurt

 22-23 November

 ALFI European Alternative Investment Funds Conference

 5-8 December

 ALFI Roadshow to Asia (Taipei & Hong Kong)


 13-14 March

 ALFI Spring Conference

 13 March

 European Fund Industry Gala dinner


ALFI events calendar 2011 - please click here.

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6 September: ALFI Roadshow to Edinburgh

The programme and registration please click here.

Last minute sponsors please contact events@alfi.lu

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26 September: ALFI Golf Tournament

Kikuoka Country Club, Canach, Luxembourg.

For programme and registration please click here

Last minute sponsors please contact events@alfi.lu

Registration to play will be open shortly.

Read more.


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27 & 28 September: ALFI Global Distribution Conference in association with NICSA & HKIFA

Exhibition: click here for the list of confirmed exhibitors. Only few spaces left! To book one of the remaining booths, click here.

The programme can be downloaded here.  

Registration: click here

Conference webpage: click here

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4-7 October: ALFI Roadshow to the US and Canada

Toronto – Greenwich - New York - Boston

Fund Industry seminars will take place in each city from about 8.30 to 13.30 (free of charge).

4th – Toronto: premises of RBC Dexia Investor Services Trust, 155 Wellington Street West, 10th floor

4th – Greenwich, Connecticut: breakfast meeting 8.20 - 10.30, venue tbc

6th – New York: Jumeirah Essex House, 160 Central Park South, NY10019

7th – Boston: Four Seasons Hotel, 200 Boylston Street, MA 02116

The programme and registration details will be available during the week of 8th August, please click here.

Sponsorship open to ALFI members, contact events@alfi.lu

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24 October: ALFI Roadshow to Frankfurt

Please click here for the programme and registration.

If you wish us to add any potential attendees to our invitation list, please send us the details (company with postal address, invitee name and e-mail address) to events@alfi.lu.

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22-23 November: ALFI European Alternative Investment Funds Conference

Centre de Conférence Kirchberg, Luxembourg.

Two days of presentations and panel discussions on latest news and trends in the alternative investment industry. Specialised Workshops on Hedge Funds, Real Estate and Private Equity. NO PLAIN VANILLA!

For the draft programme please click here.

Sponsorship and Exhibition Opportunities: click here

Registration open: click here. Early bird discount for bookings made by 21 October 2011.

Contact events@alfi.lu


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5-8 December: ALFI Roadshow to Asia

Fund Industry Semianrs in Taipei and Hong Kong (free of charge).

6th December: W Hotel Taipei, half day morning event followed by buffet lunch

7th December: Four Seasons Hotel, dull day event including lunch

Sponsorship open to ALFI Members, contact events@alfi.lu

Event website.

More information coming soon.

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13-14 March 2012: ALFI Spring Conference

Save the date!

The conference committee will start working on the programme after the summer holidays.

For any suggestions on topics please contact events@alfi.lu

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Other events

12 October: LFF-Round Table Frankfurt

Luxembourg For Finance is pleased to invite you for the Round Table corganized in cooperation with Börsen-Zeitung and Frankfurt Main Finance on 12 October 2011.

Please see the invitation and the registration form.

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