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    ALFI News Digest october 25, 2011    
          in this edition      
    1. Headlines
2. News from the EU Representative Office in Brussels
3. News from Asia office in Hong Kong
4. ALFI brochures & publications
5. ALFI past events
6. ALFI events
7. Other events



ALFI Ambition paper

The Association of the Luxembourg Fund Industry (ALFI) sets out its ambition for the Luxembourg Fund Centre, to be a global centre of excellence for the asset management industry, thereby creating opportunities for investors, fund professionals and the global community as a whole.

The five key objectives set out in ALFI’s ambition paper are to:

  • Ensure UCITS remains the best-in-class for investor protection;
  • Help fund managers and institutional investors to leverage the development of regulated European alternative funds, with AIFMD;
  • Stimulate innovation within the funds industry;
  • Facilitate cross-border fund distribution;
  • Ensure Luxembourg remains the partner of choice for the asset management industry

Ambition paper in English, French or German

Press releases in English, French or German

Please see the videos of Mr Marc Saluzzi speaking about the ambition paper and the five key objectives.

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ALFI supports Luxembourg Students’ Annual Meeting REEL

The 27th edition of the Réunion Européenne des Étudiants Luxembourgeois took place this year in Bruxelles on 13 – 16 October 2011. This annual event gathers over 150 Luxembourg students currently spread in universities all across Europe and aims at discussing common issues facing Luxembourg students as well as  relations between universities and the political and economic world. This year’s edition is placed under the theme “Free spirit, European spirit”. For further information, please visit www.reel.lu

ALFI is proud to support the REEL and was represented by the Head of the ALFI Representative Office in Brussels, Mr Antoine Kremer.

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LuxFLAG invites applications for the LuxFLAG Environment Label

Luxembourg Fund Labelling Agency (LuxFLAG) invites applications for the LuxFLAG Environment Label. The LuxFLAG Environment Label is an ‘International Label’ which will be granted to investment funds investing in environment-related sectors irrespective of their domicile of registration. It is designed to reassure investors that labelled Investment Funds actually invest the majority of their assets in environment-related sectors in a responsible manner. The timetable for the application process for the Environment Label in Winter 2011 is as follows:

Application deadline: 4 Nov 2011

Meeting of the Eligibility Committee: 22 Nov 2011

Meeting of the Board of Directors: 13 Dec 2011

Final decision on the Labels: 13 Dec 2011

Please visit www.luxflag.org to avail further information on the Eligibility Criteria and procedures or contact Daniel Dax or Sachin Vankalas on info@luxflag.org / +352 22 30 26 40

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LuxFLAG Microfinance Label

4 new Microfinance Investment Vehicles (MIVs) obtain the LuxFLAG Microfinance Label

6 MIVs choose to renew their LuxFLAG Microfinance Label

LuxFLAG is pleased to announce that 4 new MIVs have been granted the LuxFLAG Microfinance Label: the Microfinance Enhancement Facility S.A. SICAV-SIF, Selectum SICAV SIF - BL Microfinance, Etimos Fund SICAV-SIF and Dual Return Fund SICAV- SIF Vision Microfinance Local Currency.

All in all, in 2011 LuxFLAG has granted 7 new Microfinance Labels and renewed of 13 Microfinance Labels. The number of MIVs labelled by LuxFLAG has grown substantially from the beginning of 2010 from 8 MIVs to 20 MIVs, and they now represent approximately USD 2.90 billion in Assets Under Management. This confirms the continuing interest in the LuxFLAG Microfinance Label and reinforces its importance in terms of providing greater transparency to investors. LuxFLAG expects further MIVs to apply for the LuxFLAG Microfinance Label by the end of 2011.

List of MIVs labelled as of Sept 2011 classified by legal structure.

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Luxembourg modernises its legal framework – New draft bill of law on book-entry securities

On 27th September 2011, a new draft bill of law was published, which aims at introducing the possibility for corporate entities and investment funds to issue book-entry securities (the “Bill of Law”).

To date, only the issue of shares in the form of registered shares or bearer shares was recognised and regulated by Luxembourg law. This does not mean that the concept of book-entry securities is new: different legislations already contain references to book-entry securities[1] without, however, providing for the legal regime that will apply to them.  Furthermore, a legal doctrine also exists, according to which the issue of book-entry securities should be permitted[2].

In addition, and due to the fast-growing number of transactions recorded by electronic means, the practice has also developed a “de facto” dematerialisation process, where the dematerialisation is not realised upon the issuance of the securities but at a later stage, in order to facilitate the recording and the safekeeping of the securities.

The current draft Bill of Law provides for an optional use of book-entry securities, i.e. the decision to issue book-entry securities belongs to the company itself, and is not mandatory. Bearer and registered shares will still be valid and available to investors.

Please click here for the Bill of Law.

[1]Law of August 2001, 1st on circulation of securities and other fungible financial instruments, law of March 22, 2004 on securitization, Grand Ducal Regulation of December 19, 2002 laying down the terms and conditions of government debts issue.

[2]P. Mousel et F. Fayot, La circulation des titres in Droit bancaire et financier au Luxembourg, Vol. 3, éd. Larcier, No 39-11.

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Value Added Tax: New compromise texts and report on the future of VAT

On 30th September 2011, the Polish Presidency of the Council of the European Union published new compromise texts for the Directive (FISC 122) and Regulation (FISC 123) on the VAT treatment of insurance and financial services. The Council VAT working party is due to discuss the new compromise texts on 13th October 2011. 

Moreover, the Committee on Economic and Monetary Affairs has publishedthe final version of the report on the future of VAT. This report will be submitted to the European Parliament on 13th October 2011. Several new paragraphs which have been inserted into the report (namely, paragraphs 21 to 23), suggest that there is increasing recognition of the need for businesses to have legal certainty as to their VAT liability. In particular, it is suggested that Member States will agree with the VAT committee by the end of 2013 a binding list of common goods and services that are eligible for exemption under the VAT Directive.

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European Commission: Proposal for a Council Directive on Financial Transaction Tax

On 28th September 2011, the Commission has presented a proposal for a financial transaction tax in the 27 Member States of the European Union. The tax would be levied on all transactions on financial instruments between financial institutions when at least one party to the transaction is located in the EU. The exchange of shares and bonds would be taxed at a rate of 0.1% and derivative contracts, at a rate of 0.01%. This could approximately raise €57 billion every year. The Commission has proposed that the tax should come into effect from 1st January 2014.

The Commission has decided to propose a new tax on financial transactions for two reasons:

-          First, to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the Member States. The financial sector played a role in the origins of the economic crisis. Governments and European citizens at large have borne the cost of massive taxpayer-funded bailouts to support the financial sector. Furthermore, the sector is currently under-taxed by comparison to other sectors. The proposal would generate significant additional tax revenue from the financial sector to contribute to public finances.

-          Second, a coordinated framework at EU level would help to strengthen the EU single market. Today, ten Member States have a form of a financial transaction tax in place. The proposal would introduce new minimum tax rates and harmonise different existing taxes on financial transactions in the EU. This will help to reduce competitive distortions in the single market, discourage risky trading activities and complement regulatory measures aimed at avoiding future crises. The financial transaction tax at EU level would strengthen the EU's position to promote common rules for the introduction of such a tax at global level, notably through the G20.

The revenues of the tax would be shared between the EU and the Member States. Part of the tax would be used as an EU own resource which would partly reduce national contributions. Member States might decide to increase the part of the revenues by taxing financial transactions at a higher rate.

Related documents:

-          COM (2011) 594 – Proposal for a Council Directive on a common system of financial transaction tax;

-          MEMO/11/640 – FAQs;

-          SEC (2011) 1103/3 – Executive summary of the impact assessment accompanying the proposal; and

-          The full impact assessment.

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European Commission requests the Netherlands to modify rules on VAT treatment of participation in supervisory boards

On 29 September 2011, the European Commission formally requested the Netherlands to modify its rules on the treatment of members of supervisory boards for VAT purposes so as to make the rules comply with EU legislation. In the absence of a satisfactory response within two months, the Commission may refer the Netherlands to the EU's Court of Justice.

Under Dutch rules, individuals do not have to register for VAT, pay VAT on the compensation they receive or file VAT returns, if they hold no more than four positions as a member of supervisory boards. The Commission considers that the activity of serving as a member of even one supervisory board must be considered as an economic activity subject to VAT.

In practice, the Dutch rules amount to an exemption of VAT for services that should be taxed according to the VAT directive.

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Increase in foreign investment limit of Peruvian pension funds

On July 13, 2011, the Peruvian Congress approved a government proposal to increase the limit for foreign investment by Peru’s private pension funds to 50%, from the present legal threshold of 30%. Congressional approval was required to raise the foreign investment limit above the legal threshold and the Central Bank will now gradually increase the limit of a fund’s portfolio up to the new legal threshold of 50%.

Currently Peruvian private pension funds have approximately 22.4 percent of their assets abroad, including in Luxembourg UCITS. At the end of 2010, 354 Luxembourg UCITS were registered in Peru.

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EFAMA comments on latest VAT compromise texts

Following the publication of new compromise texts for a Directive and Regulation on the Value Added Tax (VAT) treatment of insurance and financial services (FISC 98 and 99; both documents were included in our Newsflash of 1 July 2011), the European Fund and Asset Management Association (EFAMA) submitted its comments on 20 September 2011 to the Polish Presidency of the Council of the European Union. EFAMA’s VAT working group is chaired by Michel Lambion, who is also the chairman of ALFI’s VAT sub committee.

The latest compromise texts were discussed at the most recent ECOFIN meeting on 20 September 2011 and the Polish Presidency is currently in the process of analysing the comments received from Member States and business representatives before deciding on the next steps. There is a possibility that a further meeting of the technical group will be organised (and new compromise texts be issued) before any high level discussions take place. However, there is no additional information available at this stage on the timing or content of either the technical or high level meetings.

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EFAMA promotes TER Report to improve transparency of investment fees

A report commissioned by the European Fund and Asset Management Association (“EFAMA”) published today aims to give investors greater transparency and understanding of cost breakdown within the Total Expense Ratio (“TER”) of European mutual funds.

As part of its on-going campaign to promote investor education, EFAMA believes greater transparency is needed to reveal the breakdown of fees within the TER of funds so investors understand what they are paying. While it is currently possible to project the TER through mutual fund expense information, it is not possible to deconstruct the ratio to fees collected by distributors, administrators and custodians and what is retained by the fund management firm.

Press release.

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ESMA: Practical arrangements for the late transposition of the UCITS IV Directive

On 13th October 2011, the European Securities and Markets Authority (ESMA) has published an opinion with regard to practical arrangements for the late transposition of the UCITS IV Directive (2009/65/EC).

The deadline for the transposition of the UCITS IV Directive into national legislation was 1 July 2011. However, most Member States have not yet fully transposed the Directive and its implementing measures. Late transposition can create difficult situations where some competent authorities may not have the legislative framework in place to allow a proper implementation of the Directive. Luxembourg was the first Member State which transposed the Directive into national law (press release).

Without prejudice to any initiatives taken by the European Commission in case of late transposition by Member States, ESMA intends to address the situation at an operational level in order to minimise, as far as possible, the impact on industry and investors deriving from lack of transposition.

ESMA proposes in its opinion practical arrangements for cross-border operations involving one Member State that has not transposed the Directive.

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ESMA issues first drafts of binding standards for Credit Rating Agencies

On 19 September 2011, ESMA published, for consultation, its first set of proposed future Regulatory Technical Standards (RTSs). The draft RTS on Credit Rating Agencies (CRAs) detail the information that CRAs would have to disclose and the rules with which they would have to comply in order to fulfil the requirements of the CRA Regulation. The potential costs and benefits of the future standards will also be assessed by ESMA.

The proposals of draft RTS published in ESMA’s consultation paper cover the following technical areas of conduct for CRAs:

1)    The information to be provided by a CRA in its application for registration and certification, and for the assessment of the systemic importance to the financial stability or integrity of financial markets (ESMA/2011/302);

2)    The assessment of compliance of CRAs with the requirements set out in Article 8(3) on the credit rating methodologies (ESMA/2011/303);

3)    The presentation of the information, including structure, format, method and period of reporting that a CRA must disclose (ESMA/2011/304); and

4)    The content and format of ratings data to be requested from CRAs as part of their periodic reporting for the purpose of the on-going supervision by ESMA (ESMA/2011/305).

ESMA is seeking stakeholders’ views by 21 October 2011. Following the consultation, ESMA will submit the final draft standards to the European Commission by 2 January 2012. The Commission, by means of delegated acts, then needs to decide on the endorsement of the standards and thereby, give them binding, legal effect.

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Investment Company Institute Launches ICI Global

The Investment Company Institute (ICI) announced the launch of ICI Global, a new trade organisation to focus on regulatory, market and other issues for global investment funds, their managers and investors. ICI Global members will include regulated U.S. and non-U.S. based funds publicly offered to investors in jurisdictions worldwide, making it the first industry body to focus exclusively on the perspective of globally active funds. The new organisation will be based in London.

Press release.

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LFF Mediawatch

LFF Mediawatch 1-19 September

LFF Mediawatch 20-30 September

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News from the EU Representative Office in Brussels

EU legislative timetable

Please see the EU legislative timetable updated on 12th October 2011.

Antoine Kremer
Head of European Affairs

Aurélie Cassou
Adviser European Affairs

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News from Asia office in Hong Kong

Singapore: Consultation paper on the regulatory regime and the business conduct requirements for fund management companies FMCs

On 27th September, the Monetary Authority of Singapore (MAS) published a consultation paper on the amendment of the regulatory regime and the business conduct requirements for fund management companies.

The first consultation, regarding the regulatory regime for FMCs, was conducted in April 2010 and was published, with MAS feedback, in September 2010. The current consultation paper sets out the legislative amendments from the first consultation.

The proposed amendments cover the areas of risk management and audit, and the creation of a Capital Markets and Financial Advisory Services (“CMFAS”) examination, to enhance and assess the competence and expertise of FMC representatives.

The consultation period finishes on 26th October and the revised regime is expected to take effect in early 2012.

The press release.

The consultation paper.

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India: Amendment of rules regarding distributors of mutual funds, transaction charges and transparency of information

The Securities and Exchange Board of India (SEBI) released a Circular on 22 August  2011, amending rules applying to distributors of mutual funds, transaction charges and transparency of information.

In order to extend the scope of mutual funds in urban areas and smaller towns, as of the date of issuance of the Circular, the SEBI shall impose a transaction fee of Rs100 (US$2.19) per Rs10,000 (US$219) of subscription.

The transaction fee does not apply to direct investments.

Mutual funds and asset management companies shall carry out due diligence on the biggest funds’ distributors. These are distributors with a presence in more than 20 locations; AuM over Rs1 billion (US$21.9 million); earning commissions exceeding Rs10million (US$219,000) per year; or having earned, from one asset manager, a commission exceeding Rs5 million (US$109,500). This due diligence targets compliance with criteria reflecting the experience of distributors, their business proficiency, regulatory records and product sales suitability.

Moreover, the total commission and expenses paid to distributors shall be disclosed on mutual funds and asset management companies’ websites.

The Circular can be found on SEBI website.

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ALFI brochures & publications

New publications and brochures

ALFI Newsletter Autumn 2011

Luxembourg: your bridge between China and Luxembourg

ALFI REIF Survey 2011

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ALFI past events

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

A delegation of about 50 ALFI members joined this roadshow that included seminars in Toronto, Greenwich CT, New York and Boston and attracted over 400 attendees. The programme included detailed sessions on UCITS, Alternative Investments & the AIFMD with the exception of Greenwich whose main focus was Alternatives.


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

The conference celebrated its 20th birthday this year in association with NICSA and for the first time with HKIFA.

Over 760 people attended the 2-day event that included special guests H.R.H. Prince Guillaume of Luxembourg, H.E. Minister Jeannot Krecké together with lively discussions and presentations from industry experts such as Gérard Lopez, Founding Partner of Mangrove Capital and Genii Capital, Tilman Leuder, Head of the AM unit at the European Commission, Jean Guill, Director General of the CSSF, Claude Kremer, Chairman of EFAMA, Christina Choi, Director of Investment Products at the SFC Hong Kong, Paul Schott Stevens, President & CEO of ICI, Frank Velling, Chief Strategist at Bankinvest Copenhagen, Jella Benner-Heinacher of the Deutsche Protection Association, Shiv Taneja of Cerulli Associates and a host of other industry professionals.

There were also 41 exhibition stands at the conference.

Pictures & celebrating 20th anniversary video

Conference blog

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26 September: ALFI Golf Tournament

A record 24 teams took to the course at sunny Kikuoka with a shotgun start at 12.30 for the texas scramble competition. Thanks to the 20 sponsors , 96 players and 10 beginners, the profits of the day were presented by the Chairman of ALFI, Marc Saluzzi, to two charities, 1) Fondation Kriibskrank Kanner which supports children with cancer as well as their families and 2) to the Fondatioun Kraizbierg which supports people with disabilities. The day finished with drinks on the terrace, a barbecue buffet dinner and a presentation to the prize winners.

The results and some photos can be seen here.

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ALFI events

ALFI confirmed events

ALFI events calendar

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22-23 November: ALFI European Alternative Investment Funds Conference

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

Click here for the invitation brochure with the full programme.

Registration: click here.

Early-bird discount for bookings made by this Friday, 21 October 2011.

Last minute exhibitors, please contact events@alfi.lu


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5-8 December: ALFI Roadshow in Asia

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

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

7 December: Four Seasons HotelHong Kong, full-day event with workshops and lunch

Programme and registration will be available the week beginning 17th October.

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

Event website.

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13-14 March 2012: ALFI Spring Conference

Save the date!

The conference committee has started working on the programme.

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

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Other events

2 November: The Euro: Pride & Prejudice

Sacred heart University Invites you to the panel discussion on The Euro: Pride & Prejudice
2nd November 2011, 6 pm – 8 pm
BGL-BNP Paribas, 27, avenue Monterey, L-2163 Luxembourg

To attend, please register by e-mail to Rachel Niebeling rniebeling@shu.lu or call (352) 22-76-13 -33.


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3 November: European-American Chamber of Commerce New York: Update on the AIFMD Seminar

The European-American Chamber of Commerce in New York organises on 3rd November 2011 a seminar Update on the EU’s Alternative Investment Fund Manager Directive and its affects on US Fund Managers.

From 5.30 to 7.30 pm, speakers will debate the settlement of the directive, key open issues, timeline for implementation and agreement to be reached.

For more information please visit www.eaccny.com or contact Ms Yvonne Bendinger-Rothschild, Executive Director: phone 212.808.2707.

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Autumn 2011: M2 Hedge Funds Accounting and Custody & M2 Funds of Hedge Funds Accounting and Custody

The IFBL is pleased to announce that two new modules M2 Hedge Funds Accounting and Custody& M2 Funds of Hedge Funds Accounting and Custody will be available this Autumn. Delegates taking part in these modules, scheduled on the 21st November and 6th December respectively, will have the opportunity to gain an applied understanding of hedge fund (and fund of hedge fund) specifics relating to investor issues, trade processing, valuation and accounting, instrument valuation and regulatory matters (IFRS). These applied courses are taught in English and target: hedge fund service providers; back office agents; fund accountants; operations & client service managers; staff involved in hedge fund custody or any person requiring a deeper knowledge of this area.

For more details please refer to the flyer attached or contact the customer service team by mail: customer@ifbl.lu or by phone : +352 – 46 50 16.

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10 & 11 November: Roles and Responsibilities of the Directors and Managers of UCI and other investment vehicles (seminar)

The IFBL is pleased to announce the next date for the highly popular seminar “Roles and Responsibilities of the Directors and Managers of UCI and other investment vehicles”  organized in cooperation with ILA (Luxembourg Institute of Directors) and ALFI (Luxembourg Investment Fund Association).

This interactive seminar includes theoretical basics, presentations by professionals and the resolution of a specific corporate case study held by Patrick Zurstrassen, Chairman of ecoDa (European Confederation of Directors' Associations).

Thursday, 10th November (from 8.45 a.m. to 5.00 p.m.)
Friday, 11th November (from 8.45 a.m. to 4.30 p.m.)

Centre de Formation IFBL/Chambre de Commerce
7, rue Alcide de Gasperi, Luxembourg

Please note that further to the previous participants’ feedback, the duration of this seminar has been extended to 16 hours. This has been done in order to have sufficient time to discuss current market developments including UCITS IV / AIFMD and to be able to handle in more depth key points of interest raised during our discussions. All presentations and discussions will be held in English.

Download the flyer here.

Should you have any further query, please do not hesitate to contact our Customer Service (by mail: customer@ifbl.lu or by phone : +352 – 46 50 16).

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10 November 2011: Save the date! Hong Kong: China's Global Financial Centre Conference

The Government of the Hong Kong SAR, supported by Invest Hong Kong, the Hong Kong Monetary Authority and the Securities and Futures Commission, is hosting:

Hong Kong: China's Global Financial Centre Conference

10th November 2011

Hotel Le Royal, 12, boulevard Royal, L-2449 Luxembourg

This event will be the first time that the Government of the Hong Kong SAR brings together in Luxembourg leading asset managers, fund managers and economists to discuss Hong Kong's role as China's global financial centre.


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