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    ALFI News Digest 4 May 2011 may 3, 2011    
          in this edition      
    1. Headlines
2. ALFI Representative Office Hong Kong
3. ALFI Past Events
4. ALFI Events



ALFI head office is moving!

Kindly note that ALFI (together with the other associations of the House of Finance located at 59, boulevard Royal) will be moving to new premises at 12, rue Erasme L- 1468 Luxembourg - Kirchberg on Thursday 19 and Friday morning 20 May.

The phone number + 352 22 30 26 1 and the postal address B.P. 206 / L-2012 will remain the same.    

As we will migrate our IT infrastructure on the same occasion, e-mails may not be answered during that period.

In due course we will provide you with specific mobile phone numbers on which you may contact us in case of urgency.


 ALFI's new premises. Source: ALFI

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Commissioner Barnier at the ABBL & ALFI EU walking dinner

One of the foremost public relations events of the ABBL & ALFI EU Representative Office is its annual walking dinner for key decision makers in the EU institutions.

Taking place in the prestigious neoclassical Hôtel Coudenberg, a two minutes walk from the Royal Palace, around a hundred people attended this year’s event among which several Members of the European Parliament, ambassadors, financial attachés from a number of Member States, Commission officials and staff from the European Parliament.

Michel Barnier. Source: ABBL

The main speaker and guest of honour, Michel Barnier, Commissioner for the internal market and services, started with expressing his concern regarding the rise of euro sceptic and populist parties throughout the continent and warned against protectionist tendencies that would threaten the Internal Market and ultimately the EU itself.

Read more.

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ALFI response to European Commission consultation on financial sector taxation

In February 2011, the Commission launched a public consultation in order to receive stakeholder feedback on its initiative for the taxation of the financial sector. The Commission wanted (i) to test its assumptions and collect related evidence as regards the definition of the problems, (ii) to assess the impacts of the set of policy options and (iii) to consult on more detailed aspects of the feasibility and design of the policy option.

Both ALFI and EFAMA are of the opinion that the asset management industry should be excluded from the scope of financial sector taxation, because the financial crisis was not caused by this industry. They are convinced that an additional cost impact would be passed on to the end-consumers and their long-term savings. Moreover, they believe that taxation is not an appropriate instrument for addressing market behaviour, and ALFI doubts that increasing taxes will prevent excessive risk-taking.

Please click on the following links for ALFI’s response and EFAMA’s reply to the consultation.

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CSSF published new warnings regarding TradeLike Tom and Bank Sewell & Raydell

For further information about TradeLike Tom, please click here. For further information about Bank Sewell & Raydell, please click here.

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Publication of the annual report 2010 of the CSSF

See the press release and annual report (in French).

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CSSF has released Circulars 11/508 and 11/509

Circular 11/508

On Monday, 18 April 2011 the CSSF has released its Circular 11/508 on the requirements that will apply to Chapter 15 management companies under the law of 17 December 2010 on collective investment undertakings and to self-managed investment companies governed by Article 27 of the Law.

The Circular details the provisions applying to

  • organisational requirements (II) ;
  • conflicts of interest (III) ;
  • conduct of business rules (IV) ; and
  • risk management (V).

of UCITS (IV) Management Companies and UCITS (IV) Self-Managed Investment Companies. The requirements apply to every UCITS IV Management Company whether it manages UCITS, UCIs or Specialised Investment Funds (SIFs).

Pursuant to the new circular UCITS (IV) Management Companies must file with the CSSF an update of their application file, completed by the new provisions under the Law and, in the case of Self-Managed UCITS (IV) Investment Companies a new file by 1 June 2011 latest.


Circular 11/509

On Monday, 18 April 2011 the CSSF has released its Circular 11/509 on the practical and technical modalities of the UCITS simplified notification procedure.

The Circular details  in its first part the documentation that a Luxembourg UCITS wishing to market its shares/units in another Member State must submit to the CSSF, and provides information as to the various formal verifications to be performed by the supervisory authority  on the notification file. The second part of the Circular addresses the notification process to be followed by foreign UCITS wishing to distribute their shares/units in Luxembourg.

The Circular is completed by 5 technical annexes relating among other to the nomenclature to be complied with for the transmission of the notification file and the formatting of the notification letter.

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ESMA sets out guidelines on risk measurement and the calculation of global exposure for certain types of structured UCITS

ESMA publishes the final report on the guidelines on risk measurement and the calculation of the global exposure for certain types of structured UCITS (ESMA/2011/112). The report contains the policy approach agreed by ESMA, the cost-benefit analysis, the feedback from the public consultation and the draft guidelines in English to be addressed to competent authorities and UCITS management companies.

The final version of the guidelines (which will be unchanged) will be translated into all the European Union languages and will be available at a later stage on the ESMA website. The guidelines will take effect when this translation process is completed and will accompany the Level 2 implementing measures of the UCITS Directive that take effect on 1 July 2011. The report published today will nevertheless help UCITS management companies and national competent authorities prepare in a timely manner.

The purpose of the guidelines is to propose, for certain types of structured UCITS, an optional regime for the calculation of the global exposure. The specific approach adopted by ESMA consists of the calculation, for each scenario to which investors can be exposed at any one time, of the global exposure using the commitment approach. Under this approach, each scenario must comply at all times with the 100% global exposure limit.

The guidelines, when they take effect, will supplement the guidelines published by the Committee of European Securities Regulators (CESR) in July last year on Risk Measurement and the Calculation of the Global Exposure and Counterparty Risk for UCITS (Ref. CESR/10-788).

ESMA considers that the scope of this alternative approach must be clearly defined. Therefore, a list of all the criteria with which structured UCITS should comply in order to be able to benefit from this specific approach is set out in Guideline 1 of the report. A number of examples have also been included to illustrate how the optional regime should be applied in practice. Guideline 2 in the report, meanwhile, sets out additional disclosure obligations on UCITS that make use of the optional regime.

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ESMA seeks views on implementing measures for AIFM Directive

Following a request for assistance by the European Commission in December 2010 on the content of the implementing measures of the Alternative Investment Fund Managers (AIFM) Directive to the Committee of European Securities Regulators (CESR - the predecessor of the European Securities Markets Authority (ESMA) and CESR’s call for evidence, ESMA has now published a “Discussion paper on ESMA’s policy orientations on possible implementing measures under Article 3 of the Alternative Investment Fund Managers Directive” that sets out its proposed approach for developing such measures. ESMA seeks views from stakeholders in particular on:

  • how to identify the portfolios of Alternative Investment Funds (AIFs) under management by a specific fund manager and the calculation of the total value of assets under management;
  • how leverage influences the assets under management;
  • how to determine the value of the assets under management by an AIF for a particular calendar year;
  • how to treat potential cases of cross-holding among the AIFs managed by a fund manager;
  • how to treat AIFMs whose total assets under management occasionally exceed and/or fall below the relevant threshold;
  • what the registration requirements for entities falling below the threshold should be;
  • how the obligation to register with national competent authorities should be implemented and establishing what the suitable mechanisms for gathering information might look like; and
  • what the procedures should be for small managers to “opt-in” to the AIFM Directive.

At this stage the discussion paper does not include any formal proposals for advice on possible implementing measures. However, the feedback to the discussion paper will assist ESMA to narrow down the policy options for its future implementing measures of the AIFM Directive.
The deadline for comments on this discussion paper is 16 May 2011. ESMA expects to publish a consultation paper containing its proposed implementing measures in the summer of 2011.

To see discussion paper click here.

To see press release click here.

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ESMA publishes MiFID Q&As on investor protection and intermediaries

The European Securities and Markets Authority (ESMA) has published a document with questions and answers (Q&As) on the Markets in Financial Instruments Directive (MiFID) with a focus on investor protection and intermediaries. The Q&As deal in particular with: (i) client profile review; (ii) appropriateness; (iii) aggregated orders and trade allocations; (iv) tied agents; (v) leveraged portfolio; (vi) due diligence on sub-custodians; and (vii) investment advice and investment research.

MiFID Questions & Answears.

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Exchange of information upon request: further adaption of double tax conventions to OECD standard

On 2 March 2011, the Luxembourg Minister of Finance submitted draft law n° 6257 to the Parliament. The bill aims at introducing newly negotiated double tax conventions and further adaptions to existing double tax convention, to bring them in line with the international OECD standard, in particular with regard to the rules on exchange of information upon request.

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Presidency compromise proposal on EMIR

The Presidency of the Council of the European Union has published a further Presidency compromise proposal, dated 11 April, on the proposed Regulation on OTC derivative transactions, central counterparties and trade repositories (European Market Infrastructure Regulation – EMIR). The proposal will be discussed at the meeting of the Working Party of Financial Services Attachés on 13-14 April. Following that meeting, the Presidency intends to further amend the compromise text with a view to the meeting of 28 March 2011.

For more information please click here.

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EMIR - revised timetable

The European Parliament Legislative Observatory has published a procedure file regarding the Regulation on OTC derivatives, central counterparties and trade repositories (also known as the European Market Infrastructure Regulation - EMIR). The file contains an updated timetable of procedural events including:

  • the Council is expected to reach political agreement on the final act on 17 May 2011;
  • the European Parliament is expected to have a report scheduled for adoption in committee, 1st or single reading on 24 May 2011;
  • the European Parliament is expected to have a plenary sitting on 7 June 2011 (indicative date).

For further information please click here.

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Indication of the transaction costs in the annual report of UCITS

Indication of the transaction costs in the annual report of UCITS governed by the law of 17 December 2010 relating to undertakings for collective investment 

Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (Directive 2009/65/EC) added transaction costs under the information to be included in the annual reports of UCITS. This new information to be published in the annual reports is set out in Annex I, Schedule B, Chapter V of Directive 2009/65/EC.

Consequently, the transaction costs shall also be indicated in the annual reports of UCITS governed by the law of 17 December 2010. This new rule shall be applied in the annual reports relating to the financial years ending on or after 31 December 2011.

For more information please click here.

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Germany: UCITS IV and related rules on investor information

The German Parliament (“Bundestag”) adopted the UCITS IV implementing law, which will now be handed over to the Federal Council (“Bundesrat”) and later be published in the official gazette (“Bundesgesetzblatt”) to enter into force, probably in May 2011.

As mentioned in our newsflash of 17 February 2011, all types of German funds (UCITS and non-UCITS) and foreign non-UCITS distributing to Germany will have to provide a Key Investor Information Document (KID) as of 1 July 2011, whereas non-German UCITS can continue to use the simplified prospectus according to the transitional provisions in force in their own Member State (in Luxembourg: 1 July 2012).

The discussion has been complicated by the adoption of the law aiming at strengthening investor protection ("Anlegerschutz- und Funktionsverbesserungsgesetz”), which has been published in the Bundesgesetzblatt (BGBl. I page 538), and entered into force on 8 April 2011. This legislation lays down requirements for the distribution of some savings products, including investment funds. Distributors will be required to provide to retail investors a disclosure document called "Produktinformationsblatt (PIB)", similar but not identical to the UCITS KID. The legislation provides for the possibility to use the KID as of 1 July 2011 to fulfil the PIB requirement, and in the final text it has been recently clarified that the simplified prospectus can be used instead of the PIB by non-German funds during their transitional period. In other words, to avoid providing a PIB, a KID will be required for German UCITS from 1 July 2011 while for foreign UCITS the simplified prospectus may continue to be provided up to 1 July 2012 (according to their transitional period).

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Call for advice on IORP Directive

The Commission launched a call for advice to the European Insurance and Occupational Pensions authority (EIOPA) for the review of the Directive 2003/41/EC (IORP II).

The call for advice seeks to obtain advice from EIOPA on how to improve the IORP Directive.

Moreover, the Commission’s proposal to review the IORP Directive will be accompanied by an impact assessment study.

Call for advice.

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European Commission initiatives for 2011

The European Commission has published a table containing estimated dates for the issue of a number of legislative initiatives for 2011. The following are on the "Commission work programme - strategic initiatives":

  • amendment of the Capital Requirements Directives, due 22 June 2011;
  • legislative initiative on a framework for crisis management and resolution in the banking sector, due 29 June 2011;
  • recast of the operation of the insider dealing and and market manipulation (market abuse) Directive, due 5 July 2011;
  • review of the Market in Financial Instruments Directive, due 5 July 2011; and
  • amending the Regulations on credit rating agencies, due September 2011.

The following initiatives are on the "Commission programme - Annex II":

  • Securities Law Directive, due May 2011;
  • proposal of a Directive to amend Directives on internal governance of credit institutions and investment firms, due 7 June 2011;
  • framework for crisis management and resolution in the banking sector, due 29 June 2011;
  • amendment of the Undertakings in collective investments in transferable securities  Directive (UCITS IV), due 13 July 2011;
  • instrument creating a framework for standardising pre-contractual information for retail investors about packed retail investment products (PRIPs), due 13 July 2011;
  • Directive on Insurance Guarantee Schemes, due Q4 2011;
  • Directive establishing framework for the approximation of sanctioning regimes in the financial sector, due Q4 2011;
  • review of the Directive on transparency obligations of listed companies, due October 2011;
  • revision of Insurance Mediation Directive, due Q4 2011; and
  • Directive on close-out netting, due July 2011.

Please click here to see the table.

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The EU corporate governance framework

The European Commission published on 5th April 2011 its Green Paper entitled “The EU corporate governance framework”.

The Green Paper aims to launch a general debate on a number of issues:

  • including Board of Directors (including composition, board evaluation and directors remuneration)
  • Shareholders (in particular the agency relationship between institutional investors and asset managers)
  • “Comply or Explain” Framework – Monitoring and implementing corporate governance codes

Contributions can be sent to the European Commission until 22 July 2011 at the latest.

The Green Paper can be found on the Commission’s website following this link.

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Harmonisation of securities law: Summary of responses

The European Commission has published a brief summary of the responses that it received in relation to the Directorate-General’s Internal Market and Services' second consultation on legislation aimed at achieving harmonisation of laws on securities holding and dispositions across the European Union.

Please click here.

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IOSCO progresses G20 objectives on commodities markets

The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published its Task Force on Commodity Futures Markets - Report to the Financial Stability Board (Report). The Report sets out IOSCO’s current work on the supervision of commodity derivative markets, market transparency, and the ongoing monitoring of developments in OTC financial oil markets.

The Report was prepared in response to the G20’s request in Seoul, November 2010, for an update to be provided to the Financial Stability Board on IOSCO’s workstreams in support of the G20’s aim of improving the regulation and supervision of exchange-traded, OTC derivative and physical commodity markets.  It also outlines IOSCO’s future plans and possible additional new areas of focus.

Read more.

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Liechtenstein becomes newest IOSCO member

The International Organization of Securities Commissions (IOSCO) has today welcomed the Financial Market Authority (FMA) of Liechtenstein as its newest member, following the approval of its application by IOSCO’s Presidents’ Committee, composed of the chairmen and chief executives of its member securities regulators.

The FMA, in meeting the membership criteria, has shown that it complies with IOSCO’s Objectives and Principles of Securities Regulation and that the structure of its regulatory regime permits them to become signatories to Appendix A of the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.

Read more.

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IOSCO ready to face the challenges ahead

20 April 2011: the International Organization of Securities Commissions (IOSCO) opens its Annual Conference public sessions focusing on the themes of securities regulators and systemic risk, the challenges of debt markets, international corporate governance and consumer education.
The public conference comes at the conclusion of IOSCO's private meetings which have resulted in this morning's decision by the Presidents' Committee to approve a new organisational structure and funding basis. This decision ensures that IOSCO, as the international standard setter for securities markets regulation:

  • is structured and positioned to continue to provide the lead in the development of regulatory standards for capital markets;
  • has the resources needed to engage in the identification of emerging securities markets risks;
  • possesses the capability to meet the needs of its members; and
  • has the ability to respond to requests for targeted work by the G20 and the Financial Stability Board (FSB).

To view the full press release click here.

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FATCA: letter sent by the EU to the US tax authorities and second notice

In a letter sent to the US tax authorities on 6 April 2011, the Hungarian Presidency of the Council of the European Union and the European Commission invited the US authorities to engage in a dialogue on how to best achieve the objectives of the US Foreign Account Tax compliance Act (FATCA).

FATCA is a US legislation intended to ensure that US tax authorities obtain information on investments by US residents in foreign financial institutions, including European financial institutions. In this regard it pursues goals similar to those of the EU Savings Tax Directive which provides for an exchange of information between tax authorities of EU Member States. However, FATCA could impose a significant compliance burden on EU financial institutions (including banks, investment funds and insurance companies). In light of the information exchange tools that already exist between tax administrations, and given the ongoing discussions on extending the scope of the Savings Tax Directive, which is a priority for the Hungarian Presidency and the Commission, the Hungarian Presidency and the Commission invited the US authorities to consider exploiting possible synergies to achieve their common goals in a cost-effective and business-friendly way.

Please click here for the full text of the press release.

Following Notice 2010-60, the Internal Revenue Service (IRS) has published on 9 April Notice 2011-34 containing some further guidance on FATCA, in particular on the following areas:

  • the method Foreign Financial Institutions (FFIs) should use to identify the status of both existing accounts and new accounts (i.e. accounts opened on or after 1 January 2013)
  • the treatment of "passthru payments"
  • certain FFIs that can be deemed compliant with the information reporting requirements without entering into a reporting agreement  
  • the reporting required to the IRS on US accounts
  • compliance procedures for FFI affiliated groups

ALFI is closely following the topic and contributes to the work of EFAMA’s FATCA working group, which is in direct contact with the US authorities. On 29 April 2011, ALFI hosted a Breakfast Seminar on FATCA.

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ALFI Representative Office Hong Kong

Hong Kong - SFC published an updated FAQs related to the application procedure of unit trusts and mutual funds

On 25 March 2011, the Hong Kong regulator, SFC, published an updated FAQs related to the application procedure of unit trustsand mutual funds.

In the document, the regulator explains that “a 12-month period is a reasonably sufficient period for a serious applicant to address the SFC’s requisitions and obtain the relevant authorization”. Also, if some information (risk disclosure, financial information …) becomes obsolete during the application, the applicant shall update it. Otherwise the SFC is entitled to stop the submission process and application fees will not be refunded. The same outcome applies for the unit trusts and mutual funds which have not reached authorization after the 12-months period. A new application will have to be resubmitted to the regulator and the same application procedure shall be repeated.

Please refer to the link for the FAQs.

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Hong Kong - SFC published an updated FAQs on post-authorisation compliance issues of SFC-Authorised Unit Trusts and Mutual Funds

On 21 February 2011, the Hong Kong regulator, SFC, published an updated FAQs related to post-authorisation compliance issues associated to SFC-Authorised Unit Trusts and Mutual Funds.

In order to rationalise the management of pricing errors disclosures, detailed calculation of the compensation made to investors is no longer required to be filed with the regulator. Nevertheless the fund manager still has to file some information such as: a summary of nature of error, confirmation that the home regulator has no comment on the error, etc. As always, the regulator reserves the right to request the submission of further information and documents as it deems appropriate on a case-by-case basis.

Please refer to the link for the FAQs.

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Hong Kong - SFC published an updated FAQs on the Code of Unit Trusts and Mutual Funds

The FAQs on the Code of Unit Trusts and Mutual Funds was revised on 21 February 2011.

Please refer to the link for the FAQs.

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Hong Kong - SFC published an updated FAQs on SFC authorization of UCITS III Funds

The FAQs on SFC authorization of UCITS III Funds was revised on 21 February 2011.

Please refer to the link for the FAQs.

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Singapore – MAS published a revised Code on Collective Investment Scheme

The regulator of Singapore, MAS, has published on 8 April 2011 its revision of the Code on Collective Investment Scheme.

The revised Code will apply to all authorized schemes other than structured product funds and will come into effect on 1 October 2011.

Please refer to the link for the revised Code.

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ALFI Past Events

29 April 2011: FATCA Breakfast Seminar

On April 29th, the ALFI FATCA Breakfast Seminar took place. It proved very popular with professionals in Luxembourg, attracting more than 240 guests. The seminar made it very clear to the attendees that FATCA is not just another tax issue that affects aspects of compliance. Instead, it affects the whole value chain and requires completely new and extended information and reporting systems.

The seminar was composed of members of the ALFI FATCA working group as well as representatives of EFAMA and the European Commission.

The following topics were covered: comparative analysis between EU Savings Directive, Qualified Intermediary (QI) and FATCA, and presentation of the characteristics of FATCA and its implementation procedures.

These presentations were followed by a panel discussion, during which different aspects of FATCA and mainly the potential implications and impacts for the Luxembourg Fund Industry were discussed. EFAMA’s key proposals and the next steps and the EU Commission’s position and initiatives were as well debated.

For more pictures visit our photo gallery.

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ALFI Events

2011 Confirmed Events Dates

 19 May

 ALFI Conference London

 9 June

 ALFI Annual General Meeting

 15 & 16 June

 ALFI Roadshow to Switzerland (Zurich & Geneva)

 6 September

 ALFI Roadshow to Edinburgh

 26 September

 ALFI Golf Tournament

 27 & 28 September

 ALFI Global Distribution Conference in association with     NICSA & HKIFA - Save the date for this 20th Anniversary!

 4 - 7 October

 ALFI Roadshow to Toronto & USA

 24 October

 ALFI Seminar Frankfurt

 22 & 23 November

 ALFI European Alternative Investment Funds Conference

ALFI events calendar 2011- please click here.

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19 May: ALFI Conference London

Click here for programme and registration details.

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15 & 16 June: ALFI Roadshow to Switzerland (Zurich & Geneva)

Click here for programme and registration details.

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6 September: ALFI Roadshow to Edinburgh

Save the date!

More information coming soon.

Sponsorships open to ALFI members.

Contact: events@alfi.lu

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

Sponsorship and Exhibition Opportunities available! Please click here.

Deadline for sponsorship is 13 May!

This two-day conference will provide presentations and panel discussions on latest news and trends in the cross-border distribution of Luxembourg investment funds, with this year a focus on the Asian region.

Highlights of the programme include:

  • CEO interviews
  • Global Issues in Asset Management
  • Cross-Border Success Story
  • Asian Distribution Dynamics
  • The Future of UCITS in Asia
  • The History of the Luxembourg Fund Industry
  • Vision of the future of the Luxembourg fund industry
  • Investors’ protection
  • Managing the Regulatory Changes
  • Deep Dive into Distribution
  • and many more

Programme and registration coming soon.

Click here for the conference website.

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