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    ALFI News Digest december 20, 2011    
          in this edition      
    1. ALFI Greetings for 2012
2. Headlines
3. News from the Asian Representative Office in Hong Kong
4. ALFI past events
5. ALFI events


ALFI Greetings for 2012

ALFI wishes YOU all the best for 2012!

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ALFI: Q&A CSSF Circular 11/512

Over the last few years ALFI has consistently demonstrated its commitment to risk management, and in 2006 a dedicated risk management working group was established in order to support ALFI and its members in the light of the upcoming regulations on risk management (i.e. CSSF risk circular 07/308). The initial focus was on portfolio risks such as market risk (Value at Risk), counterparty and issuer risk etc. Since the regulatory approach regarding risk management - as laid down in CESR’s guidance "Risk Principles" - demands an overall risk management approach, the ALFI Board decided in the past to meet this requirement by establishing a dedicated “Risk Management Committee”.  This Committee not only looks at the above-mentioned portfolio risks, but also has dedicated working groups on operational risk and liquidity risk.

In relation to risk management, a number of laws and regulations have been issued at a European and Luxembourg level. ALFI’s Risk Management technical Committee is currently analysing, amongst others, the CSSF Circular 11/512 dated 30 May 2011 regarding:

  • Presentation of the main regulatory changes in risk management following the publication of CSSF Regulation No. 10-4 and ESMA clarifications;
  • Further clarifications from the CSSF on risk management rules;
  • Definition of the content and format of the risk management process to be communicated to the CSSF;
  • Replacing, as from 1st July 2011, CSSF Circular 07/308 on UCITS risk management and the use of financial derivative instruments.

We are happy to provide you with the first version of the ALFI Q&A on Risk Management Circular CSSF 11/512. Industry participants had issued questions to the Risk Management Committee on implementation and interpretation aspects concerning the new Risk Management Circular CSSF 11/512. 

By clicking here, you will access the ALFI Q&A document. The document contains the working group's answers to questions about the implementation and the application of the CSSF Circular 11/512. 

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ALFI UCITS IV implementation project - Issue 10 of KID Q&A Document

ALFI’s KID working group has published issue 10 of the Q&A Document with questions and proposed answers about Key Investor Information Document (KID) implementation. Changes compared to the previous edition are shown in mark-up. In particular, the section with Q&A on CESR’s guidelines on the methodology for the calculation of the synthetic risk and reward indicator in the KID has been updated.

More information on how to submit questions is included on page 2 of the Q&A Document.

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CSSF Newsletter: UCI prospectuses

The CSSF announced in its latest Newsletter Nr 130 of November 2011 that it is now required to insert in the prospectuses of undertakings for collective investment subject to the law of 2010 a paragraph concerning investors’ rights against the fund. The text of this paragraph, which is to be adapted according to the legal status of the investment fund concerned is the following:

The [investment company, FCP, UCI(TS)/management company] draws the investors’ attention to the fact that any investor will only be able to fully exercise his investor rights directly against the UCI(TS), [notably the right to participate in general shareholders’ meetings - for UCI(TS) incorporated in form of an investment company] if the investor is registered himself and in his own name in the shareholders’ register [for UCI(TS) incorporated in form of an investment company] / in the unitholders’ register [for UCI(TS) incorporated in form of an FCP] of the UCI(TS). In cases where an investor invests in the UCI(TS) through an intermediary investing into the UCI(TS) in his own name but on behalf of the investor, it may not always be possible for the investor to exercise certain shareholder rights [for UCI(TS) incorporated in form of an investment company] or unitholder rights [for UCI(TS) incorporated in form of an FCP] directly against the UCI(TS). Investors are advised to take advice on their rights. 

A French and German translation of the abovementioned paragraph can be found in the Newsletter as well. This paragraph must be inserted in the prospectus of all new UCIs. For existing UCIs this insertion should be made on the occasion of the next update of the prospectus and at the latest by 30 June 2012.

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Austria: Budget Supplementary Act 2012

On Tuesday, 15th November 2011, the Austrian National Council approved the government bill including the proposed changes to the Budget Supplementary Act 2012 (“Budgetbegleitgesetz (BBG) 2012”).

The main element of this bill is the introduction of loss settlement for the purposes of the withholding tax on investment income.

Another important change of relevance to the funds’ business is the new regulation in § 198 para. 2 nr. 4 of the Austrian Investment Funds Law 2011 (“Investmentfondsgesetz (InvFG) 2011”) in connection with § 40 para. 2 nr. 2 InvFG 2011): The rules on the appointment of the Austrian tax representative for foreign investment funds shall be aligned to the court decision of the European Court of Justice, 29.09.2011, C-387/10, as from 01.01.2012. According to the Austrian legislator, and in order to clarify the current, unsatisfactory situation, as from 01.01.2012, rather than as from 01.04.2012, the tax representative may only be a domestic (tax) accountant/tax auditor or a person who is able to prove that he holds a similar qualification.

The Budget Supplementary Act 2012 and related documents can be found here (in German only).

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European Parliament passes short selling regulation

On November 15, the European Parliament passed a resolution adopting, with amendments, the European Commission's proposal for a regulation on short selling and certain aspects of credit default swaps (CDS).

The European Parliament's amendments to the Commission's original proposal include:

  • Restrictions on entering into an uncovered (naked) CDS relating to an obligation of a sovereign issuer.
  • Excluding from the definition of short sale certain sales by either party under a repurchase agreement or securities lending agreement and entering into a futures contract or other derivatives contract where it is agreed to sell securities at a specified price at a future date.
  • A new requirement that holders of significant net short positions keep records of their significant net short position for five years.
  • The requirement to report net short positions equivalent to 0.5% or more of the issued share capital of an issuer remains.  

The Regulation must now be formally approved by the European Council of Ministers. Although the text adopted by Parliament provides for the Regulation to apply from November 1, 2012, it is likely that the date it will come into effect will be 12 months after approval by the Council of Ministers.

For more information, click here.

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European Commission: recent actions on FATCA

The European Fund and Asset Management Association (EFAMA) provided its membership with an update regarding the Commission’s recent actions in relation to FATCA.

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European Commission publishes legislative proposal on credit rating agencies

The European Commission has proposed a draft Directive and draft Regulation to strengthen the existing regulatory framework relating to credit rating agencies (CRAs). The existing regulations focus on registration, conduct of business and supervision of CRAs.

The four main goals of the legislative proposal are:

  • to ensure that financial institutions do not rely only on credit ratings for their investments;
  • more transparent and more frequent sovereign debt ratings;
  • more diversity and stricter independence of CRAs to eliminate conflicts of interest; and
  • to make CRAs more accountable for the ratings they provide.

The proposal will now pass to the European Parliament and the Council for negotiation and adoption.

Draft Directive

Draft Regulation

Executive summary of the impact assessment

Press release

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European Commission: future VAT system

On 6th December 2011, the European Commission adopted a communication on the future of VAT. This sets out the fundamental characteristics that must underlie the new VAT regime, and priority actions needed to create a simpler, more efficient and more robust VAT system in the EU.

Three overriding objectives shape the vision for the new VAT system: First, VAT must be made more workable for businesses. Second, VAT must be made more efficient in supporting Member States' fiscal consolidation efforts and sustainable economic growth. Third, the huge revenue losses that occur today due to uncollected VAT and fraud need to be stopped.

Click here for the press release, and here for the frequently asked questions.

Moreover, the results of the consultation on the future of VAT and the summary report are now available on this website.

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Commission Proposals for Venture Capital and Social Entrepreneurship

The European Commission published on 7th December 2011  its proposals to create two new brands of European investment funds next to UCITS and AIF:

1. Proposal for a Regulation on “European Venture Capital Funds”

2. Proposal for a Regulation on “European Social Entrepreneurship Funds”

The first Proposal on venture capital funds creates a single rule book for the marketing of these funds.  

To read the Proposal click here.  

The second Proposal aims at creating a legislative framework tailored to the needs of social undertakings and to distinguish social entrepreneurship funds from the wider category of alternative investment funds.

To read  the Proposal click here.

Both proposals will now go to the Council and the European Parliament.

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Questionnaire on the MiFID review

A questionnaire on the Commission’s proposals for the Markets in Financial Instruments Directive and the Markets in Financial Instruments Regulation (MiFID and MiFIR, respectively) has been released by Markus Ferber MEP. The questionnaire uses the Commission’s proposals for MiFID and MiFIR as its starting point. A number of themes are covered in the questionnaire, including corporate governance, organisation of markets and trading, investor protection and transparency.

The deadline for responses is 13 January 2012.

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ECJ judgement of 20 October 2011 (C-284/09): taxation of dividends

The European Court of Justice (ECJ) recently declared that, by taxing portfolio dividends distributed to companies established in other Member States more heavily in economic terms than dividends distributed to companies established in its territory, the Federal Republic of Germany has violated the free movement of capital.

While withholding tax on dividends paid out by German companies to resident corporate shareholders is fully credited against the corporate income tax payable, withholding tax on dividends to non-resident corporate shareholders is definite.

The ECJ held that there is no justification of this different treatment.

Click here for the judgement of 20th October 2011.

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EFAMA submission on Commission proposal regarding the introduction of a financial transaction tax (FTT)

On 30th November 2011, the European Fund and Asset Management Association (EFAMA) submitted to the European Commission its comments on the proposal for a Council Directive on a common system of financial transaction tax and amending Directive 2008/7/EC.

Read more

Press release


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ESMA technical advice on possible implementing measures of the Alternative Investment Fund Managers Directive (AIFMD)

On 16th November 2011, ESMA published its advice to the European Commission on the AIFMD delegated and implementing acts.

ESMA will now take forward its work on the other subordinate measures foreseen by the Directive (i.e. regulatory and implementing technical standards), prioritising those measures which should be finalised in parallel with the adoption of the implementing measures by the European Commission. ESMA has also identified a number of areas in which it considers it appropriate to develop guidelines in order to foster a harmonised implementation of the new framework.

Read more (points covered by the advice).

The advice is available here.

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LFF Mediawatch

LFF Mediawatch, covering the period from 16 to 30 November 2011.

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News from the Asian Representative Office in Hong Kong

Taiwan: New rules over short selling

On November 21, the Financial Supervisory Commission (FSC) issued new rules regarding short selling, limiting the divestment of borrowed shares to 20% of their previous 30-day trading average.

The new rule takes immediate effect.

The official press release can be found (in Chinese) on the regulator website.

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ALFI past events

21 November: ALFI Breakfast Seminar Dubai

A breakfast seminar organized by the ALFI Dubai working group took place on November 21 in Dubai and attracted more than 50 participants. Dr Ryan Lemand, a guest speaker from ESCA (the financial regulator of the Emirates), provided an update on the new UAE draft fund legislation. The event also featured an update on European and Luxembourg legal and regulatory developments as well as two panel discussions on the interactions between Luxembourg and the MENA region in the field of investment funds. In the last panel, local and international players examined the distribution trends of Luxembourg funds in the MENA region and discussed the challenges and opportunities experienced in the different countries.

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22-23 November: ALFI EAIF Conference

HE Mr Luc Frieden, Minister of Finance

This year’s European Alternative Investment Funds Conference was attended by more than 400 delegates. The two-day event was a forum for panel discussions, stand-alone presentations and workshops on hedge funds, private equity funds and real estate funds, during which the latest news and trends in the alternative investment fund space were highlighted. ALFI had the pleasure and honour of welcoming Luc Frieden, Minister of Finance on the second morning of the event. In a keynote speech, Minister Luc Frieden gave the audience a realistic overview on potential trends and developments in the Luxembourg and European Financial Industry.

Photo gallery.

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6-7 December: ALFI Roadshow to Asia

A delegation of industry specialists from Luxembourg led by the Chairman of ALFI, Marc Saluzzi, travelled to Taipei, Hong Kong and Tokyo last week to present the most recent developments on the Luxembourg scene to over 400 local industry players. A half day seminar took place at the W Hotel in Taipei that focused on ‘UCITS Distribution & Regulatory Changes’ and ‘UCITS fund set-up and Operating Model’. In Hong a full day’s seminar at the Four Seasons Hotel included plenary sessions on ‘UCITS’ and ‘the AIFMD’ followed by three workshops; ‘UCITS’, ‘Alternative UCITS & Hedge Funds’ and ’Real Estate & Private Equity’.  A third event took place at the Luxembourg Embassy in Tokyo for a selection of top Japanese Asset Managers.

During the roadshow, ALFI met with the financial regulators and fund associations in both Taipei and Hong Kong.

Click here to see the seminar presentations.

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13 December: ALFI Leading Edge Conference n°4

UCITS IV introduced significant changes to UCITS Management Companies and to self-managed SICAVs. This event combined thorough legal and regulatory analysis, highly topical market research and practical insights into the latest requirements for Luxembourg Management Companies.

Morning sessions dealt with the legal and regulatory requirements applicable to Luxembourg Management Companies, covered the organizational requirement needs and addressed the tax challenges for Management Companies. The afternoon sessions were dedicated to organizational requirement needs such as risk management and corporate governance functions and gave an insight into the Luxembourg Management Company Passport, and a comparative review of the setup alternatives were presented.

More than 200 attendees participated at the event.

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ALFI events

ALFI confirmed events 2012

ALFI events calendar 2012

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13-14 March 2012: ALFI Spring Conference

Sponsorship opportunity - deadline Wednesday, 21th December 2011!

Available options:

1) General Sponsorship

2) Exhibition Stand (incl. 2 or 4 tickets)

3) Package: General Sponsorship & Exhibition Stand

4) Lunch Sponsorship incl. Exhibition Booth – fully booked

5) Badge Sponsorship- fully booked

6) NEW: Voting System Sponsorship

Click here for details.

Confirmed sponsors/exhibitors as of 12th December:

Allianz Global Investors Luxembourg S.A., Acarda S.à r.l., APEX Fund Services, BNP Paribas Securities Services, Bonn & Schmitt Avocats, Clearstream Banking, Confluence, CACEIS, Ernst & Young, Finesti S.A., HSBC Securities Services, IDS GmbH Analysis and Reporting Services, KNEIP, KPMG Luxembourg S.à r.l., KBL European Private Banking, Multifonds, Profidata Group, RBC Dexia, Société Générale Securities Services, Sowatec AG, UBS, Telindus

For highlights of the programme and other details, please refer to the conference webpage.

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13 March 2012: ALFI Gala Dinner

Sponsorship opportunity - deadline Wednesday, 21th December 2011! Click here for details on General and Table sponsorship.

The 2012 edition of this event will be held at the newly renovated former Cercle Municipal ball room. Due to this smaller and prestigious venue, registrations for the dinner are limited. ALFI is offering two sponsorship options with priority to ALFI members.

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18 April 2012: ALFI & PRiM Risk Management Conference - Save the date!

The conference committee will start working on the programme this month.

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

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9 & 10 May 2012: ALFI Responsible Investing Conference

Save the date!

A combination of the formerly known ALFI SRI and Microfinance conferences. More information coming soon.

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18 & 19 September 2012: ALFI Global Distribution Conference


Further details will be published on ALFI’s website once available.

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