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    ALFI NewsDigest january 6, 2011    
          in this edition      
    1. Headlines
2. Past Events
3. ALFI Events
     
 
 

1.

Headlines

Season's Greetings from ALFI

Dear All,

We wish you a wonderful holiday season and all the best for the New Year ahead!

Please find here the link to our Christmas Card.

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Alfi celebrates UCITS’ 25th Birthday - Luxembourg is the first country to ratify UCITS IV

The UCITS brand celebrates its 25th birthday today, as the first UCITS directive was formally adopted on 20th December 1985. Almost exactly 25 years later, on 16th December 2010, the Luxembourg Parliament ratified UCITS IV. As was the case in 1985, Luxembourg is the first country in the EU to pass this new regulation into national law. A number of provisions (such as fiscal reliefs) will come into effect as soon as 1st January 2011.

Please click here for the press release from 19 December 2010.

The legislative procedure is accessibly by clicking here.

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UCITS IV: Publication of Luxembourg implementing law

On 24 December 2010, the law implementing UCITS IV into national law was published in the Luxembourg official gazette Mémorial, accompanied by two CSSF Regulations. This link leads you to the following texts, which are only available in French so far:

-       Law of 17 December 2010 relating to undertakings for collective investment

French title: Loi du 17 décembre 2010 concernant les organismes de placement collectif portant transposition de la directive 2009/65/CE du Parlement européen et du Conseil du 13 juillet 2009 portant coordination des dispositions législatives, réglementaires et administratives concernant certains organismes de placement collectif en valeurs mobilières (OPCVM) (refonte)

-       CSSF Regulation N° 10-04 transposing Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company

French title: Règlement CSSF N° 10-4 portant transposition de la directive 2010/43/UE de la Commission du 1er juillet 2010 portant mesures d’exécution de la directive 2009/65/CE du Parlement européen et du Conseil en ce qui concerne les exigences organisationnelles, les conflits d’intérêts, la conduite des affaires, la gestion des risques et le contenu de l’accord entre le dépositaire et la société de gestio

-       CSSF Regulation N° 10-05 transposing Commission Directive 2010/44/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure

French title: Règlement CSSF N° 10-5 portant transposition de la directive 2010/44/UE de la Commission du 1er juillet 2010 portant mesures d’exécution de la directive 2009/65/CE du Parlement européen et du Conseil en ce qui concerne certaines dispositions relatives aux fusions de fonds, aux structures maître-nourricier et à la procédure de notification

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ALFI UCITS IV KID implementation project

ALFI’s KID working group has published issue 4 of aQ&A document including questions on the implementation of the Key Investor Information Document (KID). The answers proposed by ALFI’s KID working group are not meant to be an industry standard or a guide to best practice but they represent the view from a group of market participants. Changes compared to the previous issue are shown in mark-up.

Please click here for the Q&A document.

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CESR issues feedback statements to past KID consultations and related guidelines

On 20 December 2010, the Committee of European Securities Regulators (CESR) published the following feedback statements and guidelines concerning the four consultations on the Key Investor Information Document (KID) which were held this summer.

(1)   Template for the KID

-       CESR consultation paper

-       EFAMA response

-       CESR feedback statement: CESR’s template for the Key Investor Information document

-       CESR guidelines: CESR’s template for the Key Investor Information document

(2)   Guide to clear language and layout

-       CESR consultation paper

-       ALFI response

-       EFAMA response

-       CESR feedback statement: A guide to clear language and layout for the Key Investor Information document (KII)

-       CESR’s guide to clear language and layout for the Key Investor Information document

(3)   Performance scenarios for structured UCITS

-       CESR consultation paper

-       ALFI response

-       EFAMA response

-       CESR feedback statement: CESR’s level 3 guidelines on the selection and presentation of performance scenarios in the Key Investor Information document (KII) for structured UCITS

-       CESR guidelines: Selection and presentation of performance scenarios in the Key Investor Information document (KII) for structured UCITS

(4)   Transition from the simplified prospectus to the KID

-       CESR consultation paper

-       ALFI response

-       EFAMA response

-       CESR feedback statement: Guidelines for the transition from the Simplified Prospectus to the Key Investor Information document

-       CESR guidelines: Transition from the Simplified Prospectus to the Key Investor Information document

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European Commission launches public consultation on UCITS legislative modifications ( UCITS V )

The European Commission has launched a consultation on proposals to measures to harmonise protection for Undertakings for Collective Investment in Transferable Securities (UCITS) investors.

The proposals aim to clarify the UCITS depositary function and ensure consistency between the legislation applicable to the depositaries of UCITS and that applicable to the depositaries of alternative investment funds. In particular, the consultation paper focuses on issues relating to the duties and liability of depositaries, eligibility criteria and supervision issues.

In order to address excessive risk-taking and to ensure that remuneration policies are consistently applied across the financial sector, the consultation also seeks comments on possible new rules on remuneration policies for UCITS managers.

The deadline for responses to the consultation is 31 January 2011.

summary page,

consultation paper

press release

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EFRP welcomes new member: ASSOCIATION OF THE LUXEMBOURG FUND INDUSTRY (ALFI)

As of 1 January 2011 the Association of the Luxembourg Fund Industry (ALFI) joined the European Federation for Retirement Provision as a Full Member. Such decision was taken at the EFRP General Assembly of the Members (GAM) of 8 November 2010 in Rome. Click here

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European Securities and Markets Authority (ESMA)

The European Securities and Markets Authority (ESMA) was created through Regulation on 1 January 2011, and has since then replaced CESR, the Committee of European Securities Regulators.

ESMA is an independent EU Authority that contributes to safeguarding the stability of the European Union's financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection. In particular, ESMA fosters supervisory convergence both amongst securities regulators, and across financial sectors by working closely with the other European Supervisory Authorities competent in the field of banking (EBA), and insurance and occupational pensions (EIOPA).

ESMA's work on securities legislation contributes to the development of a single rule book in Europe. This serves two purposes; firstly, it ensures the consistent treatment of investors across the Union, enabling an adequate level of protection of investors through effective regulation and supervision. Secondly, it promotes equal conditions of competition for financial service providers, as well as ensuring the effectiveness and cost efficiency of supervision for supervised companies. As part of its role in standard setting and reducing the scope of regulatory arbitrage, ESMA strengthens international supervisory co-operation. Where requested in European law, ESMA undertakes the supervision of certain entities with pan-European reach.

Finally, ESMA also contributes to the financial stability of the European Union, in the short, medium and long-term, through its contribution to the work of the European Systemic Risk Board (ESRB), which identifies potential risks to the financial system and provides advice to diminish possible threats to the financial stability of the Union. ESMA is also responsible for coordinating actions of securities supervisors or adopting emergency measures when a crisis situation arises.

Whilst ESMA is independent, there is full accountability towards the European Parliament where it will appear before the relevant Committee known as ECON, at their request for formal hearings. Full accountability towards the Council of the European Union and European Commission also exists. The Authority will therefore report on its activities regularly at meetings but also through an Annual Report.

Click here for a guide to understanding ESMA (Frequently Asked Questions).

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EU approval for transfer of supervision of EU credit rating agencies to ESMA

The European Parliament has voted to approve legislation which amends the EU Regulation on Credit Rating Agencies (1060/2009/EC) to transfer the direct supervision of credit rating agencies based in the EU (CRAs) to the new European Securities and Markets Authority (ESMA) by July 2011. This reflects the June 2010 proposal to give ESMA exclusive supervisory powers over CRAs as part of the new European financial supervisory framework. The amendments approved by the European Parliament include:

  • ESMA will have the power to impose a range of fines on CRAs of up to 20% of their turnover for the previous year with the size of the penalty reflecting the type of infringement, the size of the CRA and any aggravating or attenuating factors;
  • ESMA will be able to conduct dawn raids on CRAs' premises;
  • ESMA will be responsible for checking all CRAs’ compliance with their obligations to “back test” rated financial instruments by comparing performance predictions against actual performance; and
  • the new regulation calls for the Commission to take legislative steps to facilitate the availability of information to CRAs who want to produce unsolicited ratings. It is hoped that this would increase competition, transparency and investor information and is a key issue on which the Parliament is expected to focus on when further changes to this regulation are negotiated, despite having limited Member State support.

press release

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European Parliament sets out its position on MiFID reform

On 14 December the European Parliament approved a resolution setting out its priorities in relation to the European Commission’s 2011 review of the Markets in Financial Instruments Directive 2004/39/EC (MiFID). The resolution emphasises that both standard and non-standard trading venues should be supervised in a transparent way, with all venue users having access to similar information on the price formation process More broadly, the resolution urges the Commission to give priority to limiting the build-up of risk and to consider the impact of fragmentation of trading among a proliferation of trading venues.

In particular, the resolution calls for:

  • broker crossing networks or bilateral trading systems to be obliged to conform to the same rules as the standard venues when performing similar activities and to be obliged to submit information returns to supervisory authorities;
  • further study by the European Securities and Markets Authority (ESMA) of the costs and benefits of high volume, high speed trading (both algorithmic and high frequency) on markets;
  • measures to encourage market players to reduce over-the-counter (OTC) trading and transact more through organised trading venues; and
  • the Commission and ESMA to consider introducing transparency requirements for derivatives and further standardisation of OTC derivative products.

press release

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MiFID Review: CESR’s feedback on standardisation and organised platform trading of OTC derivatives

Following consultation in July 2010, the Committee of European Securities Regulators (CESR) has now published its feedback statement “CESR Technical Advice to the European Commission in the Context of the MiFID Review – Standardisation and Organised Platform Trading of OTC Derivatives”. Some of the feedback given by CESR included:

  • Standardisation.In order to promote an efficient and sound derivatives market, and in doing so further G20 objectives, CESR proposes that steps should be taken in order to increase the proportion of over-the-counter (OTC) derivatives being standardised by asset class. CESR is of the opinion that a greater level of legal, operational and product standardisation (including increased use of electronic confirmation systems) can be achieved and that this would be beneficial for operational efficiency and the reduction of systemic risk.
  • Organised platform trading.In CESR’s opinion the trading of standardised derivative products or organised trading venues (referred to in the consultation document as “exchange trading”) should be incentivised by regulators, although not mandated at this stage. The feedback statement develops further on: (i) the nature of proposed regulatory action; (ii) the minimum characteristics necessary for a platform to qualify as an “Organised Trading Venue”; (iii) eligibility of products for “Organised Trading Venues”; and (iv) the calibration and monitoring of industry targets.

feedback statement

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CESR’s feedback on transaction reporting on OTC derivatives and extended scope of transaction reporting obligations

Following consultation in July 2010, the Committee of European Securities Regulators (CESR) has now issued its feedback statement on “Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations”.

For the most part, respondents generally agreed with CESR’s preferred option where transactions on over-the-counter (OTC) derivatives would be reported to trade repositories after these will have been established, registered (or recognised for those not located in the EU) and their regulatory regime defined. In addition, the preferred option foresees that investment firms retain the possibility of complying with their transaction reporting obligations in connection with OTC derivatives under the Markets in Financial Instruments Directive (MiFID) provisions.

Respondents have also expressed their support for CESR’s proposal to extend, through changes to Article 25 of MiFID, the scope of transaction reporting obligations to financial instruments that are admitted to trading only on multilateral trading facilities (MTFs) and to OTC derivatives whose value depends on the performance of a financial instrument that is admitted to trading on a regulated market (or an MTF) or on the credit risk of a single issuer of such financial instruments.

feedback statement

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European Commission: reinforcing sanctioning regimes in the financial sector

On 8 December 2010, the European Commission adopted a communication setting out possible ways to reinforce sanctioning regimes in the EU's financial services sector. Based on a review of national sanctioning regimes for violations of national rules transposing some of the most important EU directives relating to financial services, the Communication presents areas for improvement and suggests possible EU actions in order to achieve greater convergence and efficiency of these regimes. Interested stakeholders can send their contributions up until 19 February 2011:

http://ec.europa.eu/internal_market/consultations/2010/sanctions_en.htm

Please click here for the text of the communication:

A document including Frequently Asked Questions is accessible by clicking here

On the basis of the comments received, the Commission will decide in 2011 on possible proposals on how to reinforce sanctioning regimes.

Strengthening sanctioning regimes is one of the elements of the financial sector reform. It complements other strands of work already being phased in or of a more 'preventative' nature, including effective supervision and corporate governance.

As recognised in the de Larosière report: "Supervision cannot be effective with weak, highly variant sanctioning regimes. It is essential that within the EU and elsewhere, all supervisors are able to deploy sanctioning regimes that are sufficiently convergent, strict, resulting in deterrence."2

Efficient and sufficiently convergent sanctioning regimes are the necessary corollary to the new European Supervisory Authorities (see MEMO/10/434) which will be set up on 1 January 2011, and will bring about improvements in the coordination of national authorities' enforcement activities.

The issue of more effective sanctions is also agreed at global level. In the summit held in Washington on 15 November 2008, G20 leaders agreed on the implementation of an Action plan for Reform of financial markets including actions aimed at protecting markets and investors against illicit conduct and ensuring that appropriate sanctioning regimes are in place. Increasing regulatory enforcement and remedies is also one of the objectives of the recent US financial regulation reform.

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BCBS issues two consultation papers on operational risk

The Basel Committee on Banking Supervision (BCBS) has issued two consultation papers on operational risk:

  • Sound Practices for the Management and Supervision of Operational Risk highlights the evolution of operational risk management since 2003 (when an earlier discussion paper was issue by the BCBS) and is based on best industry practice and supervisory experience. The paper is presented within the context of three overarching themes: governance, risk management and disclosure; and
  • Operational Risk - Supervisory Guidelines for the Advanced Measurement Approaches (the Guidelines) which sets out supervisory guidelines relating to governance, data and modeling with the aim of creating a narrower band of effective risk management and measurement practices for regulatory capital adequacy purposes.

The deadline for comments on both consultations is 25 February 2011.

Sound Practices consultation document

and related webpage,

the Guidelines consultation document

and related webpage

press release

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2.

Past Events

24-25 November 2010: ALFI European Alternative Investment funds Conference

The event attracted more than 400 attendees. The vote on the AIFMD Directive having taken place before the event, attendees to the conference engaged in very lively discussions around this new directive.

Please click here to view the blog that has been written during the conference by Phil Davis, a freelance journalist and former fund management reporter at the Financial Times.

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9 December 2010: ALFI Roadshow to Frankfurt

The event welcomed about 170 attendees despite the difficult weather conditions. The programme had in the end to be slightly changed by merging the plenary session and the respective streams.

Please click here to view the presentation.

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World Islamic Finance Conference - Bahrain

With more than 1 000 delegates, this event is one of the largest Islamic finance gathering in the world. LFF was a sponsor of this conference and was accompanied by a delegation of around 20 representatives from the Luxembourg financial industry.

The Luxembourg stand, which was manned by representatives from LFF and ALFI, proved to be very successful.

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3.

ALFI Events

2011 Confirmed Event Dates

26 + 27 January:                ALFI Roadshow to Boston & New York
17 February:                       ALFI SRI Conference
15 March:                            ALFI Gala Dinner
15 & 16 March:                  ALFI Spring Conference
17 March:                            ALFI Microfinance Conference
31 March:                            ALFI PRiM & Risk Management Conference
27 & 28 September:         ALFI Global Fund Distribution Conference
22 & 23 November:           ALFI European Alternative Investment Funds Conference

To download the 2011 events calendar, click here

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26-27 January 2011: ALFI US Roadshow

Fund industry breakfast seminars will take place in Boston and New York on January 26th and 27th, respectively.

Important! : The event in New York will take place at the Four Seasons Hotel and not at the Helmsley Hotel as previously announced.

  - Click here for the programme and to register

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17 February 2011: ALFI SRI Conference

Highlights of the programme include:

•    SR investing in the emerging markets: are developing economies ahead of the game or lagging behind?
•    A look at sustainable stock indices and what they contribute to responsible asset management.
•    Carbon finance and forestry funds: can these funds really make a difference?
•    LuxFLAG launches an Environment Label

Registration open! Register by 7thJanuary 2011 in order to benefit  from of the ALFI member Early Bird !

Click here for the programme and to register

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15 & 16 March 2011: ALFI Spring Conference

Sponsorship & Exhibition opportunities available! Deadline for sponsorship: 7th January 2011.

Click here

Read more

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15 March 2011: ALFI Fund Industry Gala Dinner at the Philharmonie

Once again ALFI organizes a Gala dinner on the evening of the first day of the Spring conference, on Tuesday 15th March 2011. This event offers unrivalled networking opportunities and takes place at the beautiful Luxembourg Philharmonie Concert hall.

Sponsorship opportunity available. Deadline for sponsorship: 7th January 2011.

Click here

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17 March 2011: ALFI Microfinance Conference

Sponsorship opportunity available. Deadline: 7th January 2011.

Click here

Read more

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