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    ALFI Newsdigest april 30, 2014    
          in this edition      
    1. Headlines
2. News from ALFI's Asia Representative office
3. ALFI events
4. LFF events
5. Other events



Spring conference video

Check out the video of the ALFI Spring conference, including testimonials from ALFI chairman Marc Saluzzi and other participants!

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ALFI new podcasts: Trends and challenges ahead for the fund industry

Luxembourg’s Finance Minister, Pierre Gramegna, and industry experts assess the regulatory priorities, investment trends and challenges ahead for the fund industry.

HE Minister Pierre Gramegna maps out the new government’s priorities for the Luxembourg fund industry.

Behavioural Finance specialist Paul Craven discusses the dangers of bad judgment and herd instinct for financial markets.

Citi Private Bank’s Gavin Rankin identifies where investors are putting their money and the impact of AIFMD.

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Luxembourg and USA sign FATCA IGA Model 1

The agreement between the government of the United States of America and the government of the Grand Duchy of Luxembourg to improve international tax compliance and to implement FATCA (Foreign Account Tax Compliance Act) has been signed today, Friday March 28, 2014 in Luxembourg.

On 27 February 2014, the Luxembourg and United States negotiating teams agreed on the substance of the Model 1 Agreement.

ALFI welcomes the signature of this Intergovernmental Agreement (IGA).

The Luxembourg association has been working hard to ensure that its members are best prepared for the implementation of FATCA. A Q&A document is being finalised by ALFI's FATCA implementation working group. The working group comprises representatives of asset managers, management companies, securities service providers, audit firms, law firms, the Luxembourg Pension Funds Association and information management firms. The Q&A document will serve ALFI members as a reference document when it comes to implementing FATCA.

The Memorandum of Understanding regarding the Agreement between the Government of the Grand Duchy of Luxembourg and the Government of the United States of America regarding FATCA and the text of the signed IGA have been published on the Ministry of Finance website.

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ALFI working group issues FATCA Q&A document

In order to ensure that its members are best prepared for the implementation of FATCA, ALFI organized a breakfast seminar during which representatives of ALFI's FATCA implementation working group presented a Q&A document prepared by their group. The working groups comprise representatives of asset managers, management companies, securities service providers, audit firms, law firms, the Luxembourg Pension Funds Association and document and information management firms.

ALFI hopes that this document will serve its members as a reference document when implementing FATCA. It represents the view of a group of market participants and is not binding for the Luxembourg Tax Authorities or the national regulator. The document does not diminish the responsibility of management companies or investment companies to comply with national law or regulation. It must not be relied upon as advice and is provided without any warranty of any kind and neither ALFI nor its members who contributed to this document accept any liability whatsoever for any action taken in reliance upon it.

The answers are not necessarily definitive and they might not be suitable for every circumstance. The document may be amended without prior notice to incorporate new material and to amend previously published material where the working group considers it appropriate. ALFI will publish amended copies of this document to its members, showing marked-up changes from the immediately preceding copy.

ALFI FATCA Q&A document

Slides from the Breakfast Seminar

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UCITS V adopted in European Parliament Plenary session

On 15th April the European Parliament has adopted in plenary session an amended Directive on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities as regards depositary functions, remuneration policies and sanctions (the so-called UCITS V). The new rules will considerably strengthen the protection of investors vis-à-vis managers of UCITS funds and their depositaries. It will also ensure that managers who break the law will be sanctioned in an appropriate way.

(read more)

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Adoption of the regulation on key information documents for packaged retail and insurance based investment products (PRIIPs)

In a last plenary session of the European Parliament before the European elections, the regulation on key information documents for packaged retail and insurance based investment products (PRIIPs) was adopted. The final text was based on a trilogue agreement reached two weeks before between the Council, the EU Parliament and the Commission.

(read more)

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Adoption of MiFID II/MiFIR

The European Parliament adopted the "MiFID II/MiFIR" package on 15 April 2014. The final texts were based on a Council, Commission and Parliament compromise reached on 14 January 2014.

(Read more)

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ALFI Response to IOSCO/FSB consultation

“Assessment methodologies for identifying non-bank non-insurer global systemically important financial institutions”

On 7 April 2014, ALFI responded to the consultation “Assessment methodologies for identifying non-bank non-insurer global systemically important financial institutions” conducted by the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB).

ALFI is of the view that highly regulated funds such as UCITS in Europe or regulated Alternative Investment Funds (AIFs) that already comply with detailed diversification rules and rules on leverage are not systemically important and do not cause systemic risk. In addition, asset managers are also not a source of systemic risk. They are not the counterparty to trades they conduct on behalf of their clients. Neither are they responsible for the allocation by clients of their assets. Managers act as agents for their clients. ALFI considers it more appropriate to focus on market activities that may give rise to such issues.

Click here for the full response.

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ALFI Commentaries to the OECD discussion draft on the use of treaty benefits in inappropriate circumstances - BEPS Action 6

The Luxembourg Investment Fund Association (ALFI) has taken note of the OECD Public Discussion Draft “BEPS Action 6: preventing the granting of treaty benefits in inappropriate Circumstances, dated March 14, 2014 (hereafter referred to as “Discussion Draft”) and is pleased to provide its comments. 

The ALFI shares the concerns of the OECD that action is needed to effectively prevent double non-taxation, as well as cases of no or low taxation created by artificial arrangement. The ALFI recognises also that the OECD has been given a mandate by the G20 to address all BEPS issues within an extremely short time frame.

(read more)

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EU ministers adopt the extended version of the Savings Directive

On 24 March 2014, the Council of Agriculture and Fisheries adopted an extended version of the Savings Directive. Click on the respective links to access the text of the Directive and an additional document.

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CSSF updates its Application Questionnaire for the setup of a fully licensed AIFM

The Luxembourg supervisory authority CSS has updated its Application Questionnaire for the setup of a fully licensed AIFM. The new version of the questionnaire is available on the CSSF website.

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CSSF issues updated FAQ on AIFM

The CSSF informs that an updated version of the Frequently Asked Questions concerning the law of 12 July 2013 on alternative investment fund managers has been published on its website (version 6, 17 March 2014).

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EFAMA Investor Education Report uncovers widespread financial illiteracy across Europe

Europe faces a crisis of financial literacy, with millions of its people struggling to cope with even basic concepts of savings and investment. These are the stark findings of a new report from the European Fund and Asset Management Association (EFAMA), entitled Building Blocks for Industry Driven Investor Education Initiatives, recently launched in Brussels at a high level conference to discuss ways of pushing the critical issue of investor literacy to the top of the public-policy agenda.

The report provides an overview of the existing work on financial literacy by collating wide-ranging, independent expert analysis. This analysis confirms widespread ignorance of financial matters, with consumers baffled by concepts such as interest rates and inflation.

Perhaps the most alarming findings came from Professor Annamaria Lusardi of The George Washington School of Business, who said: “Financial illiteracy is both widespread and particularly severe among specific demographic groups. Low levels of financial literacy are not specific to a given country or stage of economic development. They are found everywhere.”

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European Commission to support crowdfunding

The European Commission has issued on 27 March 2014 an official Communication on “unleashing the potential of crowdfunding in the European Union”. This Communication aims at supporting the emergence of crowdfunding activities and sets the following priorities:

  • The establishment of an Expert Group on Crowdfunding to provide advice and expertise to the Commission and assess the potential of creating a quality label;
  • Raising awareness with regard to crowdfunding;
  • Mapping of national regulatory developments and organisation of regulatory workshops to ensure an optimal functioning of the internal market, and
  • Assessment of whether regulatory intervention at EU level is necessary.

To access this documents please click here.

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The European Parliament adopts the "Omnibus II" Directive

On 11th March the European Parliament adopted in plenary session the "Omnibus II" Directive that completes the "Solvency II" Directive and finalises the new framework for insurance regulation and supervision in the EU.

This follows a vote by the EU Parliament in November 2013 to amend and finalise the dates for implementation and transposition of the Solvency II Directive. The Parliament approved transposition being set for 31 March 2015 and implementation for 1 January 2016. As part of the preparation for the implementation of Solvency II, national competent authorities should put in place from 1 January 2014 the Guidelines defined by EIOPA in order to take the appropriate steps to full implementation of Solvency II.

(read more)

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ESMA publishes technical advice to the Commission on Article 67(3) of the AIFMD

ESMA has issued technical advice in response to the mandate received from the European Commission for advice on the possible content of the delegated act required by Article 67(5) of the AIFMD, concerning the information that EU competent authorities have to provide quarterly to ESMA pursuant to Article 67(3) of the Directive. This information is needed in order to allow ESMA to produce the opinion and the advice required in Article 67(1) of the AIFMD, in relation to the possible extension of the AIFMD passport to non-EU AIFs and non-EU AIFMs.

ESMA will cooperate closely with the European Commission in order to facilitate an expeditious adoption of the delegated act required by Article 67(5) of the AIFMD.

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ESMA publishes final report on collateral provisions in its guidelines on ETFs

The European Securities and Markets Authority (ESMA) has published on its website its Final report on the revision of the provisions on diversification of collateral in ESMA’s guidelines on ETFs and other UCITS issues.

After consultation of the stakeholders, ESMA has decided to modify the rules on collateral diversification in paragraph 43(e) of the existing guidelines and introduce some further consequential changes.

(read more)

Revised Q&A on ESMA Guidelines on ETFs and other UCITS issues

ESMA also issued a revised version of its Q&A on the same guidelines on ETFs and Other UCITS issues, with four additional questions and answers under the section on Financial indices.

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ESMA issues Q&As on the application of EuSEF and EuVECA regulations

The European Securities and Markets Authority (ESMA) has published Questions and Answers on the Application of the European Social Entrepreneurship Funds (EuSEF) and European Venture Capital Funds (EuVECA) Regulations.

The Q&As are aimed at promoting common supervisory approaches and practices in the application of the EuSEF and EuVECA Regulations by competent authorities across the European Union. It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of these Regulations.

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ESMA issues opinion on structured retail products

The European Securities and Markets Authority (ESMA) has published an opinion on structured retail products, setting out good practices for firms when manufacturing and distributing these products. This opinion results from ESMA’s report “Retailisation in the EU” from July 2013.

These structured retail products (SRPs) in question are defined as “compound financial instruments that have the characteristic of combining a base instrument (such as a note, fund or deposit) with an embedded derivative(s) that provides economic exposure to reference assets, indices or portfolios” and therefore capture MiFID investment firms, UCITS management companies and AIFMs both from a manufacturing and distribution angle.

For these structured products falling into scope ESMA proposes quite extensive product governance arrangements which can be highlighted as follows:

  • general organisation of product governance arrangements (p. 5f);
  • product design (p. 6f);
  • product testing (p. 7f);
  • target market (p. 8ff);
  • distributing strategy (p. 10f);
  • value at the date of issuance and transparency of costs (p. 11f);
  • secondary market and redemption (p. 12f); and
  • review process (14f).

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LuxFLAG grants new Environment and Microfinance labels

LuxFLAG has announced that Parvest Green Tigers has been granted the LuxFLAG Environment Label. This brings the number of LuxFLAG Environment Label to 10, with approximately USD 713 million in assets under management.

The European Microfinance Platform Fund and Symbiotics (SICAV) SEB Microfinance Fund have been granted the LuxFLAG Microfinance Label. In total, 27 Microfinance Investment Vehicles (MIVs) have been granted the LuxFLAG Microfinance Label so far, representing approximately USD 4.03 billion in assets under management.

The LuxFLAG Labels are valid for a period of one year and are subject to renewal on expiry.

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Inclusive Finance Network (InFiNe) Luxembourg to promote inclusive finance

ALFI is proud to be a member of the Board of Directors of the newly created Inclusive Finance Network (InFiNe) Luxembourg.

Luxembourg puts a strong emphasis on the importance of sustainable development through financial inclusion by bringing together key stakeholders from the public, private and civil-society sector around this common objective.

This new platform will focus on developing knowledge and expertise by stimulating and coordinating exchange and collaboration amongst members. It will also aim to strengthen and promote Luxembourg as a centre of excellence in the field of inclusive finance by building on its leading position in the financial and development sector.

(read more)

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News from ALFI's Asia Representative office

India: Income tax Act clarification on application to mutual funds

On February 11, 2014 the Central Board of Direct Taxes of India Ministry of Finance published a circular clarifying the scope of the additional income tax defined in the income tax act:

Additional income tax is to be levied on income generated via dividends paid to unit-holders of mutual funds. Revenues from redemption/repurchase of units are not subject to additional income tax.

Details can be found in the official circular.

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Singapore: Extension of tax exemption for investment funds

Tax changes were announced in Singapore’s annual budget for which, the existing favorable tax treatment over mutual funds is extended to March 31, 2019.

This favorable regime includes an exemption on tax on “specified income derived from designated investments” as well as “withholding tax on interest and other qualifying payments made to all non-resident persons”.

Tax changes announced in the budget can be found here.

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Hong Kong: Open-ended fund companies consultation paper

The Financial Services and the Treasury Bureau (FSTB) of Hong Kong launched a public consultation on the proposal of introducing an open-ended fund company structure in Hong Kong.

The Consultation can be found here.

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ALFI events

14 May 2014 : ALFI London Conference

The conference will open with an address by H.E. Pierre Gramegna, Minister of Finance.

Industry experts from Luxembourg and London will discuss what the investment fund industry is likely to look like in 2014 and beyond. They will update you on recent developments in the UCITS area and share their insights into what is actually happening in the alternative investment Fund sector now that the long awaited Alternative Investment Fund Managers Directive has come into force. After the panel discussions, five parallel workshops will discuss in more depth the practical aspects of the UCITS, hedge funds, private equity, real estate and responsible investing business.

Already 450 people registered!

Sponsorship open to ALFI members! Contact events@alfi.lu

Conference programme & registration


This year ALFI organises a cocktail reception on the evening before the conference. See details below.

Cocktail invitation and registration click here.

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27 May 2014 : ALFI Impact & Microfinance Conference

in association with LuxFLAG, the European Microfinance Platform and the GIIN (Global Impact Investing Network).

Is a good project a good investment?

  • Double bottom line = Double Risk?
  • Impact Investment, past - present - future
  • The Impact Investment Sector: too small to succeed?
  • Impact Investment: A must have or a nice to have?
  • How to effectively measure effectiveness

Opportunities for sponsoring.

Event webpage

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5 June 2014: Roadshow to New York

A breakfast seminar fully dedicated to the AIFMD - 1 year after its entry into force.

Get updated in only two hours!

On 12 July 2013, Luxembourg was one of the first countries to transpose this Directive into national law. Since then, both onshore and offshore managers of alternative funds are working on their compliance with a wide set of new harmonised regulatory, organisational and operational

requirements. Now, nearly one year after its transposition into our national law, we bring you two panels of experts from various disciplines to share their practical experience and advice with you on

some of the main areas impacted by the Directive, namely structuring, substance, remuneration,

distribution and reporting requirements.

Programme & registration click here

Sponsorship open to ALFI members! Contact events@alfi.lu

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8 July 2014: Roadshow to Frankfurt

Save the date!

Sponsorship open to ALFI members! Contact events@alfi.lu

More information coming soon.

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30 Sept & 1 Oct 2014: Roadshow to Switzerland

Half day seminars in Geneva and Zurich.

Save the dates!

Sponsorship open to ALFI members! Contact events@alfi.lu

More information coming soon.

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Past ALFI events

ALFI Spring Conference 2014

Following a much acclaimed speech by H.E. Pierre Gramegna, Minister of Finance of the Grand Duchy of Luxembourg, more than 800 delegates from 22 countries debated the question which financial products are needed in today's 'New World' characterised by fast moving regulatory framework, increasing competition from non-fund products and changing market needs.

The 2014 edition of ALFI's annual two days Spring Conference was supported by 30 sponsors and 21 media partners. 59 exhibitors seized the opportunity to showcase their products and services to the Luxembourg and international investment fund community.

The ALFI Gala Dinner at the close of Day One of the conference allowed participants to meet key contacts and friends in a relaxed gala atmosphere.

Get an impression of the ALFI Spring Conference and the Gala Dinner by visiting our respective photo galleries.

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LFF events

Official Mission to Poland

Luxembourg for Finance will take part in the official mission to Poland from 7 to 9 May 2014 and plans to organise a financial seminar in Warsaw on 8 May.

(read more)

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Financial Mission to Asia

Luxembourg for Finance will organise a financial mission to Beijing, Shanghai and Singapore from 30 June to 4 July 2014 led by Mr Pierre Gramegna, Minister of Finance and Chairman of Luxembourg for Finance.

(read more)

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Other events

New IFBL / ALFI training courses

The IFBL wishes to highlight the following training modules and indicates that an increasing number of courses are now also available in English language:

M' UCIs: European Tax for Lux Funds (EN)19 & 20 May. Also now available in English, this module provides an understanding of the basic principles of European tax reporting applicable to investment funds (DE, AUT, CHZ, UK, ITL, BEL, …)

NEW!  “M2 Applied AML for Funds” – 26 May.  This brand new course, based upon the ALFI Guidelines, provides an applied understanding of Anti Money Laundering and Combating Terrorist Financing (AML/CTF), the roles and responsibilities in this context, the risk based approach, due diligence, vigilance and the application of AML to third and outsourcing partners.

“AIFMD for Alternative Investment Fund Managers”19 June (am). This module focuses upon the AIFMs / ManCos specifically. The aim will be to explain the new regulatory environment after the implementation date of July 22, 2014 and to cover specific topics of governance, procedures, reporting, organisation and risk management.

M2 UCIs: NAV Errors & Breaches-Circular 02/77 – 9 July. Available in English for the first time, this module explains the notion of both NAV errors and investment rule breaches before describing the steps required to correct them.

For full information (and flyer) regarding IFBL / ALFI courses, please refer to the IFBL website or contact the IFBL Customer Service team (Tel: 46 50 16-1 / e-mail customer@ifbl.lu).

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CAIA Association Opens Registration for September 2014 Level I and II Examinations

The CAIA Association, the world leader in alternative investment education, has opened early registration for the September 2014 Level I and Level II exams on April 1, 2014. As a CAIA Association Partner, ALFI members are eligible to receive a 10% discount on first-time exam fees, and exam re-takers can take advantage of a reduced fee of US$450. 

The Level I exam will take place September 15-26, 2014 and the Level II exam will take place September 8-19, 2014 at proctored test centers around the world.

The CAIA Charter is a globally recognized credential for professionals managing, analyzing, distributing, or regulating alternative investments. The CAIA Charter designation is the highest standard of achievement in alternative investment education and provides deep knowledge, demonstrated expertise, and global credibility in alternatives.     

For more information, please visit caia.org.​

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