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    ALFI Newsdigest june 11, 2014    
          in this edition      
    1. Headlines
2. News form ALFI's ASIA representative office
3. ALFI events
4. Past ALFI events
5. Other events



LuxFLAG launches the first European ESG Label

The Luxembourg Fund Labelling Agency (LuxFLAG) has launched the LuxFLAG ESG Label. The ESG Label will be granted to investment funds which meet specific criteria related to their respect of Environment, Social and Governance objectives.

The Label is available to UCITS and AIFMD funds domiciled throughout Europe or in equivalent jurisdictions. Three asset management companies have already committed to apply for the new ESG label: OFI Asset Management, Nordea and Sparinvest.
(read more)

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ALFI Webinar: What US managers need to know about UCITS V

In the first edition in a series of webinars hosted by NICSA and sponsored by ALFI exploring developments in the European and Asian fund industry and how they affect US fund managers, Martin F. Dobbins, Chairman of the ALFI/ABBL Depository Bank Forum, Senior Vice President and Managing Director at State Street Bank Luxembourg S.A. and Stuart E. Fross, Partner at Foley & Lardner LLP, Boston, discussed

  • changes in custodian liability and its effect on global custody networks
  • new rules regarding compensation of investment manager staff, especially with regard to bonuses, and
  • why UCITS V is not the end of the regulatory tsunami and what the industry needs to prepare itself for next

Click here to access the webinar.

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EFAMA: Sustained demand for long-term UCITS in March

Demand for long-term UCITS remained high in March thanks to strong demand for bond funds in an environment of subdued inflationary pressures, EFAMA writes in its recent Investment Fund Industry Fact Sheet. 

The main developments in March 2014 in the reporting countries can be summarized as follows:

  • Net inflows to UCITS totaled EUR 34 billion in March, down from EUR 48 billion in February.  This decline can primarily be attributed to increased net outflows from money market funds.
  • Net sales of long-term UCITS (UCITS excluding money market funds) remained high in March (EUR 47 billion), albeit slightly down from EUR 50 billion in February.  Bond funds recorded increased net inflows totaling EUR 25 billion, up from EUR 24 billion in February.  Balanced funds also enjoyed an increase in net sales to EUR 16 billion, up from EUR 12 billion in February.  Equity funds continued to experience positive net inflows in March, albeit at a slower pace (EUR 6 billion, down from EUR 12 billion in February).
  • Money Market funds experienced a rise in net outflows in March to EUR 13 billion, up from EUR 2 billion in February.
  • Total net sales of non-UCITS registered EUR 18 billion, up from EUR 13 billion of net inflows in February. Special funds (funds reserved to institutional investors) registered net inflows during the month amounting to EUR 12 billion, up from EUR 9 billion in February.
  • Total assets of UCITS increased 0.6 percent in March to stand at EUR 7,180 billion, whilst total assets of non-UCITS increased by 0.7 percent to EUR 2,908 billion at month end. Overall, total net assets of the European investment fund industry stood at EUR 10,087 billion at end March 2014.

(see EFAMA's Investment Fund Industry Fact Sheet)

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German Investment Tax Act: BMF extends the transitory exemptions

On the initiative of ALFI the German Ministry of Finance ('BMF') extended the transitory exemptions of point 297 of the BMF Circular dated 18 August 2009 (“Einführungsschreiben zum Investmentsteuergesetz”) to fiscal years ending after July 22, 2016.

(read the official BMF communication in German)

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Omnibus II published in the EU Official Journal

On 22 May 2014, Directive 2014/51/EU in respect of the powers of the European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) generally referred to as Omnibus II was published in the Official Journal of the European Union. Omnibus II introduces amendments to various EU secondary legislative instruments in order to enable the implementation of Solvency II and provides specific tasks for EIOPA and ESMA, in particular clarifying the role of EIOPA in ensuring harmonised technical approaches on the calculation of technical provisions and capital requirements.

The new rules further amend Solvency II and the Prospectus Directive to take account of the new EU financial services supervisory system following the creation of EIOPA and ESMA in 2010. In addition, Omnibus II defines the appropriate scope of technical standards; enables EIOPA and ESMA to settle their disagreements; enables the existing rules to operate in the context of the new supervisory system and includes transitional requirements and other amendments to Solvency II.

Member States must transpose Omnibus II by 31 March 2015, with application of the rules from 1 January 2016.

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ABBL issues guidance notes on FATCA

The Luxembourg Bankers’ Association ABBL has released the first edition of its guidance notes on FATCA.

This 88 page document is the result of several months of in-depth analysis by competent experts from the ranks of ABBL members. The primary aim of this document is to provide an analysis of the provisions of the intergovernmental agreement on FATCA signed on 28 March 2014 between Luxembourg and the United States from the perspective of ABBL members. It is recommended to read in the first instance the foreword at the beginning of the document.

The guidance document and the slides of the related ABBL conference held on 19 May 2014 can be downloaded from ABBL’s website via the following link: http://www.abbl.lu/abbl-releases-its-guidance-notes-fatca

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Joint Forum releases Final paper on point of sale disclosure in the insurance, banking and securities sectors

The Joint Forum has released its final report on point of sale (POS) disclosure in the insurance, banking and securities sectors.

The report identifies and assesses differences and gaps in regulatory approaches to point of sale disclosure for investment and savings products across the insurance, banking and securities sectors and considers whether the approaches need to be further aligned across sectors. It sets out eight recommendations, for use mainly by policymakers and supervisors to assist them in considering, developing or modifying their POS disclosure regulations:

  1. Jurisdictions should consider implementing a concise written or electronic POS disclosure document for the product sample identified in this report, taking into account the jurisdiction’s regulatory regime.
  2. The POS disclosure document should be provided to consumers free of charge, before the time of purchase.
  3. A jurisdiction considering POS disclosure should consider requiring that a POS disclosure document discloses key characteristics including costs, risks and financial benefits or other features of a given product and any underlying or referenced assets, investments or indices, irrespective of the financial sector from which the products are derived.
  4. The POS disclosure document should be clear, fair, not misleading and written in a plain language designed to be understandable by the consumer.
  5. The POS disclosures should include the same type of information to facilitate comparison of competing products.
  6. The POS disclosure document should be concise, set out key information about a product and may include, as appropriate, links or refer to other information. It should make clear that it does not provide exhaustive information.
  7. Allocation of responsibility for preparing, making available and/or delivering the POS disclosure document should be clearly established, and the POS disclosure document should identify which entity is responsible for its content.

A jurisdiction considering POS disclosure should consider how to use its capabilities and powers to implement these POS recommendations, taking into account the jurisdiction’s regulatory regime.

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News form ALFI's ASIA representative office

Taiwan updates its offshore encouragement plan

In February 2014, the Financial Supervisory Commission (FSC) from the Securities and Futures Commission in Taiwan (FSB) updated the country’s offshore encouragement plan.

This plan aims at encouraging offshore fund houses to set up establishments and manpower in Taiwan, enhancing master agents’ functions, while providing high quality service to Taiwan offshore fund investors and introducing high quality fund products.

The plan offers preferential measures to offshore fund institutions that comply with a series of criteria and evaluation indicators. These incentives may consist in expediting the review and approval process for offshore funds to be launched in Taiwan or in relaxing the permissible number of offshore funds per application to three. (As a reminder, it had become market practice for the last 2 or 3 years that offshore funds could only submit one fund per application). The number of allocated favors depends on the number of evaluation indicators the offshore fund is satisfying.

The new rules set by the plan are very restrictive. For instance, in order to increase the volume of onshore AuM in Taiwan, offshore funds are asked to delegate the investment function to a local entity. If the AuM exceed a certain threshold, a portion of an offshore fund’s AuM has to be invested into an onshore fund, leading to margin cuts for offshore fund promoters.

The plan, press release and issuance document are now available in English on FSB’s website (FAQ item 7): http://www.sfb.gov.tw/en/home.jsp?id=26&parentpath=0,9

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Public consultation on the Asia Region Funds Passport (ARFP)

In late 2013, finance ministers from Singapore, South Korea, Australia and New Zealand officialised a statement of intent on the establishment of the Asia Region Funds Passport at the occasion of an Asia-Pacific Economic Cooperation (APEC) meeting.

According to the described timeline, eligible collective investment schemes in passport members’ economies can access the “passport” in 2016.

The contractual countries are now launching a public consultation which can be found here.

Deadline for comments is set on July 11, 2014.

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Shanghai and Hong Kong stock exchanges plan to connect

The China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission (SFC) have approved, in principle, the development of a pilot program (Shanghai - Hong Kong Stock Connect) for establishing mutual stock market access between Mainland China and Hong Kong.

When launched, the pilot program will operate between the Shanghai Stock Exchange (SSE), the Stock Exchange of Hong Kong Limited (SEHK), China Securities Depository and Clearing Corporation Limited (ChinaClear) and Hong Kong Securities Clearing Company Limited (HKSCC).

The program aims at strengthening the competitiveness of the Shanghai and Hong Kong stock exchanges as well as the collaboration and communication between both institutions.

Only institutional investors and individuals with a balance of RMB 500,000 (USD 80,645) in securities and cash accounts will be able to access the pilot program.

The official announcement of the pilot project describes the principles under which it is expected that Shanghai - Hong Kong Stock Connect will operate.

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ALFI events

8 July 2014: Roadshow to Frankfurt

Already over 200 people registered!

Programme & registration

Renowned experts drawn from a variety of professions of the Luxembourg fund industry will take a look in their crystal ball and elicit how the investment fund industry is likely to look in 2014 and beyond. They will namely update you on the recent developments in the UCITS area and analyse what is happening in practice in the alternative investment sector now that the long awaited Alternative Investment Fund Managers Directive has come into force.

After the lunch break, which offers ample networking opportunities, dedicated workshops will focus on cross-border fund distribution, tax and operational issues, Private Equity and Real Estate.

The seminar language is German.

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

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10 July 2014: ALFI Leading Edge Conference: ‘AIFMs and Super ManCos – structuring and operational aspects’

At this one-day event features stand-alone presentations and panel discussions focusing on

  • Fundamentals and practical aspects of setting up and structuring Management companies in different markets
  • Risk Management – Illiquid/Liquid Assets
  • The ManCo’s oversight over delegated and outsourced functions
  • Remuneration
  • Liability
  • Reporting

An interview of the Regulator will give participants an update on regulatory issues and the current AIFM registration status

Full programme coming soon!

Event Webpage 

Sponsorship opportunity 

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23 & 24 September 2014: ALFI Global Distribution Conference

Nouveau centre de conférences Kirchberg (NCCK), Luxembourg

  • What’s new in the trend setting US fund industry?
  • How did the RDR regulation affect the fund distribution landscape in Europe?
  • Who are the new players in the cross-border distribution world?
  • How can the competing interests of the fund manufacturers and distributors be reconciled?
  • What role do management companies play in supporting the distribution of traditional and alternative funds?
  • What opportunities and challenges do the mutual recognition and the Asian passports create for the European and US fund industry?
  • Is the time ripe for setting up the Luxembourg Fund Data Repository?
  • Is Responsible Investing a critical component for fund selection and distribution?
  • How does the regulation on Central Securities Depositories (CSDs) impact investment funds?
  • Can the Australian pension fund Scheme be a blueprint for Europe?

Get answers to these and many other questions of interest and significance to the fast-moving world of asset management at the 2014 Global Distribution Conference organised by ALFI in association with the National Investment Company Service Association NICSA and the Hong Kong Investment Funds Association HKIFA.

We expect more than 800 participants from all around the world and up to 50 exhibitors showcasing their products and solutions serving the asset management industry.

Full programme and registration available soon.

Event website

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30 Sept & 1 Oct 2014: Roadshow to Switzerland

Save the dates!

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

Event website

More information coming soon.

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22 October 2014: ALFI TA & Distribution forum

Save the date!

More information coming soon.

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25 & 26 November 2014: ALFI European Alternative Investment Funds Conference

Nouveau centre de conférences Kirchberg (NCCK), Luxembourg

Save the dates!

The conference offers two days of presentations and panel discussions on the latest news and trends in the alternative investment industry with specialised workshops on Hedge Funds, Real Estate and Private Equity Funds.

In 2013, the event attracted 600 registrations with 35 exhibitors and 38 sponsors!

More information coming soon.

Event website

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Past ALFI events

27 May 2014: ALFI Microfinance & Impact Investing Conference 2014

“Is a good microfinance or impact investment project also a good investment” was the key question discussed at ALFI’s 2014 Microfinance & Impact Investing Conference that took place at the Tramsschapp Cultural Center in Luxembourg on 27 May.

The event organised in partnership with the European Microfinance Platform (e-MFP) and the Global Impact Investing Network (GIIN) attracted around 150 industry professionals, practitioners and researchers from a broad variety of national and supra-national organisations, banks and asset management companies, investment funds and Microfinance Institutions from Luxembourg and abroad.

The feedback received from speakers, panelists and participants after the event was very positive and encourages us to go ahead promoting the Luxembourg financial center as a competence center for Responsible Investing.

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14 April 2014: ALFI London Conference

The success of ALFI’s London roadshows keeps growing: The 10th edition of this event recently held at the famous Guildhall, a magnificent medieval Grade I listed landmark situated in the heart of the City of London, attracted the record number of 1,075 participants, 200 of them were fund professionals travelling from Luxembourg to meet the local industry players. At the conference that was opened by Luxembourg’s Minister of Finance, Pierre Gramegna, participants got an update on recent developments in the UCITS area and examples of real-life AIFMD implementation.

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24 April 2014: ALFI Leading Edge Conference

Close to 130 industry experts gathered at the futuristic RBC Investor & Treasury Services Premises in Esch-sur-Alzette to learn about regulations that impact global fund distribution at ALFI’s most recent Leading Edge conference.

Participants got an update on the current state of AML/KYC rules and FATCA provisions and their practical implications and impacts namely on fund governance and distribution.

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29 April 2014: ALFI & ALRiM Risk Management Conference

The 5th edition of the ALFI & ALRiM Risk Management Conference organized by ALFI in association with the Luxembourg Association for Risk Management brought together more than 250 market experts and leading practitioners to explore the latest trends and strategies being used to measure, manage and mitigate risks. The one-day event offered participants first-hand insights into operational risk in the management of UCITS and AIFs as well as the new reporting obligations for Alternative Investment Fund Managers, namely risk reporting in accordance with ESMA Guidelines and CSSF Circular 14/581.

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Other events

18 June 2014: Swing pricing & fair valuation in the equity markets

The use of swing pricing and fair valuation, as a key measure to protect the mutual fund shareholders, has intensified in the last few years on both sides of the Atlantic. The Investment Technology Group, Inc is organising a panel discussion focusing about the relative merits of swing pricing and fair valuation, the conclusions of ITG’s latest research paper on the implementation of swing pricing and how other asset managers use these services.

The event will take place at the Hotel Meliã, 1, Park Dräi Eechelen, L-1499 Luxembourg.

For more information contact David.Angel@itg.com.

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19 June 2014: Advanced INREV NAV course in Paris

INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, is organizing an advanced NAV course to be held in Paris on June 19.

The one-day course will address reporting aspects of the INREV Guidelines which are used to calculate INREV Net Asset Value (NAV) and will provide participants with a better understanding of market best practice and examples related to adjustments, calculations and practical challenges.
As this course presumes a good understanding of INREV NAV and the ability to calculate it, it will go into more detailed analysis for adjustments providing delegates with an extensive analysis of the topic as well as the practical applications for specific fund types. There will be a special focus on adjustments related to the fair value of assets and liabilities as well as those related to the effects of the settlement.

ALFI members benefit from a reduced registration fee of Euro 500 (instead of Euro 850).

(read more)

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IFBL / ALFI Training Spotlight

The IFBL would like to highlight the following training modules still available during this semester:  

“AIFMD for Alternative Investment Fund Managers”19th June (am). This practical module focuses upon the AIFMs / ManCos specifically. The aim will be to provide the next level of detail and explain the new environment that will come into place following the implementation date on July 22nd 2014. It will cover specific topics of governance, procedures, reporting, organisation and risk management.

M2 UCIs: NAV Errors & Breaches-Circular 02/77 – 9th 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.

An increasing number of modules are also available in English, including M2 UCIs: Booking Standard Transactions - 3rd July, (prerequisite for M2 UCIs: Advanced Fund Accounting - 3rd October)

Full information regarding IFBL / ALFI courses is available on the IFBL website as well as from the IFBL Customer Service team (Tel: 46 50 16-1 / e-mail customer@ifbl.lu).

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