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    ALFI Newsdigest october 20, 2014    
          in this edition      
    1. Headlines
2. News from ALFI's Asia Representative office
3. Upcoming ALFI events
4. Past ALFI events
5. Upcoming LFF events
6. Other upcoming events



Marc-André Bechet is ALFI’s new Director of Legal & Tax

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ALFI study: Positive engagement essential for RDR success

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ALFI and ABBL issue joint brochure presenting the Luxembourg financial centre

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ALFI issues Q&A and guidance on AIFMD reporting

On 3rd October 2014, ALFI released the first editions of two documents prepared by ALFI’s AIFMD reporting working group.

The Q&A document proposes answers to technical questions on AIFMD reporting, complementing both ESMA’s Q&A document on application of the AIFMD and the FAQ document on AIFM published by the CSSF.

The purpose of the second document is to provide guidance for the preparation of Luxembourg annual reports of regulated AIFs (mainly UCI Part II and SIFs) under the AIFMD. It focuses on the annual report to investors pursuant to article 20 of the AIFMD law as well as on periodic disclosure to investors.

ALFI's members are welcome to submit any question to the AIFMD reporting working group (contact: info@alfi.lu) that has not yet been answered in the different publications.

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Investment fund assets worldwide increased 5.2 percent in Q2, 2014

The European Fund and Asset management Association EFAMA reports that investment fund assets worldwide increased 5.2 percent during the second quarter to stand at EUR 25.65 trillion at end June 2014. In U.S. dollar terms, worldwide investment fund assets totaled US$ 35.03 trillion at end June 2014.

Worldwide net cash inflows decreased in the second quarter from EUR 292 billion to EUR 252 billion.  This decrease can be attributed to a turnaround in net flows of money market funds during the quarter.

Long-term funds (all funds excluding money market funds) registered net inflows of EUR 301 billion, up from EUR 271 billion in the previous quarter. Worldwide bond funds enjoyed increased net inflows of EUR 112 billion, up from EUR 69 billion in the first quarter. In contrast equity funds experienced decreased net inflows of EUR 48 billion, down from EUR 92 billion in the previous quarter. Balanced funds also registered a rise in net sales to EUR 81 billion, compared to EUR 71 billion in the first quarter.

Money market funds registered a turnaround in net flows to post net outflows of EUR 49 billion, compared to net inflows of EUR 21 billion in the first quarter.  The global outflow from money market funds in the second quarter was driven by outflows of EUR 52 billion in the United States and EUR 22 billion in Europe.

At the end of the second quarter, assets of equity funds represented 40 percent and bond funds represented 22 percent of all investment fund assets worldwide. The asset share of money market funds was 13 percent and the asset share of balanced/mixed funds was 12 percent.  

The market share of the ten largest countries/regions in the world market were the United States (49.6%), Europe (29.1%), Australia (5.1%), Brazil (4.9%), Canada (3.8%), Japan (3.2%), China (1.6%), Rep. of Korea (0.9%), South Africa (0.5%) and India (0.4%).

(Read more)

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CSSF: New Application questionnaire for the set up of an UCI

The CSSF informs that the current form « Application questionnaire for the set up of an undertaking for collective investment » on the web site is replaced for UCITS only from 1 September 2014 by a new “Application questionnaire to set up an UCITS” (in English only) to be used for submitting to the CSSF an application for approval to set-up an UCITS.

Similarly to the previous one, this application form aims at collecting the full information required by the CSSF to open and examine the file for approval of a new Luxembourg law UCITS. For all UCI other than UCITS, the current forms and procedures remain the same.

(Read more)

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Luxembourg to develop freeport and art market

The bill of law n°6713 aiming at promoting the new VAT-free zone regime at Luxembourg’s Findel airport has been submitted to the Luxembourg Parliament. The Bill aims to amend the Law of 12 February 1979 on the value added tax (the “VAT Law”) and the Law of 17 December 2010 on excise duties applicable to certain categories of goods.

Amongst others, the bill provides that the rate of the VAT on the import, intra-Community acquisition and supply of works of art, antiques and collectors’ items will be reduced from 15% to 6%. Organisers of sales by public auction will be allowed to benefit, upon option, from the profit margin VAT regime for the supply of second-hand goods, art works, collectors’ items and antiques.

The Bill also provides that the supply of goods and services relating to certain transactions such as goods intended to be presented to customs and placed in temporary storage or goods intended to be placed in a free zone or in a free warehouse, covered by arrangements for temporary import with total exemption from import duty or by external transit arrangements, will now benefit from an exemption from VAT.

Similarly, the import of some goods which are intended, inter alia, to be placed in a free zone or in a free warehouse or to be placed under customs warehousing arrangements or inward processing arrangements, will benefit from an exemption from VAT as well.

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Luxembourg Legal Entity Identifier (LEI) service now operational

LuxCSD’s Legal Entity Identifier (LEI) issuance service for Luxembourg-domiciled entities and investment funds is now operational and accessible via luxcsd.com.

The Regulatory Oversight Committee (ROC) – a committee of global regulators – has endorsed LuxCSD as a pre-local operating unit (LOU) to issue LEIs. The ROC endorsement is a prerequisite for using Luxembourg LEIs for reporting financial transactions on an international level rather than just for domestic transactions. All EU counterparties entering into derivative trades are required to have an LEI to meet the reporting obligations under the European Market Infrastructure Regulation (EMIR).

(Read more)

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Further LEI guidance published

Following the publication of the common data format for pre-local operating units by the Legal Entity Identifier (LEI) regulatory oversight committee, the regulatory oversight committee has now published further guidance setting out principles to guide interim decision-making until the Global Legal Entity Identifier Foundation (GLEIF) takes over operational governance of the system.

Copies of the report on GLEIF, the report on GLEISadditional guidance on portability and an endorsement note from the regulatory oversight committee are available.

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Reinforced restrictive measures against Russia

Restrictive measures against Russia, including restrictions on Russia's access to EU capital markets were further strengthened on 8 September 2014 by the adoption of Council Regulation (EU) N°960/2014 and Council Decision 2014/659/CFSP. These texts enlarge the list of targeted entities and reinforce the provisions related to financial instruments. To view the Regulation and Decision as published in the Official Journal of the EU please click here.

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Commission issued report on Financial supervision

The European Commission has published its report on the operation of the European Supervisory Authorities (ESAs) and the European System of Financial Supervision (ESFS).

The report recognises the overall effectiveness and efficiency of the three ESAs in contributing to restoring confidence in the financial sector and promoting the Single Rulebook. It also identifies  a number of changes to improve the ESAs' functioning in the short-term and includes proposals for possible extensions of the ESAs' mandates on consumer/investor protection, the enforcement of International Financial Reporting Standards (IFRS), shadow banking and the direct supervision of market infrastructures such as CCPs.

A number of recommendations made by EFAMA in response to the Commission’s consultation in July 2013 are reflected in the Commission’s report, namely:

  • its call for increased involvement of ESAs in the Level 1 process,
  • its concern regarding the lack of human resources and issues regarding their budget,
  • its difficulties surrounding the very tight, and sometimes unrealistic deadlines imposed on ESMA to provide technical advice to the EU institutions in the development of Level 2 Regulations, and
  • its call for further transparency of the Level 2 process.

No legislative changes are proposed for the immediate future. The report is being sent to the European Council and European Parliament for their consideration only.

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UCITS V published in the Official Journal of the EU

On 23 July 2014, the Council of the EU adopted Directive 2014/91/EU of the European Parliament and of the Council amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions (“UCITS V directive”).

The UCITS V Directive was published in the Official Journal of the European Union on 28 August 2014 and will enter into force on the twentieth day following its publication in the Official Journal of the European Union. Member States shall transpose the directive into national law by 18 March 2016.

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ESMA updated its AIFMD reporting IT technical guidance

The European Securities and Markets Authority (ESMA) published its 4th revision of the AIFMD reporting IT technical guidance.

Click here to access the documents as a zip file. The detailed changes can be found in the Excel work sheet titled “change history”.

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ESMA issues updated Q&A on the application of the AIFMD

The European Securities and Markets Authority (ESMA) has published an update of its Q&A document on the application of the Alternative Investment Managers Directive. It clarifies the reporting obligations to national competent authorities as well as the delegation of portfolio and/or risk management.

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EBA & ESMA issue joint guidelines for complaints-handling for securities and banking

EBA & ESMA released their joint guidelines for complaints-handling for securities and banking. The guidelines become applicable (“comply or explain”) two months after the date of publication of their translations which was 25 August 2014.

The final guidelines and their translation can be found under this link.

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ESMA issues opinion on the application of MMF guidelines

The European Securities and Markets Authority (ESMA) has issued an opinion on the application of guidelines issued by the Committee of European Securities Regulators (CESR), the predecessor of ESMA, in relation to European money market funds (MMFs). The opinion is aimed at competent authorities to ensure a common supervisory culture and consistent supervisory practices.
The opinion focuses on application of the modifications to the CESR guidelines as set out in a report issued earlier this year by the Joint Committee of the three European Supervisory Authorities. This Joint Committee report set out the manner in which CESR guidelines were to be amended, in particular regarding the assessment of credit quality of money market instruments.

Read the ESMA opinion and the related press release.

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ESMA issues translations of AIFMD reporting obligations guidelines

The European Securities and Markets Authority (ESMA) has published official translations of their guidelines on reporting obligations under Articles 3 and 24(1), (2) and (4) of the Alternative Investment Fund Managers Directive (AIFMD) (ESMA/2014/869). Publication triggers a period of two months within which competent authorities must notify ESMA of their compliance position.

Read the Guidelines.

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ESMA consultation on Draft guidelines on the application of C6 and C7 of Annex I of MiFID

The European Supervisory and Markets Authority (ESMA) has published a consultation paper on future guidelines clarifying the definition of derivatives as financial instruments under the current Markets in Financial Instruments Directive (MiFID I).

The deadline to respond to the consultation is January 5, 2015.

(Read more)

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ESMA consultation on Implementing measures of the Regulations on EuSEF and EuVECA

The European Supervisory and Markets Authority (ESMA) has started a consultation on a series of implementing measures of the Regulations on EuSEF and EuVECA. The consultation focuses on the types of goods and services, methods of production for goods and services and financial support embodying a social objective, on conflicts of interest of EuSEF and EuVECA managers, on the methods for the measurement of the social impact and on the information that EuSEF managers should provide to investors.

The deadline to respond to the consultation is December 10, 2014.

(Read more)

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ESMA consultation on Delegated acts required by the UCITS V Directive

The European Supervisory and Markets Authority (ESMA) seeks stakeholders’ views on proposals in two areas related to the depositary function:

  • Insolvency protection when delegating safekeeping, and
  • Independence requirements under UCITS V

The deadline to respond to the consultation is October 24, 2014.

(Read more)

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SWIFT starts consultation to prepare its 2015-2020 strategy

SWIFT is beginning consultation in preparation for its upcoming five-year strategy for 2015-2020. As a community-driven organization, SWIFT plan to consult key customers, stakeholders and industry experts to ensure they are well-equipped to respond to the challenges and opportunities the industry will face towards 2020, and to shape the future direction of the financial messaging, software business and shared services to deliver even more value to the customers.

SWIFT started to define their strategy 2020, covering the following major domains: real time payments, person-to-person payments, financial crime compliance, corporates and securities. SWIFT has compiled a series of documents* informing about its current position in these areas.

In the context of the Securities, SWIFT strives to understand what LU SWIFT users expect as developments in the Securities domain. ALMUS (Association des Membres et Utilisateurs de SWIFT à Luxembourg) is collecting the answers the various Luxembourg players in the securities area give to a SWIFT questionnaire.  Feedback to the questionnaire should be provided by October 15th, 2014 at the very latest, to almus@abbl.lu.

In case of any questions on the questionnaire please contact Mr Guillaume Boland (guillaume.boland@swift.com).

* Community engagement workshop

   International person-to-person payments

   Securities markets

   24/7 domestic real-time payments

   Financial crime compliance

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News from ALFI's Asia Representative office

Tax Agreement between Luxembourg and Taiwan

Luxembourg and Taiwan signed a tax agreement on 19 December 2011 which were ratified by both Luxembourg and Taiwan at that time but the exchange of ratification instruments was completed on 12 July 2014 and the Agreement came into force on 25 July 2014 with an effective date on 1 January 2015. (Mémorial 2014, A, n° 123, p. 1770)

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Update on the ASEAN passport initiative

On August 25, the Association of Southeast Asian Nations (ASEAN) rolled out their collective investment schemes (CIS) framework for cross-border products offering. The participating countries, named “member jurisdictions”, at this stage are Malaysia, Singapore and Thailand.

Under the new scheme, fund managers of a member jurisdiction are allowed to distribute CISs constituted and authorized in that jurisdiction to retail investors in other member jurisdictions under a streamlined authorisation process.

The member jurisdictions also published the “Handbook for CIS operators of ASEAN CISs” providing guidelines on various administrative and procedural issues such as the application procedures, the use of local distributors in the offering process and the procedures for remittance of funds.

The Handbook can be found under this link.

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Upcoming ALFI events

14 November 2014 : ALFI Leading Edge Conference in London!

AIFMs and Super ManCos - Practical Insights and first Experiences'

Registrations now open ! Register your team and get 10% discount for more than 5 persons registered!

To register, please contact events@alfi.lu.

The conference offers practical and technical information about:

  • The Luxembourg evolving Alternative Investment Management Company Operating Models
  • Fundamentals of structuring a ManCo
  • Fundamentals of structuring an AIF
  • Practical aspects on distribution of AIFs
  • AIFM Reporting
  • Liability of the Depositary
  • Remuneration
  • And an update from the UK and Luxembourg Regulators

For exhibition and late sponsorship opportunities: click here or contact events@alfi.lu.

Event webpage

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21 November 2014 : ALFI Roadshow to Santiago de Chile

On the occasion of the Luxembourg For Finance mission to Brazil, ALFI will organise a specific fund industry roadshow to Santiago de Chile on Friday 21st November 2014.

Invitation and registration

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

The future is Alternative !

Register now !

The entry into force of the AIFM Directive has fundamentally changed the rules of the game for both European and non-EU alternative investment fund managers. And it will continue to do so for the years to come.

ALFI's two days European Alternative Investment Funds Conference is the ideal platform to bring yourself up-to-date with the most recent developments and trends in the alternative investment world.

  • Gain first-hand experience with real-life implementation of this EU regulatory framework
  • Compare peer-to-peer market intelligence
  • Learn about the new regulatory practice concerning alternative investments
  • Discover how various countries have positioned themselves with respect to the AIFMD
  • Receive a high level business and technical overview of the evolving operating models for AIF
  • Benefit from interactive expert workshops dedicated to Real Estate, Private Equity and Hedge funds

The conference has developed substantially in the past few years and it is still growing strong: In 2013, the event attracted 600 participants, 35 exhibitors and 38 sponsors. At the time being, we have 35 exhibitors and 46 sponsors confirmed! Click here for the agreement forms with detailed information on all opportunities.

Event website

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13-16 January 2015 : ALFI Roadshow to Asia

Sponsorship opportunity for ALFI members. Contact events@alfi.lu

More information coming soon.

Event website

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2015 Save the dates

24 & 25 March: ALFI Spring Conference, NCCK

20 & 21 April: ALFI London Cocktail & Conference, London Guildhall

28 April (tbc): ALFI & ALRiM Risk Management Conference

15 & 16 September: ALFI Global Distribution Conference, Philharmonie

1 & 2 December (tbc): ALFI European Alternative Investment Funds Conference

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Past ALFI events

6 - 9 October 2014 : ALFI US roadshow

Boston and New York were the destinations of ALFI’s recent US roadshow lead by Finance Minister Pierre Gramegna who informed the audience about the Government’s priorities for the Luxembourg financial center. The speakers at the event included (small pictures, starting from left, clockwise) Michael Flynn, Directeur at Deloitte, Luxembourg, and Ellen Needham, Senior Managing Director at State Street Global Advisors, Boston, who debated about the future of product design and distribution, as well as Jacques Elvinger, Partner at Elvinger, Hoss & Prussen, Luxembourg, and Denise Voss, Conducting Officer at Franklin Templeton Investments, Luxembourg who talked about how new reporting and remuneration rules might impact the day-to-day business – and the wallet – of fund managers.

Visit our rspective picture galleries on Flickr to get an impression of our seminars in Boston and New York and of our cocktail reception at the Metropolitan Club in New York.

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30 Sept & 1 Oct 2014: Roadshow to Switzerland

With an total of 700 registrations,  ALFI’s roadshow to Geneva and Zurich at the end of September can be considered a great success. The roundtable discussions focused on first practical experiences with AIFMD and on latest developments in the area of UCITS V and VI, while a series of workshops dealt with the structuring private funds / wealth management, trends in cross-border distribution under the Swiss perspective, corporate governance and risk management and the structuring non-traditional funds.

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23-24 September 2014: ALFI Global Distribution Conference

This year, the ALFI Global Distribution Conference on September 23-24, organised in co-operation with NICSA and HKIFA, the industry associations of the US and Hong Kong, was attended by around 800 delegates from 25 countries.

Have a look at the conference video and at our dedicated Newsflash summarising the conference highlights.

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Upcoming LFF events

18-19 November, 2014: Financial Mission to Brazil

Luxembourg for Finance will organise a financial mission to Brazil, honored by the presence of TRH the Crown Prince and the Crown Princess and led by HE Minister of Finance Pierre Gramegna.

Luxembourg for Finance will hold financial seminars promoting various aspects of Luxembourg’s financial centre in São Paulo on Tuesday, 18 November 2014 in the morning and in Rio de Janeiro on Wednesday, 19 November 2014 in the morning.

(Read more)

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2 December 2014: Financial seminar in Milan

Luxembourg for Finance will organise a financial seminar in Milan in the presence of the Minister of Finance, Pierre Gramegna, on Tuesday, 2 December 2014. This conference will be the 4th edition of its kind in Milan, promoting various aspects of Luxembourg’s financial centre at the Hotel Principe di Savoia. To register, please visit the LFF website.

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Other upcoming events

23 October 2014 : « La réforme de la profession de l’audit »

Dans le sillage de la crise financière de 2008 et la recherche des responsabilités dans son déclenchement au sein des acteurs économiques, la Commission européenne a entrepris de réformer une nouvelle fois la profession de l’audit en Europe. 

Quels sont les enjeux de cette réforme ? Quelles en sont les principales dispositions ? Quelles sont les options que le Luxembourg envisage d’implémenter (ou non) ? Quelles seront les conséquences pour les entreprises ? Comment la supervision publique de la profession évoluera-t-elle ?

Ces thématiques seront présentées par deux orateurs de renom lors d’une conférence sur « La réforme de la profession de l’audit » organisée par le Conseil de l’Institut des Réviseurs d’Entreprises le 23 octobre 2014 à 16h00 à l’Hémicycle du Parlement Européen. Un panel de praticiens et de non praticiens suivra pour discuter des effets de cette réforme sur la profession de l’audit et sur l’économie en général.

Vous pouvez consulter le programme de la conférence ici.

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IFBL / ALFI Training – New Modules this Semester!

24th October: M1 UCITS and Non-UCITS ManCos - Explanation of the role, responsibilities, authorization, passport and programme of activities for UCITS and AIF management companies incl. concrete examples.

10th (am) & 18th (am) November: M2 AML for Funds -  Applied understanding of AML and industry Guidelines, roles and responsibilities, the risk based approach, due diligence, vigilance and the application of AML to third and outsourced partners.

3rd December: NAV Errors & Breaches-Circular 02/77 - NAV errors and investment rule breaches are explained before describing the steps required to correct them.

8th December: M1 Intro to Fund Compliance – Professional ethics, governance and rules of conduct in funds and ManCos. Market abuse, insider trading, customer complaints handling, conflict of interest, data and confidentiality rules.

Also coming soon:

14th November: Understanding AIFMD - The directive and its environment, objectives, impact and scope. Passports, conduct of business, delegation, transparency provisions and implementation.

Programmes: Private Equity and Real Estate Investment Funds Professional – Both programmes are being delivered in full during this second semester.

Full information regarding IFBL / ALFI courses for both UCITS and alternative investment funds (with an ever increasing number of modules also available in English) is available on the IFBL website and from the IFBL Customer Service team (Tel: 46 50 16-1 / e-mail customer@ifbl.lu).

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CAIA Association Opens Registration for March 2015 Level I and II Examinations

If you are considering a deeper understanding of the complex world of alternative investments, the CAIA Association, the leader in alternative investment education, opened early registration for the March 2015 Level I and Level II exams on October 1, 2014. Now is the time for you to boost your knowledge.  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 March 9 – 20, 2015 and the Level II exam will take place March 2-13, 2015 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 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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12-14 November 2014: European Microfinance Week

“Developing Better Markets” is the theme of this year’s European Microfinance Week organized at the Abbaye de Neumunster by the European Microfinance Platform (e-MFP) and supported by the Luxembourg Government. Amongst other topics, the event will feature

  • a plenary discussing the complexity of balancing financial inclusion with the need for market stability with representatives of Central Banks and experts on regulation;
  • a plenary on managing overindebtedness: speaking from experience, featuring some of the most prominent names in the sector;
  • over 20 in-depth sessions exploring microfinance in conflict zones, post-disaster areas, working with individuals in poverty, agricultural value chains, as well as extending savings to the last mile; 
  • sessions exploring issues relevant to microfinance investors, including managing social responsibility during equity sales.

European Microfinance Week is the major annual event of the microfinance industry hosting high level and in-depth discussions by all sectors of the European microfinance community (banks and financial institutions, government agencies, NGO’s, consulting firms, researchers and universities) working in developing countries. Last year the event welcomed nearly 400 microfinance professionals from 59 countries.

In parallel with this year's 5th European Microfinance Award on “Microfinance and the Environment”, the Week will also feature sessions dedicated to the issue highlighted by the Award.

Have a look at the draft programme.

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