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    ALFI Newsdigest april 2, 2015    
          in this edition      
    1. Headlines
2. Upcoming ALFI events
3. Past ALFI events
4. Upcoming LFF events



Responsible investment on its way to becoming mainstream

Assets under management in European responsible investment funds have seen a Compound Annual Growth Rate (CAGR) of 25% between 2012 and 2014, growing from EUR 238 bn to EUR 372 bn, according to The European Responsible Investing Fund Survey 2015 commissioned by ALFI and produced by KPMG.

According to the survey, these assets can be split into a number of categories:

  • EUR 322.8 bn are in cross-sectoral funds;
  • EUR 31.8 bn are in environmental funds;
  • EUR 10.7 bn are in social funds;
  • EUR 6.7 bn are in ethical funds.

Commenting on the survey, Jane Wilkinson, partner and head of sustainability, KPMG Luxembourg, said: “We are pleased to see the results of this survey reflecting a growth and dynamism of this sector and that product innovation and a set of promising opportunities, for example the development of green and social bonds, have been identified. It is clear that asset managers today can no longer choose to ignore this market segment - they must be prepared to answer questions from their stakeholders around this topic. Failure to anticipate and act upon these questions is likely to result in chances missed and business lost.”

“Whilst responsible investing tends to be niche and institutional, it is ahead of the rest of the market in many ways,” concludes Anouk Agnes.  “Responsible investing already focuses on simplicity, transparency, honesty and integrity. It should appeal to the investors of the future, who are already more environmentally and socially conscious. By 2030 responsible investing will move from being a niche product targeting mainly institutional investors to a mainstream investment product, and it’s up to fund managers to seize this opportunity and build their brands on firm “responsible” foundations.”

Download the press release in English, French or German.

Download the survey here.

Download the executive summary here.

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ALFI launches its new Understanding Investing website


At the occasion of its annual Spring Conference, ALFI has launched its new Understanding Investing website, an online resource which aims to give people useful information they need about investing.

Commenting on the new initiative, Denise Voss, Chair of the ALFI Investor Forum, said: “It is increasingly important that people take responsibility for their long-term financial security, and the way to do that is to invest, whether directly or through funds and other financial products.  This website gives people information to help them understand investing – why they should invest, what different types of investments there are, what the risks are and how to plan ahead.”

The website www.understandinginvesting.org starts with the basics and looks at how to start investing and what a financial adviser is. It helps people analyse what sort of investor they are, and outlines different styles of investment. It also explains the structure of funds and how they are regulated.

Download the press release in English, French or German.

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ALFI responds to the ESMA Discussion Paper on UCITS share classes

On 27 March 2015 ALFI submitted its response to the ESMA Discussion Paper on share classes of UCITS. Issues addressed in this paper relate to the definition of a share class, the different types of existing share classes in the various Member States of the EU and the possible approaches to developing a common understanding on the share classes that should be permitted.

Click here to read the ALFI response.

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ALFI response to IOSCO’s consultation on cross-border regulation

On 23 February 2015, ALFI responded to the consultation on cross-border regulation which was published in November 2014 by IOSCO

The consultation report describes three cross-border regulatory tools:

  • National treatment
  • Unilateral and mutual recognition and
  • Passporting

Moreover, the report outlines challenges from a regulator’s and stakeholders’ perspective and lists suggestions on IOSCO’s role regarding cross-border issues.

Based on the feedback received, IOSCO’s task force on cross-border regulation is mandated to develop a cross-border regulatory toolkit containing common terminology, of regulatory options for use by IOSCO members and, where appropriate, to lay a foundation for the development of guidance on the coordinated use of the toolkit.

Read ALFI’s response.

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ALFI response to ESMA discussion paper on KIDs for PRIIPs

On 17 February 2015, ALFI responded to the discussion paper on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs), which was published in November 2014 by the European Supervisory Authorities (ESAs).

The ESAs are mandated by the Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products to develop draft Regulatory Technical Standards (RTS) on the content and presentation of the KIDs for PRIIPs. The aim of the KIDs is to provide EU retail investors with consumer-friendly information about investment products with the ultimate aim of improving transparency in the investment market. In order to ensure that all views and options are taken into consideration when developing the RTS, the ESAs were seeking stakeholders’ views on how these standardised KIDs should be developed. This discussion paper was a first step in the ESAs’ joint work on the broad issues to be considered in developing the RTS.

Read ALFI’s response.

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ALFI takes up a stance on ESMA guidelines on asset segregation under the AIFMD

ALFI has responded to the European Securities and Markets Authority’s (“ESMA”) consultation paper setting out proposals for possible guidelines regarding the asset segregation requirements in the case of delegation of safe-keeping duties by the appointed depositary of an AIF.

ALFI explicitly supports guidelines which will promote common interpretation across Europe as well as the consistent application of the provisions of the Directive and its implementing measures.

Read ALFI’s responses to the ESMA questionnaire.

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Draft Law on FATCA submitted to the Luxembourg Parliament

On 27 March 2015, the Luxembourg draft law on FATCA has been submitted to the Parliament. The law will ratify the execution of the Intergovernmental Agreement (IGA) signed between Luxembourg and the United States of America on 28 March 2014 as well as the related Appendices and Memorandum of Understanding.

The original version of the IGA as well as an unofficial translation of the agreement in French, which is adopting the terminology used by the OECD in the context of the Common Reporting System, are attached to this draft law. It is reminded that Luxembourg reporting financial institutions will need to file the first reporting relating to the year 2014 no later than by 30 June 2015. In addition, the draft law contains an important provision in its article 3 paragraph 4 on the duty of a reporting financial institution to inform any individual on behalf of whom it will report.

Click here for the text of the draft law.

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Luxembourg tax authorities clarify the tax treatment of Limited Partnerships

The Luxembourg tax authorities have released Circular LIR 14/4  on the taxation of income realised by a Luxembourg common limited partnership (“société en commandite simple” - “SCS”) or a special limited partnership (“société en commandite spéciale” – “SCSp”). Whilst the Circular is dealing with all types of limited partnerships, it specifically addresses the situation of SCS/SCSp which qualify as Alternative Investment Funds (“AIFs”), both in the form of regulated funds and unregulated vehicles.

SCS/SCSp are tax transparent entities and as such, they are not subject to Luxembourg corporate income tax in their own right. However, an SCS/SCSp is subject to municipal business tax (“impôt commercial communal”) in the situation where it carries out a business activity or when the GP owns more than 5% of the interests of the SCS/SCSp.

In its Guidelines on Key Concepts of the AIFMD (ESMA/2013/611), the European Securities and Markets Authority stated that an AIF is deemed not to have any general commercial or industrial purpose. The Circular explicitly confirms that an SCS/SCSp which qualifies as an AIF does not carry out any business activity and, as a consequence, it is not subject to municipal business tax provided that the GP owns less than 5% of the interests in the SCS/SCSp. The Circular also reconfirms that AIFs established as part II funds, SIFs or SICARs as well as foreign domiciled AIFs that are managed by a Luxembourg AIFM are specifically exempt from any taxation.

Click here for the text of the Circular (French version).

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CSSF reminds financial sector of its duties in tax and AML matters

On 27 March 2015, the CSSF issued Circular 15/609 reminding the financial sector of developments in the context of the automatic exchange of tax information and anti-money laundering in tax matters.

Click here for the text of the Circular (French version).

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CSSF modifies deadline to comply with Circular 14/587

The CSSF has issued Circular 15/608 aimed at modifying point 187 of Circular 14/587 regarding the deadline to comply with this Circular 14/587 and at informing the recipients of this circular on subsequent modifications to be made to this circular.

The Circular (in French) can be accessed here.

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CSSF issues recommendations regarding the immobilisation of bearer shares

On 27 March 2015 the CSSF issued a press release drawing the attention of issuers and holders of bearer shares targeted by the Law of 28 July 2014 on the immobilisation of bearer shares. In particular, this press release contains recommendations as to the next steps to be taken by issuers, whether they are issuers of UCI shares or of other types of shares, and gives clarifications as to the types of securities falling into the scope of the law.

The text of the press release (in French) can be accessed here.

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CSSF updates AML Circular

CSSF has issued Circular 15/607 drawing the attention of all persons and entities under its supervision to the FATF statements on jurisdictions which have substantial and strategic AML/CFT deficiencies, jurisdictions not meeting sufficient progress and jurisdictions whose AML/CFT regime is not satisfactory.

This Circular cancels and replaces Circular 15/595 of 30 October 2014.

To access this Circular please click here.

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European Commission adopts proposal to repeal the European Savings Directive

On 18 March 2015, the European Commission officially adopted a proposal for repealing Council Directive 2003/48/EC on the taxation of savings income (“the European Savings Directive”). The repeal of this Directive had become necessary as a result of the decision to endorse the global standard on automatic exchange of information developed by the OECD and the adoption of Council Directive 2014/107/EU on 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (the Amending Directive on Administrative Cooperation). Member States are required to transpose the Amending Directive by 31 December 2015 and to apply its provisions from 1 January 2016.

The proposal to repeal the European Savings Directive was adopted as part of a package of measures presented by the Commission to boost tax transparency.

Click here for the text of the proposal.

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New Circular on Certificates of Residency for Luxembourg Investment Funds

On 12 February 2015, the Luxembourg tax authorities released Circular L.G. – A. No 61 on the issuance of certificates of residency for Luxembourg investment funds. The Circular provides useful guidance on the eligibility of investment funds to double taxation treaties signed by Luxembourg with third countries and on the procedure to follow when requesting the issuance of a certificate. In addition to treaty access, investment funds may also, in some particular instances, avail themselves of statutory exemptions under domestic law and/or request refunds in other contexts (e.g. as a result of the so-called “Aberdeen” case of the Court of Justice of the European Union).

When requesting the Luxembourg tax authorities to issue a certificate, an investment fund or its representative must however specify in which context it needs any such certificate and provide the tax authorities with a detailed list of revenues in relation thereto, either at time of sending the request (in case of a refund) or no later than 6 months after the year during which it receives these revenues (in case the certificate is used for an at-source exemption).

Click here for the text of the Circular (French version).

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EFAMA lauds plans for a Capital Markets Union focused on investor needs

The European Fund and Asset Management Association (EFAMA) has given a strong early welcome to the European Commission’s Green Paper for a Capital Markets Union.  

The industry body believes the EC’s “Building a Capital Markets Union” consultation paper, launched in Brussels on 18 February, highlights the clear need for a Capital Markets Union which is primarily focused on investors. 

EFAMA believes that investors are the cornerstone of the asset management industry and that an integrated capital market in the EU will help unlock capital, shift it towards investments in long-term projects, and ultimately reduce the cost of investment funds and pensions savings for investors. There is no doubt that the fund management industry and its investors can play a huge role together in the long term financing and rebuilding of the European economy.

At a time of important financing and saving challenges, it is clear that Europe needs to encourage the financing of its real economy via the capital markets. A more capital market based economy is one of the key solutions that will enable Europe to get back on the road towards growth recovery, and European asset managers have a crucial role to play in this changing landscape.

(Read more)

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EFAMA publishes recommendations for European personal pensions

The European Fund and Asset Management Association (EFAMA) has published further recommendations for a new EU-wide pension product based on extensive research and feedback from the asset management industry.

EFAMA namely recommends that

  • an EPP should specify an appropriate investment default option.  This could include life-cycle strategies or balanced funds and would be designed to ensure an acceptable level of risk for pension savers.
  • pre-enrolment communication should be standardized and applied uniformly by all providers in a way that facilitate the comparison between EPPs, to help consumers make the right choice, and
  • the EU framework for an EPP should be sufficiently standardized to reduce distribution costs and in this way encourage more consumers to save for retirement.

The recommendations are published in a report entitled Towards a Single Market for European Personal Pensions:  building blocks for an EU frameworkwhich lays out EFAMA’s key arguments in favour of the creation and implementation of a standardised pension product.

The recommendations aim to contribute further to the work undertaken by the European Insurance and Occupational Pensions Authority (EIOPA) towards the creation of an EU-single market for personal pensions – and follow on from the September 2013 Report of EFAMA on the Officially Certified European Retirement Product (OCERP). To make this proposal and its objectives clearer and easily understandable for the wider European population, EFAMA has renamed the proposed product as the “European Personal Pension” (EPP).  

(Read more)

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ESMA updates Q&A on the AIFMD and UCITS KIID

On 26 March 2015, the European Securities and Market Authority (ESMA) updated its Q&A documents on the application of the AIFMD and of the Key Investor Information Document (KIID) for UCITS.

The AIFMD Q&A includes updated or new questions and answers on

  • reporting to national competent authorities,
  • the notification of alternative investment fund managers,
  • the calculation of leverage,
  • the calculation of additional own funds,
  • and on the scope.

The Q&A on the UCITS KIID includes a new question on the treatment of past performance information in case of fund mergers:

  • Question 4g: Article 19(4) of Commission Regulation (EU) No 583/2010 states that “In the case of mergers referred to in Article 2(1)(p)(i) and (iii) of Directive 2009/65/EC, only the past performance of the receiving UCITS shall be maintained in the key investor information document.” Article 19(4) applies in cases where a receiving UCITS has a performance history. How should Article 19(4) be interpreted in cases where the receiving UCITS is a newly established UCITS with no performance history and is in effect a continuation of the merging UCITS?
  • Answer 4g: In the case of a merger where the receiving UCITS is a newly established UCITS with no performance history, UCITS should use the past performance of the merging UCITS in the KIID of the receiving UCITS if the competent authority of the receiving UCITS reasonably assesses that the merger does not impact the UCITS’ performance. ESMA expects the performance of the UCITS to be impacted if there is, inter alia, a change to the investment policy or to the entities involved in the investment management. It should also be made clear in the KIID of the receiving UCITS that the performance is that of the merging UCITS.

By adding this question ESMA has accepted the principle already foreseen in ALFI’s Q&A document on KIID implementation.

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Delegated Regulation on information to be provided to ESMA published

On 27 March, the AIFMD delegated Regulation (EU) 2015/514 was published in the EU Official Journal. This Regulation is aimed solely at national supervisors and lays out the information to be provided to ESMA. The aim of this exercise is to allow ESMA to “enable it to evaluate the functioning of the passport for EU alternative investment fund managers (EU AIFMs) managing or marketing EU alternative investment funds (EU AIFs) in the Union, the operating conditions for AIFs and their managers and the potential impact of an extension of the passport.”

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ESMA issues technical advice on EuSEF and EuVECA Regulations

ESMA has published its technical advice on the delegated acts of the European Social Entrepreneurship Funds (EuSEF) and European Venture Capital Funds (EuVECA) Regulations. The implementing measures address the following topics:

- the types of goods and services, methods of production for goods and services and financial support embodying a social objective;
- conflicts of interest of EuSEF and EuVECA managers;
- the methods for the measurement of the social impact and
- the information that EuSEF managers should provide to investors.

Click here to access the document.

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Upcoming ALFI events

20 & 21 April: London Cocktail and Conference at London Guildhall

Networking Cocktail on 20th April 2015

ALFI London Conference 21st April 2015

Guildhall, London city centre

Registration open !

This year's annual conference in London will kick-off with a networking cocktail on the evening before! Last year over 1000 people registered to attend!

Conference sessions include :

  • Interview of H.E. Pierre Gramegna, Minister of Finance of the Grand Duchy of Luxembourg: Europe and the quest for growth: the importance of international financial centers and cross-border financial services
  • Keynote speech by Dr. Jean-Pierre Zigrand, London School of Economics: Key drivers shaping post-crisis global finance
  • Navigating Change: The view of the Asset Management Industry
  • Fund Distribution: adapting to the new regulatory environment

Afternoon sessions:

  • UCITS workshop
  • Hedge Funds workshop
  • Real Estate Roundtable
  • Private Equity workshop in cooperation with The Luxembourg Private Equity Association
  • Responsible Investing Roundtable

Full programme and Registration: click here

Sponsorship & Exhibition opportunities for ALFI members! Click here.

Contact events@alfi.lu

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29 April 2015: ALFI Impact Investing & Microfinance Conference

Is the creation of an environmental or social impact by a company or an organisation no more than a by-product that, at best, pays off indirectly through a positive corporate image? To what extent should asset managers encourage corporations they invest in to create social impact? Can a company actually generate additional income by directly marketing the social impact it is creating? Is the active marketing of social impact even a precondition for achieving a return on impact investing - and for making social impact investable? And if so, how can social impact be priced? What does really matter: generating measurable social and environmental impact or a financial return?

These are only a few of the questions that will be discussed at the 2015 Impact Investing and Microfinance Conference organised by the Association of the Luxembourg Fund Industry (ALFI) in collaboration with the Global Impact Investing Network (GIIN), the European Microfinance Platform (e-MFP), and the Luxembourg Fund Labelling Agency LuxFLAG.

Register now ! click here

Sponsorship opportunities click here

Event webpage

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19 May 2015: ALFI & ALRiM European Risk Management Conference

Registration open! Click here.

The ALFI & ALRiM European Risk Management Conference has established itself as an important forum where risk managers, conducting officers and experts from all over Europe and beyond gather and exchange information and ideas about risk governance, measurement, management and reporting in the areas of both UCITS and Alternative Investment funds.

At our conference, industry experts will analyse amongst other topics operational risk in the global distribution process and the practice of risk management for alternative strategies.

A series of parallel interactive workshops offer the opportunity to discuss practical aspects.

The conference breaks, buffet lunch and cocktail provide plenty of time to mingle with industry peers and make new contacts.

For full programme, click here.
For registration & fees, click hereEarly bird deadline 17 April!
Sponsorship opportunities: click here.

Event webpage

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Calendar of public ALFI events in 2015

For an overview of all events scheduled or endorsed so far by ALFI in 2015, have a look at the ALFI events calendar.

Check out all upcoming events. Click on  "Search Events" to filter by event type.

Note: the event calendar allows to have events listed either chronologically or by event category. Click on the name of the event for detailed information.

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Past ALFI events

24 & 25 March 2015: ALFI Spring Conference

‘Asset management moves centre stage‘ was the topic of ALFI’s 2015 Spring Conference that brought together during two days more than 800 representatives from supervisory authorities and regulators, government bodies and supra-national organisations, fund promoters and distributors, consulting companies and law firms, financial institutions and asset management companies, custodians and service providers, trade bodies and specialised media at the New Conference Center in Luxembourg/Kirchberg. The topics discussed at this yearly event, where no less than 58 exhibitors showcased their products and services, were as diverse as the audience. The Gala Cocktail Reception at the prestigious Cercle Cité at the close of the first conference day offered participants a dignified setting for deepening existing and making new contacts.

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Upcoming LFF events

13 - 15 April, 2015: Financial mission to Canada

Luxembourg for Finance is organizing a Financial Mission to Canada in April 2015. Destinations are Toronto and Montreal, two economic hotspots in Canada. The mission will be led by HE Pierre Gramegna, Minister of Finance. Valuable insights into various aspects of Luxembourg's financial services will be given at LFF events in Toronto (13 April) and Montreal (15 April).

(Read more)

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4 May 2015: Financial mission to Stockholm

Luxembourg for Finance is organising a financial mission to Stockholm on Monday, 4 May 2015, led by HE Pierre Gramegna, Minister of Finance. During panel discussions, where key experts will discuss cross-border solutions and opportunities for Swedish investors. Topics will cover Responsible Investment, fund distribution, Private Equity, Private Banking and insurance.

(Read more)

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