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    NewsDigest september 23, 2010    
          in this edition      
    1. Headlines
2. ALFI events
3. Luxembourg for Finance events



CESR consultations regarding Key Information Document (KID)

On 20 July 2010, CESR published the following consultation papers in respect of key investor information:

ALFI responded to the first three consultations. The statements are available at our website:

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EFAMA-KPMG report: analysis of the tax implications of UCITS IV

The European Fund and Asset Management Association (EFAMA) and KPMG International LLP published jointly an industry research report which analyses the tax implications of UCITS IV:

Please click here

The report aims to identify tax provisions that potentially prevent the EU funds industry from implementing UCITS IV in the way that it would like to and whether it is realistic to expect that evolving case law will permit the effective implementation of UCITS IV.

The tax findings focus on cross-border mergers, the introduction of a management company passport and master-feeder structures. The report is complemented by country reports.

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FATCA: IRS notice regarding implementation of information reporting and withholding compliance

The US Internal Revenue Service (IRS) published on 27 August 2010 notice 2010-60 regarding the implementation of the new information reporting and withholding compliance rules adopted earlier this year: http://www.irscompliance.org/downloadable/Notice_2010-60_August_27.pdf

A new chapter 4 to Subtitle A of the Internal Revenue Code expands the information reporting requirements imposed on foreign financial institutions (“FFIs”) with respect to certain US accounts. It also imposes withholding, documentation, and reporting requirements with respect to certain payments made to certain foreign entities. A brief summary of the new rules was included in our NewsFlash of 23 July 2010.

In particular, the notice describes priority issues involving the implementation of chapter 4, including the scope of obligations exempt from chapter 4 withholding, the definition of FFIs, the scope of collection of information and identification of persons by financial institutions, and the information that FFIs must report to the IRS pursuant to an agreement with respect to their US accounts.

The Notice solicits written comments from affected persons by 1 November 2010. ALFI contributes to the ongoing work at EFAMA level.

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UCITS IV level 1: publication of the Luxembourg draft law (projet de loi n° 6170)

On 6 August 2010, the Luxembourg Ministry of Finance passed on the draft law transposing the UCITS IV level 1 directive (2009/65/EC) into national law to the Parliament (Chambre des Députés).

The text is available (only in French) at the following link:


An overview of the legislative procedure was included in our newsflash of 6 August 2010. Please click here for a press release of the Luxembourg tax authority (Administration des Contributions Directes): http://www.impotsdirects.public.lu/archive/newsletter/2010/nl_11082010/index.html

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Investor Compensation Scheme Directive: adoption by the Commission of a proposal to amend Directive 97/9/EC of the E.P.

A proposal to amend Directive 97/9/EC of the European Parliament and of the Council on investor-compensation schemes has been adopted by the Commission in July 2010.

This proposal may, if adopted in its current form, substantially impact the fund industry. Indeed the current Investor Compensation Scheme Directive(ICSD) does not cover UCITS and their units' holders. This is to change with the Commission proposal: the Commission intends to make UCITS or UCITS depositories bear the costs of the coverage.
Furthermore, the schemes should be pre-funded and should amount to at least 0,5% of the assets under management.

ALFI is closely and actively following this new proposal.  Since its adoption, different actions and contacts have been taken in order to anticipate any further changes and to draw the attention of the European Institutions on the consequences that this new legislation could have on the European investment fund industry.

The text of the proposal, as well as the entire set of documents published by the Commission on that matter is available by using the following link:


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IOSCO publishes principles for direct electronic access to markets

The International Organization of Securities Commissions (IOSCO) has published a final report – Principles for Direct Electronic Access to Markets (DEA Principles) – containing principles designed to guide intermediaries, markets and regulators in relation to the areas of pre-conditions for direct electronic access (DEA), information flow and adequate systems and controls.

The final report is based on analyses of market and regulatory developments and of the responses received to the original consultation report – Policies on Direct Electronic Access – which identified and discussed the benefits, potential risks and concerns associated with direct electronic access to markets.

Please click here for the report:


A summary thereof is available at:


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OECD approved 2010 Update on OECD Model Tax Convention

On 23 July 2010, the OECD Council approved the 2010 Update to the OECD Model Tax Convention (http://www.oecd.org/dataoecd/23/43/45689328.pdf).

The contents of this update were previously released as a draft on 21 May and, after a few changes, the update was approved by the Committee on Fiscal Affairs on 22 June before being presented to the Council for final approval.

As part of the update, the Report on the Granting of Treaty Benefits with respect to the Income of Collective Investment Vehicles (http://www.oecd.org/dataoecd/59/7/45359261.pdf) which was approved by the Committee on 23 April 2010, will be added to the section of Volume II of the electronic and loose-leaf versions of the OECD Model Tax Convention that includes reports on the Model Tax Convention. Also, Appendix I of Volume II, which lists the status of tax conventions between OECD countries, will be replaced as a result of the revision and conclusion of new treaties since 2008.

A revised condensed version of the OECD Model that will include the changes resulting from the update will be published in September 2010.

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CESR sets out final guidelines on risk measurement and the calculation of global exposure and counterparty risk for UCITS

On 28 July 2010, the Committee of European Securities Regulators (CESR) published guidelines on risk measurement and the calculation of global exposure and counterparty risk for Undertakings for Collective Investments in Transferable Securities (UCITS) (the Guidelines) and a feedback statement.

The purpose of the Guidelines is to provide both regulators and companies managing UCITS with detailed methodologies to calculate the global exposure and counterparty risk for UCITS, whilst fostering a level playing field in the area of risk measurement among European Union Member States. The Guidelines will accompany the Level 2 implementing measures of the UCITS Directive, and will become applicable from 1 July 2011.

The Guidelines set out detailed methodologies that have to be followed by UCITS when they use either the commitment or the more advanced Value-at-Risk (VaR) approach for calculating their global exposure. For UCITS using the VaR approach (designed for more complex investment strategies), the Guidelines also provide additional safeguards such UCITS should put in place when calculating their global exposure.

The Guidelines also contain a set of high-level principles relating to assets that may be used as collateral and cover rules for transactions in financial derivative instruments.

Guidelines:  http://www.cesr.eu/popup2.php?id=7000

Feedback statement:  http://www.cesr.eu/popup2.php?id=7001

Press release:  http://www.cesr.eu/popup2.php?id=7002

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MiFID review - CESR advice

The Committee of European Securities Supervisors (CESR) has published its first set of technical advice to the European Commission in the context of reviewing the Markets in Financial Instruments Directive (MiFID). The advice includes policy proposals on equity markets, non-equity markets transparency, transaction reporting and investor protection and intermediaries.

  • Technical advice on equity markets.  CESR's recommendations include improving the pre-trade transparency regime for regulated markets (RMs) and multilateral trading facilities (MTFs), reviewing the definition of (and obligations for) systematic internalisers - CESR has recommended that the objective of the systematic internaliser regime be clarified and that a broader review of this regime should be considered within the MiFID review. It has also recommended establishing a new regulatory regime for broker crossing systems (this would include notification by investment firms that they operate such a system and publication of a list of broker crossing systems by CESR/the European Securities and Markets Authority (ESMA)), addressing certain options and discretions of MiFID and tackling market micro-structural issues.
  • Technical advice on non-equity markets transparency.  In its advice CESR makes detailed proposals on the calibration of the MiFID post-trade transparency regime for non-equity financial instruments following its earlier report on transparency of corporate bond, structured finance product and credit derivatives markets of July 2009. It has recommended, amongst other things, (i) re-defining the scope of a post-trade transparency regime for bonds, (ii) defining a phased approach for the introduction of a post-trade transparency regime for structured finance products, (iii) extending the scope to clearing eligible sovereign CDS, and (iv) introducing pre-trade transparency requirements for non-equity financial instruments traded on RMs and MTFs.
  • Technical advice on transaction reporting.  CESR’s suggested amendments are designed to enhance market supervision and to ensure greater market integrity. Some of the key recommendations include: (i) the introduction of a third trading capacity (client facilitation); (ii) requiring the collection of and defining standards for client and counterparty identifiers; and (iii) requiring the collection of client ID when orders are transmitted for execution.
  • Technical advice on investor protection and intermediaries.  CESR’s main recommendations include: (i) requiring trading venues to produce reports demonstrating execution quality; (ii) the clarification of the difference between MiFID complex and non-complex financial instruments; and (iii) clarifying the scope of the definition of investment advice.

Next steps.  Although these papers form the most extensive part of CESR’s advice to the Commission within the context of the MiFID review, there are some work streams that remain to be finalised in the next few months. CESR intends to publish feedback statements on the consultations conducted on equity markets, non-equity markets transparency and investor protection and intermediaries. Shortly afterwards, CESR expects to provide the Commission with its technical advice on the basis of responses to three ongoing consultations on:

  1. client categorisation,
  2. standardisation and exchange trading of over-the-counter (OTC) derivatives, and
  3. transaction reporting on OTC derivatives and extension of the scope of transaction reporting obligations. CESR will  deliver its technical advice on binding post-trade transparency standards and obligations in the second set of submissions.

First set of technical advice:  http://www.cesr.eu/popup2.php?id=7003

Press release:  http://www.cesr.eu/popup2.php?id=7009

Feedback statement on transaction reporting:  http://www.cesr.eu/popup2.php?id=7003

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CESR publishes report on trends, risks and vulnerabilities in financial markets

The Committee of European Securities Regulators (CESR) has published, for the first time, a report on trends, risks and vulnerabilities that are directly relevant to securities markets regulators. CESR wishes to contribute more to the understanding of trends and risks in financial markets and communicate its insights to the general public through regular reports. These reports will focus mainly on the short and medium term, without losing sight of long-term developments. The analysis will focus on the activity in European financial markets, but will also take full account of the international dimension of the various markets and instruments analysed.

CESR's report covers developments in European securities markets, both by considering broader trends and risks, and by looking into specific areas, such as activities in sovereign and corporate debt markets, securitisation in general, and the fund industry (with a particular focus on the hedge fund sector and Undertakings for Collective Investment in Transferable Securities (UCITS)). It also considers recent developments in mergers and acquisitions, and initial public offerings.

The findings of the report will inform Europe’s securities supervisors in their day-to-day analysis of supervisory priorities, and will inform the emphasis and importance given to particular factors as they are weighed in the development of regulatory policy.

Report:  http://www.cesr.eu/popup2.php?id=7015

Press release:  http://www.cesr.eu/popup2.php?id=7014

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Official Gazette: exemption of the subscription tax for funds investing in Microfinance

On 30 July 2010, a Grand Ducal Regulation of 14 July 2010 that determines the conditions and criteria for the exemption of the subscription tax for “Undertakings for Collective Investments” (UCIs) and “Specialised Investment Funds” (SIFs) investing in Microfinance has been published in the official gazette - Mémorial A N° 127.

The Grand Ducal Regulation foresees that the UCIs and SIFs which hold the LuxFLAG Microfinance Label will be automatically exempted. UCIs and SIFs that do not hold the LuxFLAG Microfinance Label will also be able to benefit from the exemption under the condition that their investment policy stipulates that at least 50% of their assets are invested in one or more “Microfinance Institutions” (MFIs).

For more information, please visit: http://www.cssf.lu/index.php?id=22&tx_ttnews[cat]=31&cHash=d39faa4582

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LFF Media Watch September 1- 15, 2010


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ALFI events

20 October: ALFI Leading Edge Conference Series: ‘KID’ & Notification Procedure

The 2nd conference in the series will focus on: Key Information Document (KID) and the Notification Procedure - Paving the way for a successful implementation

Click here for the webpage that will take you to the conference programme.

The full conference programme will be available soon on the ALFI website www.alfi.lu (conference section).

Venue: RBC Dexia, Esch-Alzette

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08-11 November: ALFI Roadshow to Asia (Tokyo – Taipei – Hong Kong)

Tokyo– Monday 8 November – ½ day morning seminar – Ritz Carlton

Taipei– Wednesday 10 November – ½ day afternoon seminar – Grand Hyatt Taipei

Hong Kong– Thursday 11 November – full day seminar with workshops – Grand Hyatt

We are honoured to announce that H.E. Luc Frieden will deliver the welcome address at the Hong Kong seminar. A cocktail reception to announce the official opening of the ALFI representative office in Hong Kong will take place after this seminar in the presence of H.E. Luc Frieden.

Click here for the programmes and to register. (available soon)

Contact events@alfi.lu for any more information.

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24 & 25 November: ALFI European Alternative Investment Funds Conference

Click here for the webpage for the programme and all information.

Early bird rate for payments by 8 october.

Only a few exhibition spaces remaining.

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09 December: ALFI Roadshow to Frankfurt

Venue: Villa Kennedy Hotel.

All details and the programme coming soon.

Contact events@alfi.lu

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Luxembourg for Finance events

5 october: Financial seminar in Lyon


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14 october, Frankfurt: “Finanzplatz Luxemburg / Finanzplatz Frankfurt: Partner oder Mitbewerber?”

In collaboration with Börsen-Zeitung and Frankfurt Main Finance, Luxembourg for Finance is pleased to invite you to a round table “Finanzplatz Luxemburg / Finanzplatz Frankfurt: Partner oder Mitbewerber?”.

The event will take place at the Hotel Steigenberger, Frankfurt a.M. on the 14th October 2010.

The roundtable is composed of:

  • Thomas Neisse, Chairman of Bundesverband Investment und Asset Management (BVI)
  • Ernst Wilhelm Contzen, Chairman of the Luxembourg Bankers' Association (ABBL)
  • Claude Kremer, Chairman of the Association of the Luxembourg Fund Industry (ALFI)
  • Wolfgang Köhler, Member of the Board of DZ Bank
  • Hubertus Väth, General Manager of the Frankfurter Institut für Risikomanagement und Regulierung (FIRM)
  • The guest speech will be delivered by H.E. Mr. Luc Frieden, Finance Minister of Luxembourg

For further information and registration please click here

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25-28 october: LFF mission to South America: - Brazil, Uruguay and Chili

Please find here (Uruguay, Brazil, Chili) the "Save the Date" information related to the LFF mission to South America in Uruguay, Brazil and Chili the 25, 27 and 28 October 2010. The Invitation and details will follow.

For further information please contact Ms Violaine Mathurin from Luxembourg For Finance by mail at violaine.mathurin@lff.lu or by phone at +352 27 20 21 1.

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22 November: Official mission to Milan

The Agency Luxembourg for Finance will organise an official mission to Milan in November 2010 led by Mr. Luc Frieden, Minister of Finance and Chairman of Luxembourg for Finance.

A seminar on the Luxembourg financial sector is planned on the 22 November, in the morning. The seminar will be followed by a walking lunch offering participants possibilities for networking.

Presently, we have the pleasure to forward to your attention the Luxembourg for Finance registration form. A more detailed agenda will follow.

In case your organisation would be interested in joining Luxembourg for Finance for this official mission, we would be very grateful if you could return the enclosed registration form directly to Luxembourg for Finance before September 17th, 2010 (Ms Sophie Henry, fax: +352 27 20 21 399 or sophie.henry@lff.lu).

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