The European Securities and Markets Authority (ESMA)'s consolidated Guidelines on ETFs and other UCITS issues (Guidelines)1 entered into force on 18 February 2013. On the same day, the Commission de Surveillance du Secteur Financier (CSSF) published its Circular 13/559 incorporating the Guidelines into its supervisory practice. In addition, ESMA published Questions and Answers (Q&A) on 15 March 2013 (updated on 11 July 2013) on the practical application of the Guidelines.
The Guidelines introduce disclosure and documentation requirements as well as a number of new substantive requirements applicable to UCITS ETFs and other UCITS, index-tracking by UCITS, the use of efficient portfolio management (EPM) techniques and over-the-counter (OTC) derivatives by UCITS, the management of collateral received by UCITS in this context, and the eligibility of financial indices for investments by UCITS.
This briefing gives an overview of the changes to the relevant Luxembourg regulatory environment brought about by the Guidelines as specified by the Q&A. It focuses on actions to be taken by Luxembourg UCITS in order to comply with the Guidelines, in particular as regards the new substantive requirements and the amendments to fund documentation required by the Guidelines.
The Guidelines’ stated purpose is to enhance the protection of UCITS investors. ESMA’s review process leading to the adoption of the Guidelines was originally triggered in particular by concerns regarding index-tracking UCITS ETFs and their securities lending activities. However, the scope of the Guidelines has been broadened to apply to all UCITS ETFs and other UCITS generally.
The Guidelines address the following issues:
- (leveraged) index-tracking,
- UCITS ETFs, including passively as well as actively-managed UCITS ETFs,
- The use by UCITS of EPM techniques (such as securities lending, repurchase and reverse repurchase agreements) and total return swaps (TRS) and other derivatives with similar characteristics,
- the management of collateral received by UCITS in the context of EPM and derivatives, and
- the eligibility of financial indices for investments by UCITS.
1. New Substantive Requirements
This Section considers the new substantive requirements introduced by the Guidelines and their impact on Luxembourg UCITS.
1.1 UCITS ETFs
The Guidelines define a UCITS ETF as a UCITS at least one unit or share class of which is traded throughout the day on at least one regulated market or multilateral trading facility2 with at least one market maker which takes action to ensure that the stock exchange value of its units or shares does not significantly vary from its net asset value (NAV) and, where applicable, its indicative NAV (i.e. the measure of the intraday value of the NAV of a UCITS ETF based on the most up-to-date information).
The Guidelines require any UCITS ETF falling within the scope of the above definition to be renamed so as to include the identifier "UCITS ETF" in its denomination. UCITS not meeting this definition shall not use this identifier, nor shall they use the designations "ETF" or "exchange traded fund". ESMA clarifies in its Q&A that in the case of umbrella UCITS the identifier must be included in the sub-fund name. Where all sub-funds are exchange-traded, the identifier may, but does not have to, in addition be included in the name of the umbrella.
In view of strengthening the rights of investors who have acquired their units or shares on the secondary market, the Guidelines further require UCITS ETFs to allow such investors to sell their units or shares directly back to the UCITS ETF where the stock exchange value of the units or shares of the UCITS ETF significantly varies from its NAV. In such situations, the regulated market on which the UCITS ETF is quoted must be informed that the UCITS ETF is open for direct redemptions. The costs for such direct redemptions must not be excessive. In its Q&A ESMA holds that where a direct redemption right for secondary market investors arises, the UCITS ETF or its management company does not necessarily need to be in direct contact with secondary market investors but should make sure that appropriate processes are in place in order to allow direct redemptions when needed.
- Amend names of sub-funds qualifying as UCITS ETFs to include the identifier "UCITS ETF"
- Adapt redemption policy to allow direct redemptions in cases where the stock exchange value of the UCITS ETF's units/shares significantly varies from its NAV
1.2 Efficient Portfolio Management1.2.1 Revenues arising from the Use of EPM Techniques
The Guidelines require all revenues arising from EPM techniques, net of direct and indirect operational costs, to be returned to the UCITS. ESMA further specifies that the direct and indirect operational costs deducted from the revenues returned to the UCITS must not include hidden revenue.
1.2.2 Recallability and Termination Rights
CSSF Circular 08/3563 already requires Luxembourg UCITS lending out their securities to ensure that they are entitled to request the return of the securities in a manner that enables them, at all times, to meet their redemption obligations towards unitholders/shareholders. The Guidelines now more strictly require UCITS to ensure that they are able at any time to recall any security that has been lent out or to terminate any securities lending agreement into which they have entered.
As regards (reverse) repurchase agreement transactions, CSSF Circular 08/356 also already requires that the volume of the (reverse) repurchase agreement transactions is kept at a level such that Luxembourg UCITS are able, at all times, to meet their redemption obligations towards unitholders/shareholders. According to the Guidelines, UCITS must further be able, at any time, to:
- recall the full amount of cash or to terminate reverse repurchase agreements either on an accrued or on a mark-to-market basis (if on a mark-to-market basis, then the market value of the reverse repurchase agreement must be used for the calculation of the UCITS' NAV), and
- recall the securities subject to repurchase agreements or terminate the repurchase agreements.
- Review EPM revenue-sharing arrangements and revise if required to ensure that all revenues, net of direct and indirect operational costs, go to UCITS
- Review securities lending and (reverse) repurchase agreements with regard to recallabiltiy and termination rights
- Add counterparty risk created by EPM techniques to counterparty risk linked to OTC derivatives for the purpose of calculating all limits laid down in Article 43 of the 2010 Law
- Implement a liquidity risk management process taking into account EPM techniques
- Review roles of derivatives counterparties and comply with UCITS delegation rules (including approval of the counterparty by the CSSF as investment manager) where the counterparty assumes discretion as described above
ESMA further specifies that fixed-term (reverse) repurchase agreements not exceeding seven days will be considered as allowing the assets to be recalled at any time by the UCITS.
1.2.3 Counterparty/Concentration Risk
CSSF Circular 08/356 (as amended by CSSF Circular 11/512)4 already requires Luxembourg UCITS to take the net exposure to a counterparty arising from EPM techniques into account when calculating the 20% limit for investments in a single body provided for by Article 43 of the law of 17 December 2010 on undertakings for collective investment, as amended (2010 Law).5 The Guidelines now codify this requirement also at EU level.
In addition, the Guidelines require to apply the counterparty limits of 10% (for credit institutions) and 5% (in other cases) set forth in Article 43 (2) of the 2010 Law as combined limits to counterparty to risk exposures arising from OTC derivatives as well as from EPM techniques.
1.2.4 Liquidity Risk
The Guidelines expressly require the UCITS’ liquidity risk management process to take into account the UCITS’ use of EPM techniques in order to ensure their ability to comply at any time with their redemption obligations (see section 2.6.1).
As regards derivative transactions, the Guidelines inter alia address the practice under which the counterparty to a derivative entered into by the UCITS is effectively given discretion over the composition or management of the UCITS’ investment portfolio or over the underlying of the derivative, e.g. where the counterparty may be entitled to select assets or the weighting of assets that constitute the underlying reference portfolio of a TRS.
ESMA is of the view that in such cases the UCITS’ counterparty must be considered as an investment manager of the UCITS and that the requirements applicable to the delegation of investment management functions by UCITS shall apply to the relationship with such counterparty. According to ESMA's Q&A, these principles apply also where any decisions of the counterparty are subject to the UCITS' approval.
1.4 Management of Collateral received by UCITS
CESR’s Guidelines on risk measurement and the calculation of global exposure and counterparty risk for UCITS (Risk Measurement Guidelines)6 already set forth requirements applicable to collateral provided to a UCITS in the context of OTC derivatives and which the UCITS uses to reduce its counterparty risk arising from OTC derivatives.
The Guidelines now tighten such requirements and also make them applicable to both collateral received in the context of EPM techniques and collateral received in the context of OTC derivative transactions.
In particular, the following collateral management requirements are new or more stringently worded in comparison with the requirements set out in CESR's Risk Measurement Guidelines.
- non-cash collateral received must be traded on a regulated market or multilateral trading facility with transparent pricing,
- all collateral received must be included in the calculation of the issuer control limits set forth by Article 56 of the UCITS Directive7 (Article 48 of the 2010 Law).
- Review collateral management policy to ensure compliance with the above new requirements
1.5 Financial Indices
The Guidelines clarify the criteria to be met by financial indices in order to be eligible for investments by UCITS.
1.5.1 Commodities and indices as underlyings of UCITS eligible indices6. ESMA further clarifies that subcategories of a commodity (e.g. from different regions or markets or derived from the same primary products by an industrialised process) must be considered as being the same commodity, except where the subcategories are not highly correlated.
ESMA's Q&A further consider that the assessment of the eligibility of an index does not require a look-through regarding the diversification of an underlying index. However, in assessing the eligibility of an index, the rebalancing frequency of the underlying index should be taken into account, and the underlying index must also meet the transparency requirements set out below.
1.5.2 Adequate Benchmark
The existing general legal requirement that an index must represent an adequate benchmark for the market to which it refers, is specified as follows by the Guidelines:
- the index must have a clear, single objective,
- the universe of the index components and the basis on which these components are selected must be clear to investors and competent authorities, and
- where cash management is included as part of the index strategy, the UCITS must be able to demonstrate that this does not affect the objective nature of the index calculation methodology.
- are based solely on algorithmic non-subjective frameworks,
- are generally published on an ex ante basis,
- draw on publicly available criteria (or data), and
- do not rely on the judgment of the index-provider, for example, indices which follow mechanical rebalancing formulae.
- the full calculation methodology to allow investors to replicate the index (including detailed information on the index constituents, their weightings, index calculation, re-balancing methodologies, index changes, operational difficulties in providing timely or accurate information, and other important parameters to be taken into account in replicating the index), and
- information on the performance of the index.
- the methodology for the selection and rebalancing of the components must be based on pre-determined rules and objective criteria,
- the index provider must not accept payments from potential index components for the inclusion of index components, and
- the index methodology must not allow for retrospective changes to previously published index values (backfilling).
- as regards the requirement for the index to represent an adequate benchmark of the market to which it refers, the Guidelines require the due diligence to take into account whether the index methodology contains an adequate explanation of the weightings and classification of the components on the basis of the investment strategy,
- the due diligence must also cover matters relating to the index components, and
- the due diligence must also assess the availability of information on the index, including whether there is a clear narrative description of the benchmark, whether there is an independent audit and the scope of such audit, and the frequency of index publication and whether this will affect the ability of the UCITS to calculate its NAV.
- Review financial indices currently invested in to ensure compliance with the above new requirements and, if required, change indices
- Update due diligence documentation on index eligibility in light of the above requirements
- Index-tracking UCITS9 must include in their prospectus:
- a clear description of the indices tracked, including information on their underlying components (a link to a website displaying such information is also possible in order to avoid the need of frequent prospectus updates),
- information on the index-tracking method (e.g. full or sample-based physical replication and/or synthetic replication and, if both, physical and synthetic replication methods, are used, whether they are used at the same time or alternatively) and its impact in terms of exposure to the underlying index and counterparty risk,
- information on the anticipated level of tracking error (i.e. the volatility of the difference between the return of the UCITS and the return of the index or indices tracked) in normal market conditions, and
- a description of the factors affecting the UCITS’ ability to track the index’ performance (such as e.g. transaction costs, small illiquid components, dividend reinvestment etc.).
- Index-tracking leveraged UCITS10 must include in their prospectus a description of:
- the leverage policy, including how leverage is achieved as well as the costs (if any) and the risks associated with this leverage policy,
- the impact of any reverse leverage (short exposure), and
- how the performance of the UCITS may differ significantly from the multiple of the index performance over the medium to long term.
- Any UCITS ETFs must include in its prospectus:
- its policy regarding portfolio transparency,
- where the information on the portfolio may be obtained, including where the indicative NAV (if applicable) is published,
- the method and frequency of the calculation of the indicative NAV (if applicable), and
- a specific warning11 where units or shares purchased on a secondary market are not redeemable from the UCITS ETF. The procedure and costs for direct redemptions by the UCITS ETF in exceptional circumstances (see Section 1.1) shall also be disclosed in the prospectus.
- The prospectus of an actively managed UCITS ETF shall in addition contain:
- a clear disclosure of the fact that the UCITS ETF is actively managed, and
- information on how it will meet its investment policy, including, if applicable, its intention to outperform an index.
- the EPM techniques the UCITS intends to use as well as the associated risks (as already required by CSSF Circular 08/356), including counterparty risk, potential conflicts of interests, and their impact on the performance of the UCITS,
- the policy regarding direct and indirect operational costs/fees arising from EPM techniques that may be deducted from the revenue delivered to the UCITS, and
- the identity of the entities to which such direct and indirect costs/fees are paid and any relationship they have with the management company or depositary of the UCITS (alternatively this information may, according to ESMA's Q&A, be published in the annual report).
- the underlying strategy and composition of the investment portfolio or index, and
- the counterparty(ies) to the derivative transactions, the counterparty risk and the potential impact on investor returns.
- the extent to which the counterparty assumes any discretion over the composition or management of the UCITS’ investment portfolio or over the underlying of the derivative, and whether the approval of the counterparty is required in relation to any UCITS investment portfolio transaction, and
- where applicable, the identification of the counterparty as investment manager of the UCITS (see Section 1.3).
- If the UCITS intends to make use of the possibility to raise the 20% limit for exposure to a single issuer to 35% under exceptional market conditions, this must clearly be disclosed in the prospectus together with information on the exceptional market conditions under which the 20% limit for exposure to a single issuer may be raised, and the rebalancing frequency of the indices and its effect on costs within the strategy to be disclosed in the prospectus of the UCITS.
- Update prospectus to include – as relevant – the above disclosures on index-tracking, leveraged index-tracking, UCITS ETFs, the use of EPM techniques, the use of TRS and similar derivatives, collateral management and investments in indices, and also to bring the prospectus in line with the new substantive requirements set out in Section 1
- Update articles of incorporation/management regulations of UCITS ETFs to include identifier "UCITS ETF"
- Index-tracking UCITS must include in their KIID a summary of the prospectus disclosure on the method used for tracking the index and its impact in terms of exposure to the underlying index and counterparty risk.
- Index-tracking leveraged UCITS must include in their KIID a summary of the disclosure to be included in their prospectus as set out in Section 2.1.1.
- UCITS ETFs must include in their KIID: – the identifier "UCITS ETF", and – information on the policy regarding portfolio transparency and where information on the portfolio may be obtained, including information on where the indicative NAV (if applicable) is published.
- In addition, actively managed UCITS ETFs must include in their KIID: – a specific disclosure that they are actively managed, and – how they will meet the stated investment policy, including, where applicable their intention to outperform an index.
- Update KIIDs of index-tracking (leveraged) UCITS and UCITS ETFs to include the above Disclosures
- the identifier "UCITS ETF",
- the warning required by the Guidelines where units or shares purchased on the secondary market are generally not redeemable from the UCITS ETF (see Section 2.1.2),
- a description of the policy regarding portfolio transparency and where information on the portfolio may be obtained, including where the indicative NAV (if applicable) is published, and
- in the case of actively managed UCITS ETFs, a specific disclosure that the UCITS ETF is actively managed, and how it will meet the stated investment policy, including, where applicable its intention to outperform an index.
- Update marketing communications relating to UCITS ETFs to include the above disclosures
- state the size of the tracking error at the end of the period under review,
- provide an explanation of any divergence between the anticipated tracking error as indicated in the prospectus and the realised tracking error for the relevant period, and
- disclose and explain the annual tracking difference between the performance of the UCITS and the performance of the index tracked.
- the exposure obtained through EPM techniques,
- the identity of the counterparty(ies) to these EPM techniques,
- the type and amount of collateral received to reduce counterparty exposure,
- the revenues arising from EPM techniques for the entire reporting period together with the direct and indirect operational costs/fees incurred, and
- the identity of the entities to which direct and indirect costs/fees arising from the use of EPM techniques are paid and any relationship they have with the management company or depositary of the UCITS (only required in the annual report if this information is not already contained in the prospectus).
- the underlying exposure obtained through derivatives,
- the identity of the counterparty(ies) to these derivatives, and
- the type and amount of collateral received to reduce counterparty risk.
- Ensure that financial reports include the above information on index-tracking, the use of EPM techniques and the use of TRS and similar derivatives as relevant
- adequately capture the risks arising from these activities (CSSF Circular 11/512 only required the risk management process to capture the counterparty risk arising from the use of EPM techniques), and
- include a liquidity risk management process taking into account the EPM techniques used and ensuring the UCITS' ability to comply at any time with their redemption obligations.
- identify, manage and mitigate the risks linked to the management of collateral, such as operational and legal risks,
- include a liquidity stress testing policy enabling the UCITS to assess the liquidity risk attached to the collateral, if they receive collateral for at least 30% of their assets, and
- include a haircut policy adapted to each class of assets received as collateral.
- Update risk management process to address all risks arising from EPM techniques and to include a liquidity risk management process taking into account EPM techniques, a collateral management policy, a liquidity stress testing policy and a haircut policy as relevant
- Amend securities lending and (reverse) repurchase agreements if and as required to comply with the Guidelines' requirements in particular as regards recallability, termination and collateral management
- Amend ISDA agreements if and as required to comply with the Guidelines' requirements regarding the role of the counterparty and collateral management
- Undertake documented due diligence on the eligibility of indices
- Existing UCITS using EPM techniques and/or derivatives have 12 months to comply with the Guidelines' collateral management requirements (see Section 1.4), except for the requirements regarding the reinvestment of cash collateral, which shall be complied with immediately by any new reinvestments of collateral made after entry into force of the Guidelines.
- Existing UCITS that have entered into revenue sharing arrangements prior to 18 February 2013 have 12 month to comply with the requirement that all the revenues arising from EPM techniques, net of direct and indirect operational costs, must be returned to the UCITS.
- Existing UCITS investing in financial indices have 12 months to align such investments to the relevant requirements of the Guidelines (see Section 1.5).
- Requirements relating to the contents of the prospectus, articles of incorporation/management regulations, KIID and marketing communications (including also the use of the identifier "UCITS ETF" where required) must be complied with at the next update of such document, but no later than 18 February 2014. ESMA's Q&A further allow UCITS using EPM techniques to benefit from the same transitional provision to bring the agreements governing the EPM techniques in line with the Guidelines.
- According to the Q&A, a transitional period of 12 months also applies in relation to the requirements regarding counterparty risk exposure (see section 1.2.3),
- Requirements to publish information in the financial reports and accounts of an existing UCITS do not apply in respect of any accounting period that ended before 18 February 2013.
- Existing structured UCITS (i.e. UCITS which process a predetermined maturity date) are not required to comply with the Guidelines provided that no new subscriptions are accepted after 18 February 2013.
- The Guidelines further expressly state that existing UCITS ETFs must comply immediately with the requirements regarding the treatment of secondary market investors (see Sections 1.1).
The Guidelines further provide that an index created at the request of a limited number of market participants according to their specifications cannot be considered as an adequate benchmark for the market to which it refers.
ESMA emphasises that investors must be able to replicate the index. This implies that indices which rebalance on an intra-day or daily basis will not be eligible for investments by UCITS, with an exception however for technical adjustments to indices (such as leveraged indices or volatility target indices). ESMA's Q&A further specify that such technical adjustments include adjustments which:
In order for the index to be eligible for investments by UCITS, ESMA requires that the index provider must publish:
This information must be easily accessible, free of charge, by investors and prospective investors, for example via the internet. As regards weightings of index constituents, ESMA allows the weightings to be published after each rebalancing on a retrospective basis at the latest before the next following rebalancing takes place. ESMA further specifies that this information must be published also in relation to indices underlying the index in which the UCITS invests.
The Guidelines provide for further rules, including:
The index must be subject to independent valuation. According to ESMA's Q&A this requirement does not prevent UCITS from investing in indices for which the valuation is performed by the index provider, insofar as the index provider's unit in charge of the valuation of the index is functionally independent from the unit responsible for the design of the index and the UCITS carries out is own due diligence; also, the remuneration of the staff responsible for the valuation of the index should not be linked to the performance of the index.
1.5.6 Due Diligence
The CSSF's regulatory practice already requires UCITS to carry out appropriate documented due diligence on the eligibility of the index.
The Guidelines provide further guidance on such due diligence as follows:
2. Disclosure and Documentation Requirements
This Section summarises the impact of the Guidelines on the existing documentation of Luxembourg UCITS, including the prospectus, articles of incorporation/management regulations, key investor information document(s) (KIID), other marketing materials, and financial reports and also lists further documentation required by the Guidelines to be put in place.
The Guidelines require UCITS to include the following disclosures in their prospectus where relevant.
2.1.1 Index-Tracking UCITS and Index-Tracking Leveraged UCITS
2.1.2 UCITS ETFs
The Guidelines require UCITS ETFs to use the identifier "UCITS ETF" in their prospectuses. In addition:
2.1.3 UCITS Using EPM Techniques
The Guidelines require the prospectus of a UCITS using EPM techniques to disclose:
2.1.4 UCITS using Derivatives
The Guidelines require the prospectus of a UCITS entering into TRS or similar derivatives to include information on:
In addition the prospectus should disclose in relation to any derivative entered into:
2.1.5 Management of Collateral for EPM Techniques and Derivatives
The Guidelines require the UCITS' collateral policy to be disclosed in the prospectus. This includes information on the permitted types of collateral, the level of collateral required, the haircut applied, and, if cash collateral shall be reinvested, details on such reinvestment, including the risks arising from the reinvestment policy.
Where a UCITS intends to invest in a financial index, the Guidelines require:
In light of the Guidelines’ requirements regarding the accessibility of information on the indices' calculation methodology and performance, we recommend disclosing in the prospectus where such information can be obtained.
2.1.7 New Substantive Requirements
UCITS' prospectuses will also need to be amended to reflect the new substantive requirements introduced by the Guidelines, in particular the provisions of the prospectus regarding the counterparty risk limitations (see Section 1).
2.2 Articles and Management Regulations
In the case of UCITS ETFs, the articles of incorporation/management regulations of the UCITS ETFs will need to be amended in order to reflect ESMA's requirement regarding the use of the identifier "UCITS ETF". Even if the identifier requirement were to apply at sub-fund level only and the names of the sub-funds did not appear in the UCITS ETF's articles of incorporation/management regulations, the Guidelines would arguably nevertheless require the articles of incorporation/management regulations of UCITS ETFs to include the identifier "UCITS ETF".
UCITS' KIIDs are required by the Guidelines to include the following disclosures.
2.3.1 Index-Tracking UCITS and Index-Tracking Leveraged UCITS
2.3.2 UCITS ETFs
2.4 Marketing Communications
The Guidelines require marketing communications relating to UCITS ETFs to contain the following information:
2.5 Financial reports2.5.1 Index-Tracking UCITS
The annual reports of index-tracking UCITS must:
In addition, the semi-annual reports of index-tracking UCITS must also state the size of the tracking error at the end of the period under review.
2.5.2 UCITS Using EPM Techniques
CSSF Circular 08/356 already required UCITS to disclose in their financial reports the global valuation of securities lent out and the total amount of open (reverse) repurchase agreement transactions as of the reports' reference dates.
The Guidelines now require the annual report of any UCITS using EPM techniques to contain detailed information on:
2.5.3 UCITS Using derivatives
The Guidelines require the annual report of UCITS entering into derivatives to contain details on:
2.6 Other Documentation
In addition, the Guidelines require UCITS to have in place the following documented policies and procedures.
2.6.1 UCITS using EPM Techniques and Derivatives
The risk management process of UCITS using EPM techniques must:
The risk management process of UCITS using EPM techniques and/or derivatives must further:
Although not expressly required by the Guidelines, UCITS having entered into securities lending agreements may need to amend such agreements, in particular in order to ensure their ability to recall at any time securities lent out or to terminate the securities lending agreement at any time, and to comply with the Guidelines' collateral management requirements (see above Section 1.4). (Reverse) repurchase agreements may likewise need to be amended, in particular to allow the UCITS to recall at any time the full amount of cash/securities or to terminate the agreement at any time.
UCITS having entered into ISDA agreements with counterparties that are given discretion over the UCITS portfolio/the underlyings of derivatives, must have the necessary documentation in place in order to be able to comply with the requirements applicable to the delegation of the investment management function by UCITS (see above Sections 1.3, 2.1.4 and 2.5.3). ISDA credit support documentation may have to be amended in view of the Guidelines' collateral management requirements (see above Section 1.4).
2.6.2 UCITS investing in Financial Indices
As indicated above in Section 1.5.6, UCITS investing in financial indices must carry out a documented due diligence on the eligibility of the indices.
3. Transitional Provisions
The Guidelines came into force on 18 February 2013. However, UCITS established prior to the entry into force of the Guidelines are given until 18 February 2014 to comply with some of the Guidelines' requirements, whilst others apply with immediate effect.
3.1 New UCITS
UCITS established after 18 February 2013 must comply immediately with the Guidelines.
3.2 Existing UCITS
As regards existing UCITS created before 18 February 2013, the Guidelines provides for the following transitional provisions:
4. Further CSSF and ESMA Guidance
On 18 February 2013, the CSSF issued Circular 13/559 the purpose of which is to incorporate the guidelines in its supervisory practice.
In addition to issuing Circular 13/559, it may be anticipated that the CSSF will revise its Circulars 08/356 and 11/512 in order to align them with the new requirements of the Guidelines.
Moreover, ESMA's Q&A on the Guidelines, last updated on 11 July 2013, will be continually edited and updated and may at a later stage partly be converted into ESMA guidelines or recommendations.
Joëlle Hauser heads the Clifford Chance Luxembourg Investment Funds Department and has been the lead partner on all of the Luxembourg fund matters. Her practice includes infrastructure, retail, real estate, private equity and institutional funds. She is a member of the “Comité OPC” (UCI Committee) of the CSSF and an active member of various working groups of ALFI.
Caroline Migeot has been involved in the structuring and set-up of numerous fund structures, including retail and institutional investment funds (UCITS, real estate, private equity, fund of funds, carbon, green and microfinance funds) as well as SICARs. Her experience also includes negotiations with and advice to asset managers, financial groups, institutional and retail investors in relation to these investment structures.
Alfred Sawires has acquired extensive experience in advising clients on legal, regulatory and organisational aspects of the creation, structuring, management and servicing of investment funds. He has gained particular expertise in handling regulatory matters such as anti-money laundering and risk management requirements for investment funds and also regularly assists clients in negotiating ISDA agreements.
International law firm Clifford Chance combines the highest global standards with local expertise. Leading lawyers from different backgrounds and nationalities come together as one firm, offering unrivalled depth of legal resources. In Luxembourg, a team of over 80 lawyers advise both international and Luxembourg-based clients, including financial institutions, business enterprises and state and regulatory bodies, on a wide range of matters. Our Luxembourg Funds group’s focused commitment to the funds industry puts us at the forefront of the development of cutting edge products and market trends, which in turn results in us providing a value enhancing service to our clients. This article is republished by permission of Clifford Chance. For more information, please visit www.cliffordchance.com.