CSSF Updates

CCSF – April

CSSF: Update of Circular CSSF 21/769 on Governance and Security Requirements for Supervised Entities to Perform Tasks or Activities Through Telework

April 1, 2022

On March 31, 2022, the CSSF published Circular CSSF 22/804 – Update of Circular CSSF 21/769 on governance and security requirements for supervised entities to perform tasks or activities through telework. The purpose of the circular is to confirm the entry into force of Circular 21/679 on telework from July 1, 2022.

The Circular CSSF 21/769 on telework was supposed to enter into force on September 30, 2021. However, the CSSF decided in September 2021 to postpone the effective date due to the COVID-19 situation in Luxembourg. As per the CSSF press release, the Circular CSSF on telework was a response to market demand and based on reflections that started before the pandemic.

The circular will be reviewed, at the latest, 12 months after its entry into force, i.e., by June 30, 2023, to address potential abuses or any other shortcomings or deficiencies.

Read the full article here.

European Commission: Publication of the Delegation Regulation (Level 2) Of SFDR

April 6, 2022

On April 6, 2022, The European Commission adopted the final draft RTS submitted by ESAs to be used by financial market participants when disclosing sustainability-related information under SFDR. The European Commission published the delegated regulation, which sets down the disclosure obligations relevant to Article 8 and Article 9 funds, as well as to the financial market participants publishing PAI reports under Article 4 of the SFDR. The document is divided into six sections:

• The delegated regulation itself
• Annex 1, “Template principal adverse sustainability impacts statement”
• Annex 2, “Template pre-contractual disclosure for the financial products referred to in Article 8, paragraphs 1, 2 and 2a of SFDR and Article 6, first paragraph of Taxonomy Regulation”
• Annex 3, “Template pre-contractual disclosure for the financial products referred to in Article 9, paragraphs 1 to 4a of SFDR and Article 5, first paragraph of Taxonomy Regulation”
• Annex 4, “Template periodic disclosure for the financial products referred to in Article 8, paragraphs 1, 2 and 2a of SFDR and Article 6, first paragraph of Taxonomy Regulation”
• Annex 5, “Template periodic disclosure for the financial products referred to in Article 9, paragraphs 1 to 4a of SFDR and Article 5, first paragraph of Taxonomy Regulation”

The RTS will be subject to scrutiny by the European Parliament and the Council and are scheduled to apply from January 1, 2023.

Read the full article here.

CSSF: Circular CSSF 22/806 on Outsourcing Arrangements

April 22, 2022

On April 22, 2022, the CSSF published Circular CSSF 22/806 on outsourcing arrangements. The purpose of the circular is to implement the EBA guidelines on outsourcing arrangements into the Luxembourg regulatory framework. The document specifies guiding principles and lays down additional detailed requirements that supervised entities must observe when resorting to outsourcing arrangements. To do so, the circular is divided in three sections:

• The first lists the requirements in relation to outsourcing arrangements and includes definitions, scope of application, general principles and applicable governance requirements.
• The second describes specific requirements for ICT outsourcing arrangements relying, or not, on a cloud computing infrastructure.
• The third provides details on the applicable date of the circular.

The circular applies to:

• Credit institutions and professionals of the financial sector (PFS)
• Payment institutions and electronic money institutions subject to the Law of November 10, 2009 on payment services
• Investment fund managers subject to Circular CSSF 18/69
• UCITS funds that designate a management company
• Central counterparties
• Approved publication arrangements with a derogation and authorized reporting mechanisms with a derogation
• Market operators operating a trading venue
• Central securities depositories 
• Administrators of critical benchmarks

Furthermore, the CSSF stressed that the Circular must be read together with relevant legal provisions and other CSSF circulars on central administration, internal governance and risk management as applicable to supervised entities. The same day, the CSSF published a FAQ to provide clarification on some key aspects and to bring further clarity on the supervisory expectations of the regulator.

The circular is applicable from June 30, 2022 for all arrangements entered into force on or after this date. For existing outsourcing arrangements, the documents need to be updated by no later than December 31, 2022.

Read the full article here. 

CCSF – May

CSSF: Circular CSSF 22/810 on Investment Fund Marketing Notification Files

May 12, 2022

On May 12, 2022, the CSSF published Circular CSSF 22/810 on the marketing notifications of investment funds managed by Luxembourg-based investment fund managers. As per the new circular, pre-marketing notification, marketing notification and de-notification procedures will be submitted only via the new CSSF eDesk module, “ePassporting.”

The circular applies to:

• UCITS wishing to register or to de-notify for marketing shares/units in EU member states
• Luxembourg AIFM submitting a pre-marketing notification in Luxembourg and/or in EU member states
• Luxembourg AIFM wishing to register or to de-notify for marketing shares of AIFs in Luxembourg and/or in EU member states
• IFM of Luxembourg EuVECA and EuSEF submitting a pre-marketing notification in Luxembourg and/or in EU member states
• IFM of Luxembourg EuVECA and EuSEF wishing to register or to de-notify for marketing shares of AIFs in Luxembourg and/or in EU member states
  
   

Currently, the marketing procedures of AIFs managed by Luxembourg AIFM must be submitted to the CSSF via email. The notification letter and the annex are in word format and, depending on the EU member state (France or Germany for example), a separate letter including specific provisions must be drafted. Regarding the de-notification process, a notice in must be submitted to the CSSF and, in the event there is presence of local investors, a separate notice must be drafted.

The circular is applicable as from May 12, 2022 and the new module is available on eDesk from July 1, 2022.

Read the full article here.

CSSF: Circular CSSF 22/811 on the Authorization and Organization of Entities Acting as UCI Administrators

May 16, 2022

On May 16, 2022, the CSSF published Circular CSSF 22/811 on the authorization and organization of entities acting as UCI administrators. The circular specifies the principles of good governance and the CSSF requirements on internal governance and good practice applicable to them and applies to companies acting as administrators of Luxembourg and/or foreign regulated and nonregulated UCI.

The UCI administration may be performed by:

• IFMs established in Luxembourg, as well as foreign IFMs carrying out the activity of a UCI administrator for UCIs established in Luxembourg
• Regulated Luxembourg UCIs (UCITS, Part II UCIs, SIFs and SICARs)
• External service providers set up under the law of April 5, 1993 on the financial sector, such as licensed credit institutions, registrar agents, client communication agents and administrative agents

As per the circular, the UCI administration activity covers:

• The registrar function
• The NAV calculation and accounting function
• The client communication function

Like circular CSSF 18/698 on investment fund managers, the circular provides, among others, details on:

• The activity of the UCI administration (authorization requirements, organization of the three functions)
• The organizational arrangements (internal organization, relationship with depositary banks, delegation, IT/BCP)

Furthermore, and starting from June 30, 2023, UCI administrators will be required to provide information and documentation annually as listed in Annex B. The information and documentation must be submitted, at the latest, five months after the financial year-end.

Finally, the circular is applicable as from May 2022.

As part of their oversight activity, investment fund managers would need to ensure that delegates in charge of the UCI administration are implementing the new requirements as per the circular. This exercise can be conducted during due diligences (initial and ongoing) and/or ongoing monitoring.

Read the full article here.