Luxembourg Funds Intelligence Briefing

Top funds industry news May 25, 2020: German fund group casts doubt on rapid adoption of emergency liquidity measures

Germany’s fund industry group BVI has expressed doubt as to whether emergency liquidity management tools advocated by national and EU regulators, including swing pricing and redemption gates, can be implemented this year. The issue was more pressing in March, when a number of European funds, around half of them from Luxembourg, suspended redemptions amid extreme market volatility, which has since subsided. Luxembourg’s CSSF issued a notice to fund groups on April 7 clarifying that they could implement changes to swing pricing going beyond the maximum set out in the fund’s prospectus without notifying the regulator in advance.

— Simon Gray, Editor in Chief

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Asset Management

BVI says liquidity management tools probably can’t be implemented this year

Regulators including Germany’s BaFin and the European Securities and Markets Authority are pressing fund management firms to use liquidity management tools that have been permitted since the end of March to help them cope with market turbulence sparked by the coronavirus pandemic. Peggy Steffen, departmental director at German fund industry association BVI, says the group is working with members to implement the tools, including swing pricing and redemption gates, but she says that for technical reasons limits on redemptions probably cannot be implemented before 2021.

Best source: Börsen-Zeitung (subscription required, in German)
See also: Börsen-Zeitung (subscription required, in German)

Full economic recovery could take up to three years: Luxembourg for Finance survey

It is likely to take at least a year, and perhaps two or three, before the economy fully recovers from the impact of the coronavirus pandemic, according to 74% of the 183 senior asset management, bank and insurance executives surveyed by Luxembourg for Finance. Respondents say global recession is the greatest concern, with 82% believing that the pandemic will slow down globalisation, while 51% expect further fragmentation of the EU single market. Digitalisation is cited by 57% as a driver of future expansion, ahead of sustainable finance (52%) and global growth (43%).

Best source: Luxembourg Times (subscription required)
See also: Paperjam (in French)

Fund Services

Aztec Group makes senior appointments for private debt business

Fund service provider Aztec Group has appointed James Vella-Bamber as group head of private debt and Peter Brown as head of private debt for its Luxembourg business. Previously head of real assets with the firm in Luxembourg, Vella-Bamber will be responsible for the ongoing development of the group’s private debt offering, overseeing relationship management, operations and business development activity. Brown is a former managing director with Royal Bank of Scotland, most recently as head of funds banking in London.

Best source: Private Debt Investor


Commission gives Luxembourg four months to adopt all AML Directive provisions

The European Commission says that Luxembourg, along with eight other countries, risks penalties for failing fully to implement the provisions of the EU’s fifth Anti-Money Laundering Directive by the deadline of January 10. The member states, which also comprise Austria, Belgium, the Czech Republic, Estonia, Ireland, Greece, Poland and the UK, have been given four months to remedy the situation before infringement procedures are launched. Luxembourg’s Finance Ministry says that 98% of the directives provisions have already been transposed into law and the rest will be enacted in the coming weeks. The Commission also says Luxembourg’s transposition of the second Anti-Tax Avoidance Directive goes beyond permitted exemptions, notably by extending unlimited deductibility of interest for corporate income tax to securitisation entities, which do not qualify as financial undertakings under ATAD 2. The finance ministry describes the issues as purely technical.

Best source: Luxembourg Times (subscription required)

German fund group welcomes possible easing of MiFID disclosure requirements

German fund industry association BVI has welcomed the European Commission’s readiness to consider eliminating some of the disclosure requirements under MiFID II for professional customers. In response to a consultation about MiFID reform, the organisation says categories of differentiated consumer protection would be more helpful than warning labels. The BVI also opposes a prohibition on commission for investment advice, arguing that this gives yet another competitive advantage to insurers.

Best source: Börsen-Zeitung (subscription required, in German)


Finologee partners with Belgium’s Harmoney for KYC platform

Luxembourg financial technology platform operator Finologee and Belgian KYC specialist Harmoney have launched KYC Manager, an IT tool to help financial institutions comply with anti-money laundering and financing of terrorism rules. The firms say the platform connects the end-customer, the institution’s front office and its compliance department, facilitating digital customer onboarding and lifecycle management.

Best source: Paperjam (in French)
See also: Luxembourg Chronicle

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