The ALFI Digi Pulse USA on 20 May 2020 was a perfect opportunity for asset managers and service providers in North America and Latin America to hear from ALFI experts on the most recent regulatory developments affecting the investment fund and asset management industry in Luxembourg.
Marc-André Bechet, ALFI Deputy Director General, gave a brief introduction on the recent impact of the Covid-19 pandemic on the fund industry in Luxembourg. Having collected questions from its members, ALFI engaged in a structured dialogue with the authorities and in particular the CSSF, who, in return, published a number of clarifications and FAQs addressing these very particular market conditions. Marc-André stressed that all relevant information and documents are posted on a Covid-19 information board available to members only on the ALFI website.
The first panel focussed on Alternatives.
Marc Meyers, Partner at law firm Loyens & Loeff in Luxembourg, went on detailing measures that the CSSF had taken, in particular on liquidity management tools such as gating and swing pricing, and different regulatory forbearances on reporting and consultations. Valuation of alternatives in stressed market conditions was touched upon. The upcoming ESMA guidelines on liquidity stress testing, which are due to enter into force in September 2020, were briefly summarised. Finally, Marc drew the attention of all participants to the recommendations issued by the ESRB on liquidity risks in funds.
Nicolas Fermaud, Partner and Head of the New York office of law firm Elvinger, gave the most recent state of play on the upcoming review of the AIFMD, first sharing the conclusions of the report on the operation of the AIFMD commissioned by the European Commission to KPMG as well as the current thinking of the industry, then moving on to the most recent news on the timing of the legislative process. Nicolas also spent some time on explaining the different licensing options for asset managers wishing to raise capital in the EU, with a particular focus on the UK in a post-Brexit environment.
Mathieu Scodellaro, Principal and Head of Investment Funds at PwC Legal in Luxembourg, explained what the upcoming legislation on the cross-border distribution of funds means in practice for asset managers who distribute their products across Europe (pre-marketing, marketing materials etc.). The ELTIF was a particular point of attention. It is one of the few alternative products that can be marketed to retail investors, subject to the particular safeguards embedded in the legislation. Asset managers are only starting to grasp the full potential of the ELTIF regime.
The second panel was focussed on distribution in general and recent developments in selected jurisdictions in particular, ESG and the impact of Covid-19 on the digitalisation of distribution.
Johan Lindberg, Managing Director and Head of Nordics at RBC Investor & Treasury Services in Luxembourg, gave a snapshot of recent changes in two important distribution markets for Luxembourg UCITS and AIFs, Mexico and Australia. Sascha Calisan, Senior Vice President and Head of Distribution Support at Northern Trust in London, took participants through the new regulation affecting fund distribution in Switzerland, then moving on to the UK in a post-Brexit environment. She gave some hints as to what the situation could look like after Brexit, drawing her conclusions from the recent consultation of the UK government on the overseas funds regime. Sascha then moved on to the major upcoming pieces of legislation from the European Commission in ESG/sustainable investing, shedding some light on the Taxonomy and Disclosure Regulations. Both Johan and Sascha concluded their round of discussions on the unexpected impact of the Covid-19 pandemic which is likely to drive the digitalisation of fund distribution to the next stage.
The last session was devoted to AML/CFT.
Nadia Bonnet, Counsel with law firm Arendt at their New York office, had the difficult mission to summarise the impact of the AML V Directive, as transposed in Luxembourg legislation, on the operation of a fund. She explained in particular how the concept of a UBO must be analysed in a fund context, whose distribution typically involves many layers of financial intermediaries. Nadia pointed at the recent guidelines published by ALFI in that regard. She also detailed the recent CSSF Circular 20/747 which tackles financial crime in a Covid-19 context and rounded up her presentation by a discussion on the upcoming FATF review which is scheduled for 2021.
ALFI was honoured by everyone’s participation and would be delighted to see you at our next ALFI Digi Pulse USA which will be held in October 2020.