Key regulatory developments in Luxembourg

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EU Banking and Finance Regulatory Newsletter January 2022
Key regulatory developments in Luxembourg

Key regulatory developments in Luxembourg

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January 25, 2022

Source/Date	Brief description
Commission de Surveillance du Secteur Financier (CSSF)¹ December 31, 2021	Guidelines on UCITS² risk reporting published As in previous years, the reporting focuses on leverage, value at risk, stress test, repos, securities lending, OTC³ financial derivative instruments, liquidity and credit risk. UCITS need to submit to the CSSF the semi-annual report covering the period between July 1, 2021 and December 31, 2021 by February 15, 2022 at the latest. To access the text of the guidelines, please click here.
CSSF December 31, 2021	2020 MMF⁴ reporting dashboard published This MMF reporting dashboard encompasses a first set of indicators based on the data reported by MMF managers under article 37 of the MMF Regulation⁵. The CSSF noted that, despite the March/April 2020 impact of the COVID-19 pandemic crisis, Luxembourg MMFs coped well with the situation. To access the text of the reporting dashboard, please click here.
CSSF December 31, 2021	2020 UCITS risk reporting dashboard published The 2020 report, shaped by the COVID-19 pandemic, provides an overview of Luxembourg UCITS: Volatility increased significantly in Q1 2020, accompanied by an increased use of swing pricing. 2020 was marked by overall decrease in leverage. To access the text of the report (in English), please click here.
CSSF December 23, 2021	Regulation CSSF n°21-04 of November 22, 2021 on systemically important institutions (SIIs) authorized in Luxembourg The CSSF has not qualified any Luxembourg entity subject to the CRR⁶ (CRR Entity) as a global SII. On the other hand, seven CRR Entities have been identified as other SIIs. To access the text of the regulation (in French), please click here.
Government/ Parliament December 20, 2021	Law published amending law of September 23, 2020 on measures concerning the holding of meetings in companies and other legal entities (September 2020 Law) The law extends until December 31, 2022 the possibility granted by the September 2020 Law to hold shareholder, bondholder, and management meetings without physical presence, despite any provision in the constitutive documents providing for the contrary or restricting such use. To access the text of the law (in French), please click here.
Government/ Parliament December 17, 2021	Draft law no. 7933 published, implementing EU Regulation 2021/23⁷ on framework for recovery and resolution of central counterparties (CCPs) The draft law operationalizes the Regulation by amending several pieces of legislation, including the law of March 15, 2016 on OTC derivatives, central counterparties and trade repositories, and grants the CSSF new powers in relation to the recovery and resolution of CCPs. To access the text of the draft law (in French), please click here.
CSSF December 17, 2021	Press release published on electronic submission of prospectus by SICARs⁸ As from December 16, 2021, SICARs must submit their prospectuses to the CSSF electronically via the e-file communication platform⁹ or the SOFiE¹⁰ communication platform, similarly to what Part II UCIs¹¹ and SIFs¹² have been doing since 2019. No other submission route will be possible in the future. To access the text of the press release (in English), please click here.
CSSF December 17, 2021	Circulars CSSF 21/789 and 21/790 published on: practical rules regarding the self-assessment questionnaire (SAQ) to be submitted each year by investment fund managers (IFMs) and collective investment schemes (CIS), and on the role of the approved statutory auditor’s role vis-à-vis IFMs and CIS, as well as practical rules on management letters and separate reports to be drafted each year IFMs, internally managed AIFs¹³, UCITS, Part II UCIs, SIFs, and SICARs must be completed on an annual basis a SAQ, and their approved statutory auditor is required to review it partially and to draft on that basis a separate report. These circulars also introduce new formats for the management letter and long-form report. All aforementioned documents need to be submitted via eDesk¹⁴. To access the text of the circular 21/789 (in French), please click here. To access the text of the circular 21/790 (in French), please click here. To access the text of the press release (in English), please click here.
CSSF December 17, 2021	Circular CSSF 21/788 published, providing guidelines for the collective investment sector on the new CSSF AML/CFT¹⁵ external report As CSSF regulation 20/05 on AML/CFT¹⁶ came into force in August 2020, this circular provides guidance on the new CSSF AML/CFT external report that must be drawn up by an approved statutory auditor acting as external AML/CFT expert and to be submitted to the CSSF via eDesk. The circular is applicable to all Luxembourg IFMs, including registered AIFMs¹⁷, and to all Luxembourg investment funds supervised by the CSSF for AML/CFT purposes. To access the text of the circular (in English), please click here.
CSSF December 17, 2021	FAQ¹⁸ on Luxembourg law of December 17, 2010 relating to UCIs updated The FAQ addresses investments in special purpose acquisition companies (SPACs). SPACs constitute eligible investments for UCITS provided that (i) their securities qualify, at any point of their life cycle, as transferable securities, and (ii) a detailed risk assessment covering all material risks is performed. Moreover, the CSSF is of the opinion that investments in SPACs should in principle be limited to a maximum of 10 percent of a UCITS’ NAV¹⁹. To access the text of the updated FAQ (in English), please click here.
CSSF December 17, 2021	Press release on enforcement of 2021 annual reports published by issuers subject to Transparency Law²⁰ When monitoring and assessing compliance with the relevant reporting requirements, the CSSF will pay attention to disclosures on: (i) impacts of the COVID-19 pandemic, (ii) climate-related matters, (iii) accounting policies for financial instruments, and particularly to those requiring significant judgment, (iv) impact of the interest rate benchmark reform²¹, (v) presentation of primary financial statements in light of IASB²² proposals, and (vi) expected credit losses (only for credit institutions). To access the text of the press release (in English), please click here.
CSSF December 14, 2021	Press release on February 15, 2022 launch of AML/FT survey for 2021 The objective is to collect standardized key information concerning AML/FT risks to which supervised entities are exposed and the implementation of measures to mitigate these risks. Responses to the survey must be submitted through eDesk between February 15 and April 15, 2022. To access the text of the press release (in English), please click here.
Government/ Parliament December 9, 2021	Law on issuance of covered bonds, implementing EU directive 2019/2162²³ The law has abolished the monopoly related to the issuance of covered bonds—as of July 8, 2022 all CRR credit institutions²⁴ incorporated in Luxembourg and covered bonds banks²⁵ can issue covered bonds. The law also creates two new types of covered bonds: (i) European covered bonds and (ii) so-called high-quality European covered bonds. To access the text of the law (in French), please click here. To access our article on the subject (in English), please click here.
CSSF December 2, 2021	Press release on taxonomy fast-track procedure for UCITS and AIFs A fast-track procedure was made available to UCITS until December 17, 2021 as well as a semi-fast track procedure for AIFs, managed by a Luxembourg AIFM, updating their prospectuses to comply with the Taxonomy Regulation²⁶ and SFDR²⁷. To access the text of the press release (in English), please click here. To access the CSSF’s template of the UCITS confirmation letter (in English), please click here.
CAA²⁸ November 30, 2021	CAA circular 21/18 amending circular letter 16/1 setting out conditions for non-life insurance and reinsurance companies to benefit from the exemption from quarterly reporting under Solvency 2 Directive²⁹ The exemption regime is extended until 2024 and the de minimis threshold based on gross written premiums in 2020 is raised from €90 million to €100 million. To access the text of the circular (in French), please click here.
CSSF November 29, 2021	FAQ on virtual assets³⁰ applicable to UCITS, AIFMs and credit institutions This FAQ clarifies whether UCITS, AIFs and credit institutions can invest in virtual assets, and if so, what are additional regulatory requirements of such an investment. The FAQ also provides further clarifications to depositaries and regarding the opening virtual asset accounts, as well as the CSSF’s expectation of credit institutions facilitating investments in virtual assets. To access the text of the FAQ for UCITS and AIFMs (in English), please click here. To access the text of the FAQ for credit institutions (in English), please click here. To access the text of the press release (in English), please click here.
CSSF November 29, 2021	Report released on thematic review of share issuers’ climate and environmental–related disclosures required by Non-Financial Reporting Directive³¹ This report provides an overview of the trend in issuers’ disclosures. It reveals that since 2017 disclosures related to the climate have increased in terms of quantity and quality, with a majority of issuers referring to the principles of the UN global compact and sustainable development goals and/or following the Global Reporting Initiative³². To access the text of the report (in English), please click here.
CSSF November 23, 2021	Press release issued on domiciliation activity exercised when operating a business center or a co-working space In view of the development of such work spaces, the CSSF reminds that offering a head office or a commercial or professional address to a company where the latter exercises its activities in the framework of its corporate purpose and providing any service related to these activities is considered as a company domiciliation activity within the meaning of Article 1 of the Law of May 31, 1999 governing the domiciliation of companies. To access the text of the press release (in English), please click here.

Source/Date

Brief description

Commission de Surveillance du Secteur Financier (CSSF)¹

December 31, 2021

Guidelines on UCITS² risk reporting published

As in previous years, the reporting focuses on leverage, value at risk, stress test, repos, securities lending, OTC³ financial derivative instruments, liquidity and credit risk. UCITS need to submit to the CSSF the semi-annual report covering the period between July 1, 2021 and December 31, 2021 by February 15, 2022 at the latest.

To access the text of the guidelines, please click here.

CSSF

December 31, 2021

2020 MMF⁴ reporting dashboard published

This MMF reporting dashboard encompasses a first set of indicators based on the data reported by MMF managers under article 37 of the MMF Regulation⁵. The CSSF noted that, despite the March/April 2020 impact of the COVID-19 pandemic crisis, Luxembourg MMFs coped well with the situation.

To access the text of the reporting dashboard, please click here.

CSSF

December 31, 2021

2020 UCITS risk reporting dashboard published

The 2020 report, shaped by the COVID-19 pandemic, provides an overview of Luxembourg UCITS: Volatility increased significantly in Q1 2020, accompanied by an increased use of swing pricing. 2020 was marked by overall decrease in leverage.

To access the text of the report (in English), please click here.

CSSF

December 23, 2021

Regulation CSSF n°21-04 of November 22, 2021 on systemically important institutions (SIIs) authorized in Luxembourg

The CSSF has not qualified any Luxembourg entity subject to the CRR⁶ (CRR Entity) as a global SII. On the other hand, seven CRR Entities have been identified as other SIIs.

To access the text of the regulation (in French), please click here.

Government/ Parliament

December 20, 2021

Law published amending law of September 23, 2020 on measures concerning the holding of meetings in companies and other legal entities (September 2020 Law)

The law extends until December 31, 2022 the possibility granted by the September 2020 Law to hold shareholder, bondholder, and management meetings without physical presence, despite any provision in the constitutive documents providing for the contrary or restricting such use.

To access the text of the law (in French), please click here.

Government/ Parliament

December 17, 2021

Draft law no. 7933 published, implementing EU Regulation 2021/23⁷ on framework for recovery and resolution of central counterparties (CCPs)

The draft law operationalizes the Regulation by amending several pieces of legislation, including the law of March 15, 2016 on OTC derivatives, central counterparties and trade repositories, and grants the CSSF new powers in relation to the recovery and resolution of CCPs.

To access the text of the draft law (in French), please click here.

CSSF

December 17, 2021

Press release published on electronic submission of prospectus by SICARs⁸

As from December 16, 2021, SICARs must submit their prospectuses to the CSSF electronically via the e-file communication platform⁹ or the SOFiE¹⁰ communication platform, similarly to what Part II UCIs¹¹ and SIFs¹² have been doing since 2019. No other submission route will be possible in the future.

To access the text of the press release (in English), please click here.

CSSF

December 17, 2021

Circulars CSSF 21/789 and 21/790 published on:

practical rules regarding the self-assessment questionnaire (SAQ) to be submitted each year by investment fund managers (IFMs) and collective investment schemes (CIS), and
on the role of the approved statutory auditor’s role vis-à-vis IFMs and CIS, as well as practical rules on management letters and separate reports to be drafted each year

IFMs, internally managed AIFs¹³, UCITS, Part II UCIs, SIFs, and SICARs must be completed on an annual basis a SAQ, and their approved statutory auditor is required to review it partially and to draft on that basis a separate report. These circulars also introduce new formats for the management letter and long-form report. All aforementioned documents need to be submitted via eDesk¹⁴.

To access the text of the circular 21/789 (in French), please click here.

To access the text of the circular 21/790 (in French), please click here.

To access the text of the press release (in English), please click here.

CSSF

December 17, 2021

Circular CSSF 21/788 published, providing guidelines for the collective investment sector on the new CSSF AML/CFT¹⁵ external report

As CSSF regulation 20/05 on AML/CFT¹⁶ came into force in August 2020, this circular provides guidance on the new CSSF AML/CFT external report that must be drawn up by an approved statutory auditor acting as external AML/CFT expert and to be submitted to the CSSF via eDesk.

The circular is applicable to all Luxembourg IFMs, including registered AIFMs¹⁷, and to all Luxembourg investment funds supervised by the CSSF for AML/CFT purposes.

To access the text of the circular (in English), please click here.

CSSF

December 17, 2021

FAQ¹⁸ on Luxembourg law of December 17, 2010 relating to UCIs updated

The FAQ addresses investments in special purpose acquisition companies (SPACs). SPACs constitute eligible investments for UCITS provided that (i) their securities qualify, at any point of their life cycle, as transferable securities, and (ii) a detailed risk assessment covering all material risks is performed.

Moreover, the CSSF is of the opinion that investments in SPACs should in principle be limited to a maximum of 10 percent of a UCITS’ NAV¹⁹.

To access the text of the updated FAQ (in English), please click here.

CSSF
December 17, 2021

Press release on enforcement of 2021 annual reports published by issuers subject to Transparency Law²⁰

When monitoring and assessing compliance with the relevant reporting requirements, the CSSF will pay attention to disclosures on: (i) impacts of the COVID-19 pandemic, (ii) climate-related matters, (iii) accounting policies for financial instruments, and particularly to those requiring significant judgment, (iv) impact of the interest rate benchmark reform²¹, (v) presentation of primary financial statements in light of IASB²² proposals, and (vi) expected credit losses (only for credit institutions).

To access the text of the press release (in English), please click here.

CSSF

December 14, 2021

Press release on February 15, 2022 launch of AML/FT survey for 2021

The objective is to collect standardized key information concerning AML/FT risks to which supervised entities are exposed and the implementation of measures to mitigate these risks. Responses to the survey must be submitted through eDesk between February 15 and April 15, 2022.

To access the text of the press release (in English), please click here.

Government/ Parliament

December 9, 2021

Law on issuance of covered bonds, implementing EU directive 2019/2162²³

The law has abolished the monopoly related to the issuance of covered bonds—as of July 8, 2022 all CRR credit institutions²⁴ incorporated in Luxembourg and covered bonds banks²⁵ can issue covered bonds. The law also creates two new types of covered bonds: (i) European covered bonds and (ii) so-called high-quality European covered bonds.

To access the text of the law (in French), please click here.

To access our article on the subject (in English), please click here.

CSSF

December 2, 2021

Press release on taxonomy fast-track procedure for UCITS and AIFs

A fast-track procedure was made available to UCITS until December 17, 2021 as well as a semi-fast track procedure for AIFs, managed by a Luxembourg AIFM, updating their prospectuses to comply with the Taxonomy Regulation²⁶ and SFDR²⁷.

To access the text of the press release (in English), please click here.

To access the CSSF’s template of the UCITS confirmation letter (in English), please click here.

CAA²⁸

November 30, 2021

CAA circular 21/18 amending circular letter 16/1 setting out conditions for non-life insurance and reinsurance companies to benefit from the exemption from quarterly reporting under Solvency 2 Directive²⁹

The exemption regime is extended until 2024 and the de minimis threshold based on gross written premiums in 2020 is raised from €90 million to €100 million.

To access the text of the circular (in French), please click here.

CSSF

November 29, 2021

FAQ on virtual assets³⁰ applicable to UCITS, AIFMs and credit institutions

This FAQ clarifies whether UCITS, AIFs and credit institutions can invest in virtual assets, and if so, what are additional regulatory requirements of such an investment.

The FAQ also provides further clarifications to depositaries and regarding the opening virtual asset accounts, as well as the CSSF’s expectation of credit institutions facilitating investments in virtual assets.

To access the text of the FAQ for UCITS and AIFMs (in English), please click here.

To access the text of the FAQ for credit institutions (in English), please click here.

To access the text of the press release (in English), please click here.

CSSF

November 29, 2021

Report released on thematic review of share issuers’ climate and environmental–related disclosures required by Non-Financial Reporting Directive³¹

This report provides an overview of the trend in issuers’ disclosures. It reveals that since 2017 disclosures related to the climate have increased in terms of quantity and quality, with a majority of issuers referring to the principles of the UN global compact and sustainable development goals and/or following the Global Reporting Initiative³².

To access the text of the report (in English), please click here.

CSSF

November 23, 2021

Press release issued on domiciliation activity exercised when operating a business center or a co-working space

In view of the development of such work spaces, the CSSF reminds that offering a head office or a commercial or professional address to a company where the latter exercises its activities in the framework of its corporate purpose and providing any service related to these activities is considered as a company domiciliation activity within the meaning of Article 1 of the Law of May 31, 1999 governing the domiciliation of companies.

To access the text of the press release (in English), please click here.

Commission de Surveillance du Secteur Financier, the Luxembourg financial supervisory authority
Undertakings for the collective investment in transferable securities
Over-the-counter
Money market fund
Regulation (EU) 2017/1131 of the European Parliament and of the Council of June 14, 2017 on money market funds
Regulation (EU) 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions and investment firms
Regulation (EU) 2021/23 of the European Parliament and of the Council of December 16, 2020 on a framework for the recovery and resolution of central counterparties
Sociétés d'Investissement en Capital à Risque, venture capital investment companies
E-file is a communication platform for the transmission of data, documents and regulatory and statistical reports between financial sector actors and the Luxembourg authorities
SOFiE is as communication platform that enables financial sector actors to transfer documents and regulatory reports to the CSSF and the Central Bank of Luxembourg
Undertakings for collective investment subject to part II of the law of December 17, 2010 relating to undertakings for collective investment
Specialized investment funds
Alternative investment funds
An online gateway for submission of certain dematerialized requests to the CSSF
Anti-money laundering/combating the financing of terrorism
CSSF regulation No 20-05 of August 14, 2020 amending CSSF Regulation No 12-02 of December 14, 2012 on the fight against money laundering and terrorist financing
Alternative investment fund managers
Frequently asked questions
Net asset value
Law of January 11, 2008 on transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and transposing EU directive 2004/109/EC
Following EU regulation 2016/1011 of the European Parliament and of the Council of June 8, 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds
International accounting standards board
Directive (EU) 2019/2162 of the European Parliament and of the Council of November 27, 2019 on the issue of covered bonds and covered bond public supervision
A CRR credit institution is a credit institution that meets the narrow definition of a credit institution in accordance with article 4(1) of the EU regulation 575/2013 of June 26, 2013 on prudential requirements for credit institutions
Known in French as “banques d’émission de lettre de gage”
Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on the establishment of a framework to facilitate sustainable investment
Sustainable finance disclosure regulation (i.e. regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019 on sustainability‐related disclosures in the financial services sector)
Commissariat aux assurances, the Luxembourg insurance sector supervisory authority
Directive 2009/138/EC of the European Parliament and of the Council of November 25, 2009 on the taking-up and pursuit of the business of insurance and reinsurance
As defined by article 1 (20b) of the law of November 12, 2004 on the fight against money laundering and terrorist financing, i.e. a digital representation of value, including a virtual currency, that can be digitally traded, or transferred, and can be used for payment or investment purposes, except for virtual assets that fulfil the conditions of electronic money within the meaning of point (29) of article 1 of the law of November 10, 2009 on payment services, and the virtual assets that fulfil the conditions of financial instruments within the meaning of point (19) of article 1 of the law of April 5, 1993 on the financial sector
Directive 2014/95/EU of the European Parliament and of the Council of October 22, 2014 amending directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups
The Global Reporting Initiative is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impact on issues such as climate change, human rights and corruption. The Global Reporting Initiative’s framework for sustainability reporting helps companies identify, gather and report environmental, social and governance information in a clear and comparable manner.