Reactivation of the IFM notifications on fund issues and large redemptions via eDesk
On 25 February 2022, the CSSF implemented a specific monitoring of the largest investment fund managers (“IFM”) in view of the specific circumstances and risks to which these companies are exposed to as a result of the prevailing market conditions relating to the current situation in Ukraine. Since then, these IFMs have had to notify the CSSF of significant developments and issues as well as on related decisions and measures taken by IFMs.
The information collected serves the CSSF to perform its daily supervision and as a basis to support discussions with other authorities and with market players to identify issues at an early stage and to assist with the resolution of these.
All IFM concerned by the notification on fund/IFM issues and/or large redemptions (hereafter “IFM Notification”) have been contacted by the CSSF.
An IFM Notification has to be transmitted to the CSSF via eDesk only if the following events occur:
- significant events/issues affecting the functioning of the IFM or the investment funds managed by the IFM (e.g. valuation, liquidity), including also the impact of restrictive measures in response to the current situation in Ukraine if applicable;
- larger redemptions at the level of Luxembourg regulated investment funds (UCITS, Part II UCI, SIF) managed by the IFM (i.e. daily net redemptions exceeding 5% of the NAV, net redemptions over a calendar week exceeding 15% of the NAV and/or application of gates/ deferred redemptions).
For the IFM that have been contacted by the CSSF, some specific additional information has also been requested if the IFM manages individual (sub-)fund(s) with a combined direct or indirect exposure (including exposure gained through derivatives) exceeding 10% of their Total Net Assets (TNA) to Russian and/or Ukrainian issuers.
Further details on the IFM Notification, the scope of application and additional explanations assisting IFM infilling in the notification are outlined in the dedicated section of the CSSF eDesk Portal homepage.
The IFM Notification remains in place until further notice by the CSSF.
In this context, the CSSF wants to inform the industry that the reporting “IFM Notification – Early Warning”, which is only relevant for a limited number of UCITS that have, in the past, been contacted directly by the CSSF, is suspended until further notice.
In order to support IFM and to ensure a secured exchange platform, the response notification shall be submitted by the IFM via the CSSF eDesk Portal. For that purpose, the IFM must have an eDesk account with a LuxTrust authentication.
For any technical questions linked to the eDesk platform, please contact: email@example.com.
If you have any other questions, do not hesitate to contact: firstname.lastname@example.org
In light of the prevailing market conditions, the CSSF would also like to remind the industry about the following clarifications given by means of CSSF “Frequently Asked Questions” as also referred to in the CSSF FAQ COVID-19:
- the CSSF FAQ on the swing pricing mechanism (applied similarly to dilution levy) applicable to regulated investment funds in Luxembourg (UCITS, UCI part II, SIF), including amongst others clarifications on the increase of the applied swing factor beyond the maximum swing factor laid down in the fund prospectus;
- the CSSF FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment which in its section 11 “Treatment of breaches of the UCITS global exposure limit” provides clarifications in relation to VaR limit breaches in front of heightened volatility in financial markets.