Cross-border distribution of investment funds in Europe:
The EU made changes to the way investment funds can be marketed under AIFMD and UCITS to take effect in 2021, and delayed the application of the PRIIPs KID to UCITS.
The CSSF published a warning regarding virtual currencies, stating that entities under its prudential supervision must take into account that investing in virtual currencies is not suitable for all kinds of investors and investment objectives. UCITS, UCIs addressing non-professional customers and pension funds are thus not allowed to invest directly or indirectly in virtual currencies.
The EMIR REFIT regulation (Regulation (EU) 2019/834) saw changes to counterparty classification and reduction in the scope of the clearing obligation. A further temporary exemption from clearing for pension schemes and exemption from reporting for certain intra-group transactions were also granted.
European Supervisory Authorities (“ESAs”) review package:
By the end of December, the package of four legislative proposals to review and enhance the powers of the ESAs will be published.
Interest rate reform:
2019 has seen significant developments on interest rate reform, with the development of market conventions, particularly in relation to SONIA FRNs and by the LMA’s publication of new draft compounded risk-free rate facilities agreements.
Investment firms review:
The investment firms regulation and directive are expected to be published in the EU Official Journal in December. These contain an overhaul of the prudential and remuneration regimes which apply to investment firms.
Pan-European Personal Pension Product (“PEPP”):
In April, Regulation (EU) 2019/1238 on a PEPP was adopted. Its main objective is to create a harmonised personal retirement product while channelling more household savings towards the capital markets.
The RAIF law was amended to clarify inter alia that RAIFs taking the form of a Luxembourg fonds commun de placement (“FCP”) may have as their legal representative a ‘Super-ManCoʼ.
Regulation (EU) 2017/2402 which consolidated existing risk retention, disclosure and due diligence requirements and established a new regime for simple, transparent and standardised (“STS”) securitisations applies to securitisations which closed on or after 1 January 2019. The law of 16 July 2019 amending the Luxembourg securitisation framework reflects these changes.
Shareholders rights directive (“SRD”):
The revised SRD was transposed in Luxembourg through the law of 1 August 2019 amending the amended law of 24 May 2011. It aims to encourage long-term shareholder engagement in listed companies through new obligations imposed on asset managers and institutional investors as well as on listed companies regarding, among others, new board pay rules and related party transactions.