Detailed insight into the CSSF’s work and expectations for boards on a range of regulatory topics was given again this year by Pascal Berchem, who is responsible for Authorisation and Supervision of IFMs and Securitisation Undertakings, and Alain Hoscheid, head of Prudential Supervision and Risk Management. Sophie Dupin, Partner at Elvinger, Hoss & Prussen, was in the chair.
Most of the hour-long session focused on feedback given by the CSSF on the use of the self-assessment questionnaires (SAQ), separate reports (SRs), and revamped management letters for both investment funds and investment fund managers. The reform of the Long Form Report aimed notably at delivering data to the CSSF in a clear, easy-to-proceseasy-to-process format.
With regard to investment funds and investment fund managers, the SAQ covers eight topics respectively 13 sections. The SR provides for 15 to 26 questions depending on the type of fund respectively 14 sections for investment fund managers. The panel informed that some of these questions have been amended to take account of feedback from auditors and the industry, as well as recent developments in areas such as SFDR and AML Additionally, “tooltips” have been added to provide additional explanations to the industry. An IT solution optimising the filling in of the SAQ for investment funds has been in operation since November, and work will continue to further improve the processes based also on the feedback from the industry.
The panel explained how the CSSF uses the volume of data received from the industry in the context of its supervisory processes. The structured format of the data allows efficient processing of the data by the CSSF and notably also to benchmark the industry against a variety of indicators. Work is on-going to further integrate the potential offered by this data into the CSSF’s procedures
There was a demonstration of how CSSF staff have dashboards to help them analyse data. Filters can be run to provide overviews of the market’s regulatory performance in many different areas. These can be used as benchmarks to put granular detail from each entity into context, helping the official to assess the level of compliance and highlight potential risks.
A range of detailed practical examples were discussed by the panel, with indications of the regulator’s expectations for levels of compliance in different domains.
The panel then turned to commenting on planned revisions of key CSSF circulars. An updated version of circular 02/77 on NAV calculation errors and non-compliances with investment rules is due for publication in Q1 2024. It will now be relevant for all regulated UCIs as well as EU labelled products such as Eltifs, money market funds, EuVECAs, EuSEFs for which the CSSF is the competent authority. It will feature guidance on the roles of directors in the context of NAV errors, investment breaches and other errors, including errors in the payment of fees or swing pricing. This will be a relatively long document as it will feature extensive guidance to the market.
A revamp of circular 11/512 on risk management in UCITS and AIFMs is due for around the end of the year. This will take account of changes in the fund regulatory environment since 2011, not least with the advent of the likes of AIFMD, SFDR, and money market regulations.