Raymond Frenken

Financial supervision in the European Union has encountered a pressing challenge - a notable disparity in the approaches taken by national financial supervisors when it comes to sanctioning investment funds. As the watchdog of the EU’s financial markets, the European Securities and Markets Authority (Esma) has identified this growing divide and is now pushing for measures to foster greater convergence among member states.

The European Central Bank is set to make headlines again on Thursday as it is widely expected to raise its benchmark interest rates by another 25 basis points. The financial world is keenly watching to gauge the ECB’s plans for September and beyond.

As pressure mounts on investors to allocate larger portions of their portfolios to alternatives, Stuart Dunbar, a partner and director at Edinburgh-based investment manager Baillie Gifford, stresses the need for careful consideration. He highlights the limited supply of high-quality opportunities as a critical factor. “We can’t just rush into the alternatives.”

Negotiators from the European Council and European Parliament have reached a provisional agreement on new rules aimed at enhancing European capital markets and bolstering investor protection within the EU. The deal, reached during the early hours on Thursday, includes consensus on leverage limits and passporting rules for Loan Originating Funds (LOFs), marking a significant milestone in the regulatory landscape.

Luxembourg’s Fuchs & Associés Finance SA is no longer allowed to provide services in Belgium after its Luxembourg licence as a financial services professional was revoked by CSSF, Belgium’s financial markets supervisor FSMA said.

The number of new reserved alternative investment funds registered in Luxembourg during a single month in June showed its first rebound since January. Issuance levels though are well below their historic averages. Economic and geopolitical issues get the blame, along with difficulties in raising institutional investment money. Still, faith in the vehicle remains strong, with private equity specialists expecting a further recovery in Raif registrations.

The Luxembourg District Court on Tuesday ordered the dissolution and liquidation of 23-year old investment firm Fuchs & Associés Finance SA and appointed a liquidator and an official receiver. Luxembourg’s financial supervisor CSSF, noting “serious breaches of essential legal and regulatory requirements,” said it has revoked the firm’s authorisation to operate as an investment services provider and has activated the Grand Duchy’s investor compensation scheme.

The 60-seat Luxembourg parliament has finalised its adoption of a major upgrade of five investment laws, making its popular international framework for investment funds even more attractive for new types of funds coming into the market, in particular Eltifs. The industry has widely welcomed the changes, with one ManCo CEO describing them as “an evolution rather than a revolution.”

Global financial regulators and industry insiders clashed over the implementation of liquidity management tools (LMTs) to mitigate the impact of mass redemptions in open-ended investment funds at a meeting in Dublin on Wednesday.

Luxembourg’s parliament, with 55 votes in favour and only two against, has embraced a highly anticipated law that revamps its legislative arsenal for investment funds. Several fund categories, including European Long Term Investment Funds (Eltifs) and money market funds, are to be exempted from the registration tax imposed on Luxembourg-domiciled funds.