Cammille Thommes, Alfi
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All of Luxembourg’s fund community is feeling the impact of the coronavirus crisis, and fund association Alfi is doing its best to offer support. At the same time however, Alfi itself is being hit by the crisis too, as part of its revenue stream partly drying up.

Alfi postponed its flagship European Asset Management Conference, due to take place on 17-18 March this year, to mid-September. There are another dozen or so events on its calendar for this year, some of  which may have to be cancelled depending on the coronavirus situation. 

‘We have a very broad events agenda so we are definitely feeling the impact,’ says Director-General Cammille Thommes (pictured) in an interview with Investment Officer. ‘We are now working hard to review our events calendar and postpone events where possible.’

Thommes recognises the coronavirus crisis is going to take a bit out of Alfi’s revenue, recognising it may not be possible to organise large-scale conferences, such as Alfi’s European Asset Management conference which draws more than 600 attendees, for some time to come.

‘Obviously events are a part of our revenue stream, and if we have to reschedule or cancel events that will have financial impact’, he says. ‘We will change selective events into webinars, and managed to change the dates for most conferences, but without knowing whether we will be allowed to hold the event, or whether there will be interest from attendees.’ After all, people may be reluctant to attend mass gatherings for a prolonged period of time if this brings an increased risk of infection.

No insurance against pandemics

Alfi is not insured for cancellations due to the coronavirus. ‘In January we checked with insurance companies whether they could cover cancellations due to a pandemic, but we couldn’t find one willing to do that. So now we’ll have to negotiate with venue owners and stress the long-term relationships we have with them,’ says Thommes.

On the other side, the same goes for the relationship with sponsors. ‘As an association, we have a long-standing relationship with most of our sponsors. If they ask to be reimbursed, we’ll do that,’ says Thommes. ‘But the majority so far hasn’t done that. Some have already agreed to stay on board as sponsors for the conferences that were postponed.’ Alfi will also pay back attendees who had registered for events that will be cancelled.

Alfi can handle possible financial setbacks by dipping into its reserves. ‘We are in good financial shape now, and can cope financially with the hypothetical situation that all events for this year are cancelled,’ says Thommes. ‘We have built up reserves over the years to use them in times of crisis such as now.’ Alfi does therefore have ‘no immediate plans’ to raise its membership fees for 2021, according to Thommes.  

Helping out

Meanwhile, Alfi is doing its best to play its role as an ambassador to the Luxembourg fund industry, asserts Thommes. ‘On 18 March we opened the email address covid-19@alfi.lu for our members to send us their concerns and issues related to the crisis.’

The concerns most on members’ minds were difficulties to meet ongoing reporting requirements due to the crisis, and issues related to liquidity pressures, says Thommes. ‘Given the extraordinary times we have been in and the extreme market volatility, many investments teams have been focused exclusively on managing the portfolio. So having to continue to comply with standard reporting requirements during the crisis was hard for them. Members also had questions on how to deal with swing pricing and different liquidity management tools.’

Thommes says Alfi aggregated the questions they had received and then relayed these to the CSSF. ‘In fact, the Frequently Asked Questions document about Covid-19 that the CSSF has published on its website more or less reflects the questions we received from our members,’ he notes. ‘The regulator has also responded with clear indications on liquidity requirements, provided relief on some deadlines for regulatory reporting, and has allowed investment firms to adjust swing thresholds in a pragmatic way.’

One of the measures the CSSF took to accommodate Ucits funds coping with unusually high outflows was to allow a higher so-called swing factor than the one laid down in the fund’s prospectus. This means funds’ NAVs could deviate from market prices by more than originally allowed, to give funds the opportunity to avoid having to redeem shares.

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