Laws and Regulations

Loan origination activities under the EU’s second Alternative Investment Fund Management Directive, known as AIFMD2, present both opportunities and challenges for alternative investment funds, or AIFs, writes Geoffroy Hermanns, partner at Norton Rose Fullbright in Luxembourg. In this contribution as Knowledge Partner to Investment Officer Luxembourg, he also addresses the impact  these AIF changes can have for Eltif funds used for loan origination.

Worried about the protection of European investors, illiquid investments, and financial stability, Esma wants its table to be reinstated into the Eltif standards rulebook, although with some significant modifications.  

As home to investors and companies that prefer the allure of American markets over their domestic counterparts, the European Union has arrived at a crossroads. A window of opportunity has arrived for creating a new framework that supports efficient capital markets, creating growth and jobs and enabling retail investors and pension savers meet their long-term financial needs.

The International Monetary Fund (IMF) this week issued a dire warning concerning the rapidly expanding private credit sector. With Luxembourg standing as a pivotal hub for private credit in both Europe and globally, the IMF’s cautionary stance merits serious attention from the Grand Duchy’s financial community.

The Securities and Exchange Commission (SEC) has revised its climate reporting requirements under pressure from politicians and the business community.

A significant portion of financial influencers, commonly known as finfluencers, has been found to neglect proper disclosure practices when promoting products or services, according to a study conducted by the CFA Institute. The institute is now calling on investment firms that engage with these finfluencers for promotional activities to shoulder the responsibility of ensuring compliance through adequate training.

Some 40 new Eltif funds, enabling European retail investors to put their money in private markets, are understood to be in the pipeline, due to enter the market in the coming months.

The Commission de Surveillance du Secteur Financier (CSSF) has imposed a fine of 162,500 euro on Intertrust (Luxembourg) S.à r.l., a specialist in the professional financial sector, for not adhering to its custodial duties as outlined in Luxembourg’s financial sector legislation, particularly concerning the management of non-financial assets.

The European Securities and Markets Authority (Esma), the EU’s financial markets regulator, has fined the European rating agency Scope 2.2 million euro for breaches of the Credit Rating Agencies (CRA) Regulation. The penalty is for Scope’s failure to manage conflicts of interest adequately, involving both structural and specific non-compliance issues.

Approvals of new European Long-Term Investment Funds in Luxembourg are proceeding smoothly, despite the relays with the adoption of regulatory standards for the second generation of these funds, the CSSF’s supervisor in charge of investment funds, Marco Zwick, told the Alfi conference on Tuesday.