supervision

Luxembourg’s financial watchdog, the CSSF, has made important changes to its rules for valuations of investment funds, the first in two decades. While many things stay the same, some key updates—like lowering limits for money market funds and adding new checks before making investment decisions—are aimed at tightening control and providing clearer guidance.

Former Portuguese finance minister and Morgan Stanley banker Maria Luís Albuquerque, known for her austerity-heavy tenure during the eurozone crisis, is now the European Commission’s nominee for the influential role of Commissioner for Financial Services. Her appointment has already ignited controversy.

Perhaps the most contentious development in Luxembourg’s fund management ecosystem this year was the order to management firms, issued by supervisor CSSF, to report back on the costs of investment funds and look at becoming more efficient.

Investment fund managers of Ucits funds in Luxembourg, home to about a third of all such funds in Europe, were ordered to review, and if necessary correct, the way they calculate the costs and fees of their investment funds and report back to the CSSF before April 1 next year.

Cryptocurrencies are causing the European Central Bank increasing concern. This exotic market segment operates outside the domain of central banks and, according to specialists, can undermine monetary and financial stability. This form of alternative liquidity is a highly undesirable development, according to Sylvester Eijffinger, emeritus professor of financial economics at Tilburg University and visiting professor at Harvard University’s economics department.