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Alternative Market Briefing

Luxembourg issues new rules on special investment funds

Monday, March 26, 2012

Bailey McCann, Opalesque New York: Earlier this month, the Luxembourg Parliament amended its rules for specialized investment funds (SIFs). The rules provide additional guidance to a law passed in February 2007 in order to bring the country in line with requirements in the Alternative Investment Fund Managers Directive (AIFMD).

Luxembourg is making an effort to increase the popularity of SIFs as they are faster to set up and authorize. According to a client alert from Laven Partners, obtained by Opalesque, the key point of the new law is a set of restrictions on the delegation of investment management responsibilities to third parties. Any third party chosen from now on must be authorized or registered specifically as an asset manager.

Investment management can be delegated to portfolio managers outside of the EU only as long as there is an agreement between Luxembourg’s regulator Commission de Surveillance du Secteur Financier (CSSF) and the regulatory authority of the non-EU country. If a fund wants to delegate investment management to a firm other than an asset manager, that firm will have to be specially approved by the CSSF. Funds will also have to undertake due diligence on any third party they delegate to in order to verify that they can perform the required functions. In order to operate as a SIF core investment management functions can not be managed by the depositary.

Going forward, any new SIF will also have to be approved by the CSSF before they can s......................

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