The CSSF publishes a new circular on UCI administrators

In view of evolutions in the field of UCI administration, the Commission de Surveillance du Secteur Financier (CSSF) specifies its requirements concerning governance and internal organisation by publishing Circular CSSF 22/811. The circular immediately enters into effect and applies to all entities acting as UCI administrators for regulated and non-regulated UCIs established, or not, in Luxembourg.

Evolutions in UCI Administration

In the past decades, the field of UCI Administration has undergone a number of developments. “These developments particularly relate to the legislation, changes in technology and market evolution with respect to the activity of UCI administration”, says Marco Zwick, director in charge of UCI supervision.

“Our objective was to modernise Chapter D of Circular IML 91/75 and to provide the industry with a strong and comprehensive regulatory framework for this activity” indicates Marie Lichterowicz, legal expert, UCI department “International, Regulation and Enforcement”. Taking into account all these evolutions, Circular CSSF 22/811 replaces Chapter D of Circular IML 91/75, which dates back to 1991.

Clarifying the CSSF’s requirements

André Schroeder, deputy head of the UCI department “International, Regulation and Enforcement”, points out that “this circular was requested by the industry for many years and that our objective was to transcribe our administrative practice”. He specifies that “through this new circular, we try to respond to the market’s demand for a modernised, homogeneous and harmonised national framework.”

“The main purpose of this circular is to specify the principles of sound governance and the CSSF requirements on internal organisation and good practice”, explains Marco Zwick.

Marie Lichterowicz specifies that “the circular provides, in particular, the common organisational requirements required of UCI administrators (UCIAs), including, but not limited to, the CSSF expectations relating to delegation models and ICT.”

The UCI administration activity covers three main functions: the registrar function, the NAV calculation and accounting function, and the client communication function as defined in section 2.2.2 of the circular.

In particular, the circular implements a new reporting for UCI administrators (pt 7 of the circular & annex B). The reporting must be filed, for the first time, at the latest five months after the UCIA financial year-end, starting from 30/06/2023 (pt 104 of the circular). Another important change is that prior authorisation is replaced by a prior notification in case of delegation of a critical or important operational task (pt 100-101 of the circular).

Immediate entry into force to all UCIA’s

Circular 22/811 enters into force with immediate effect. It is applicable to all entities carrying out the activity of UCI administration, i.e. UCI administrators, for regulated and non-regulated UCIs established, or not, in Luxembourg. “Of course, before acting as a UCIA for a given UCI,” says André Schroeder, “a UCIA must assess whether the carrying out of this activity is permitted, taking into account applicable legal provisions. The same applies for UCIs which must refer to applicable laws and regulations to determine the eligibility of UCIAs.”

The requirement for authorisation set out in section 2.2.1 of the circular does not apply to entities already acting as UCIA at the date of entry in force of this circular. A grandfathering period, in order to comply with the remaining provisions of the present circular, is granted to such entities already acting as UCIA at the date of entry in force of Circular 22/811 until 30/06/2023.

The text of the circular can be found here.