Action plan for cross-border management and distribution following Brexit

CSSF Press release 20/26 on the end of the transitional period on 31 December 2020 following the withdrawal of the United Kingdom from the European Union

E
xecutive summary

The CSSF¹ issued a press release providing various reminders and clarifications about the actions which need to be taken by 31 December in respect of:

• Luxembourg undertakings for collective investment (“UCIs”) managed by a UK investment fund manager (“IFM”)
• UK  UCIs managed by a Luxembourg IFM
• UK UCIs marketed in Luxembourg

The CSSF also clarifies other Brexit-related issues in relation to UCIs:

• Delegation of investment management/portfolio management and/or risk management activities to undertakings in the UK
• Compliance with investment policy and eligibility issues
• Its position on secondments. 

Cross-border management of UCIs

Cross-border distribution of UCIs in Luxembourg

Other Brexit-related issues in relation to UCIs

• The CSSF reminds that delegation of IFM functions to UK regulated asset managers which are subject to prudential supervision is permitted, as the multilateral memorandum of understanding between the Financial Conduct Authority,  EU national securities regulators and the European Securities and Markets Authority (“ESMA”) signed on 1 February 2019 remains relevant following ESMA’s confirmation on 17 July 2020
• The CSSF confirms that any breach of compliance with applicable investment rules or policies triggered by the withdrawal of the UK will be considered as active breaches for the purpose of Circular 02/77. The CSSF draws specific attention to the provisions related to UCITS master-feeder structures where the master fund is a UK-domiciled fund (30% investment limit in “other UCIs”) and money market funds deposit rules (deposit with UK credit institutions will no longer be eligible after 31 December 2020)
• Secondments of staff from the UK are acceptable subject to prior notification to the CSSF and provided that they comply with all applicable requirements and that the IFM supervises secondees in an appropriate manner. The Marketing function should be reorganized to ensure compliance with presence requirements applicable to secondees from the UK. Travel for professional purposes is accepted but IFMs should have regard to the COVID situation.