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  • Last updated: 11-05-2020

Coronavirus (COVID-19) is having a significant impact on investment funds around the world. Over the past few weeks, Luxembourg's financial supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), has issued a number of communiqués providing updates as the situation evolves and explaining its position on a range of regulatory issues.

We are continually updating our COVID-19 CSSF Tracker as new information and recommendations become available.

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29 April 2020
UCITS - passive investment breaches
In its COVID-19 FAQ, the CSSF clarifies that passive investment breaches by a UCIT (i.e. a breach beyond the control of the UCIT) of the global exposure limit provided for by Article 42(3) of the 2010 Act (and more generally of investment restrictions applicable to undertakings for collective investment) do not have to be notified to the CSSF.

Breaches of the VaR limit (either the maximum regulatory limit of 20% for absolute VaR or 200% for relative VaR, as the case may be or any other more restrictive internal limit, laid down in the sales prospectus) by UCITS due to increased financial market volatility can be considered passive breaches (in the absence of any new positions increasing the portfolio risk). 

In the event of a passive breach of the regulatory VaR limit or the internal VaR limit laid down in the prospectus, investment fund managers should take appropriate steps to en-sure that the limit is met within a reasonable period of time, taking due account of prevailing market conditions and the best interest of investors. 

For that purpose, investment fund managers are expected to closely monitor the situation of the UCITS and the defined remediation plan.

Upon the occurrence of a passive breach, any additional risk exposure taken on by the UCITS that increases the overall risk level of the portfolio (i.e. increasing VaR usage) should be viewed as an active investment breach.

A passive breach should not, however, preclude the UCITS from continuing to manage the fund (for example, making investments following subscriptions). If a new position does not increase the level of risk of the UCITS (i.e. VaR consumption is not increasing), it should not be considered an active breach.

In the event of an active breach of the regulatory or internal VaR limit, the UCIT shall notify the CSSF of:

  • the name of the notifying person/entity and its CSSF identifier;
  • the name and CSSF code of both the fund and sub-fund;
  • the VaR computation method (absolute or relative VaR);
  • the internal VaR limit (if the prospectus mentions a limit below the regulatory limit);
  • the VaR limit consumption;
  • the date on which the active breach occurred and the date on which the breach ended;
  • the reason(s) for the breach (i.e. new position, redemptions not managed by the fund manager, etc.).

For such notifications investment fund managers do not have to use the standard 02/77 template, but shall just communicate by e-mail (opc.prud.sp@cssf.lu)


17 April 2020
Immediate review of organisational setup by supervised entities to enable working from home
In a communiqué, the CSSF urges all financial institutions under its prudential supervision to continue favouring working from home. Satisfactory IT security conditions should be guaranteed, and the prior authorisation of the CSFF is not required for such arrangements. The Luxembourg government will reassess the situation after 11 May, and the CSSF will reassess its position accordingly.


16 April 2020
Extension of reporting deadlines
In its FAQ, the CSSF provides an overview of the extensions of reporting deadlines applicable to UCIs, SIFs, SICARs, investment fund managers, pension funds and securitisation undertakings. The deadlines for the documents listed here (pages 21-23) may be extended, provided the CSSF is informed. Communication with the CSSF should be exclusively by e-mail, using the address opc@cssf.lu.

Nevertheless, the CSSF reminds that submission on time is encouraged, where a submission can be made without compromising the quality of the reporting and in line with the health and safety rules enacted to contain the spread of COVID-19.


14 April 2020
Regulatory reporting deadlines 
In its FAQ, the CSSF confirms that it will comply with the public statement of ESMA (Actions to mitigate the impact of COVID-19 on the deadlines for the publication of periodic reports by fund managers, 9 April 2020) and consequently:

  1. Investment fund managers that expect annual and half-yearly reports to be published after the applicable regulatory deadlines must inform the CSSF promptly of this fact by email (opc@cssf.lu), indicating the reasons for the delay and, if possi-ble, the estimated publication date.
  2. Investment fund managers must also inform investors as soon as practicable of the delay, the reasons for the delay and, if possible, the estimated publication date. 

9 April 2020
Weekly questionnaire to be completed by investment fund managers
In a communiqué, the CSSF informs investment fund managers of its intention to introduce a weekly questionnaire providing updates on financial data and governance arrangements.

The objective of the questionnaire is to provide the CSSF with weekly updates on financial data (total net assets, subscriptions and redemptions) and governance arrangements in relation to the activities performed by investment fund managers established in Luxembourg or other European/non-European countries and managing at least one UCITS, AIF and/or any other UCI (not qualifying as an AIF) in view of the specific circumstances and risks to which these entities are exposed during the current period of market turbulence. 

The weekly questionnaires are to be submitted through the eDesk portal, no later than Wednesday of the following week. This process will remain in place until further notice by the CSSF.


2 April 2020
Postponement of reporting under the Money Market Funds Regulation
In a communiqué, the CSSF draws attention to ESMA's announcement of 31 March 2020 to postpone, until September 2020, the reporting deadline for money market fund (MMF) managers under the MMF Regulation (MMFR). The original due date was April 2020.

Based on this statement and by way of derogation from Circular CSSF 20/736, managers of Luxembourg-domiciled money market funds may therefore postpone the submission of their Q1 and Q2 2020 reports until September 2020.

However, as the CSSF will implement the amended XML schema as soon as possible, submission of quarterly reports before the September deadline is encouraged. The CSSF will issue a separate communication once reporting entities are able to use the amended XML schema to submit the reports.


26 March 2020
Current CSSF operating model
In a communiqué, the CSSF clarifies that new complaints as well as any communication concerning complaints already registered by the CSSF should be sent by e-mail to reclamation@cssf.lu (along with the duly completed, dated and signed complaint form and all documents mentioned therein) in lieu of or in addition to being sent by regular mail.

All outgoing communications from the CSSF will henceforth by sent e-mail and will not be manually signed. 


25 March 2020
Long-form reports
In a communiqué, the CSSF indicates that, where necessary, the long-form report may exceptionally be remitted up to four months after the annual general meeting of the audited entity or fund, excluding extensions for such annual general meeting granted further to the recently enacted exceptional measures (Bill No. 7566 extending the measures concerning the holding of meetings of companies and other legal persons). These extensions cannot be applied cumulatively.

Where the report can be submitted by the ordinary deadline without compromising the quality of the audit work, timely submission is encouraged.

The CSSF also recalls the statement published by the Committee of European Auditing Oversight Bodies (CEAOB) on the impact of COVID-19 on the audits of financial statements.


23 March 2020
Temporary waiver of prior authorisation/notification requirements for cloud-based outsourcing
In its FAQ, the CSSF informs that, in the framework of the adaptation of their working environment in response to the COVID-19 situation, supervised entities may opt for cloud-based tools and solutions (e.g. collaborative tools, virtual desktop infrastructure, etc.).

To facilitate the rapid implementation of these solutions, prior authorisation by or notification to the CSSF, normally required by Sections 26.b to 26.g of the Circular CSSF 17/654 (as amended by Circular CSSF 19/714), will not be required for the duration of the current exceptional situation. A simple communication by email to the CSSF contact agent of the entity concerned is considered sufficient at this stage.

The CSSF recalls that this arrangement is without prejudice to the entity's obligation to carry out appropriate due diligence and risk assessment of such cloud outsourcing and that entities must keep a register of cloud outsourcing as required by Section 26.a of the Circular. This register must be provided to the CSSF upon request.


23 March 2020
Regulatory reporting deadlines
The CSSF issues a press release stressing the importance of timely regulatory reporting by supervised entities, especially given the current crisis. 


22 March 2020
Immediate review of organisational setup by supervised entities to enable working from home
In a communiqué, the CSSF urges all supervised entities to immediately review their current organisational setup in order to enable working from home.

The CSSF urges all supervised entities to review their current organisational setup immediately:

  • so that working from usual workplaces or backup sites is limited to vital functions “essential to maintain the critical mission of supervised entities for them to remain operational” and only to the extent these functions cannot be performed remotely; 
  • in order to implement virtual desktops and other remote-access solutions, cloud-based or not, for employees not equipped with a mobile device. 

The CSSF indicates that the financial sector needs to contribute to ensuring compliance with the lockdown measures in order to protect the public health system and that remote access from home should therefore be privileged.


20 March 2020
New FAQ on swing pricing
The CSSF provides clarification on the use of swing pricing by UCITS, Part II Funds and SIFs (the “UCIs”) as well as the conditions to be met in order to raise the swing factor above the level set out in the prospectus, even when this possibility is not provided for therein. UCIs can increase the swing factor up to the maximum level laid down in the prospectus without having to notify the CSSF in advance.

Under certain circumstances, UCIs can exceed the swing factor set out in the prospectus.

  • If the prospectus expressly provides for this possibility

The management body can decide to increase the swing factor in accordance with the conditions and provisions of the prospectus. This decision must be duly justified and take into account the best interest of investors.

  • If the prospectus does not provide for this possibility

Given the exceptional market circumstances caused by COVID-19, the CSSF will allow the management body of a UCI to exceed temporarily the swing factor beyond the maxi-mum level mentioned in the prospectus, under certain conditions. This decision must be duly justified and take into account the best interest of investors. In addition, the prospectus must be updated as soon as possible to provide for this possibility.

In both cases, investors must be informed of the decision through the usual communication channels and a detailed notification, including an explanation of the reasons for the decision, must be submitted to the CSSF. 

In order to raise the swing factor above the maximum level set out in the prospectus on a temporary basis: 

  • an appropriate communication must be made to investors through the usual communication channels; and
  • the revised swing factor must be based on a robust methodology (including analysis of market/transaction data) that provides for an accurate NAV, representative of prevailing market conditions.

Furthermore, the UCI can be requested to justify, on an ex post basis, the swing factor applied and to provide documentary evidence that the factor was representative of prevailing market conditions at a given time.


17 March 2020
Current CSSF operating model
In a press release, the CSSF indicates that funds and professionals should communicate with the CSSF either through the eDesk portal or by e-mail. All outgoing CSSF communications will be sent by e-mail from the @cssf.lu domain.


17 March 2020
FAQ on minimum IT security requirements for remote access
The CSSF issued an FAQ clarifying the recommended minimum IT security requirements for remote access implemented to meet the demands of the exceptional situation created by COVID-19 and issuing minimum recommendations with respect to:

  • High-privileged access: identification of user profiles with the highest risk levels (IT administrators, employees in charge of transactions/payments, etc.) and the im-plementation of proper security measures (strong authentication, access from a secure laptop, logging and review of sensitive actions).
  • Secure communication: encryption of communication channels (e.g. use of VPN with AES-256, RSA-2048 encryption).
  • Connection monitoring: controls to ensure, at least, that remote connections are consistent with recourse to teleworking (i.e. access during office hours, geofencing).
  • The duration of remote access: remote access introduced due to the exceptional COVID-19 situation should be temporary and disabled once the exceptional circumstances have ended.

The CSSF furthermore urges financial institutions under its prudential supervision to favour working from home as part of their business continuity plan. As mentioned in the communication of 2 March, satisfactory IT security conditions should be guaranteed, and no prior authorisation is needed for such arrangements.

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