New FAQ
On 24 December 2024, the CSSF published the FAQ on the new Circular 24/856 concerning the protection of investors in case of an NAV calculation error, an instance of non-compliance with the investment rules and other errors at UCI level (the “Circular 24/856”). With the entry into force of Circular 24/856 on 1 January 2025, the former CSSF FAQ on Circular 02/77 has been repealed.
The updated CSSF FAQ retains certain questions from the previous FAQ on Circular CSSF 02/77, provided they remain relevant under the new framework established by Circular CSSF 24/856. However, most questions from the earlier FAQ have been withdrawn, as their clarifications are now incorporated into the new circular.
In addition, the revised FAQ introduces new questions addressing key topics, including the scope of Circular CSSF 24/856, the application of tolerance thresholds to closed-ended UCIs, and the handling of non-compliant cost or fee payments at the UCI level.
The FAQ on Circular CSSF 02/77 will continue to apply to errors or instances of non-compliance identified before 1 January 2025. The updated CSSF FAQ will govern errors and non-compliance detected on or after 1 January 2025.
With the entry into force of Circular CSSF 24/856, references to Circular CSSF 02/77 and its FAQ, along with related minor updates, will be incorporated into the following CSSF FAQs:
- FAQ concerning the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment;
- FAQ concerning Money Market Funds Regulation;
- FAQ concerning the application of the swing pricing mechanism.
Key topics in FAQ
Among the key topics handled in the new FAQ, the following noteworthy questions arise:
- RAIFs and other UCIs not authorised by the CSSF do no fall into the scope of the Circular 24/856 except if they fall into the category of UCIs covered by section 2.1 of the circular which the CSSF is the competent authority (this includes, ELTIFs, Money Market Funds, EuVECA or EuSEF).
- Closed-ended UCIs fall out of scope of chapter 4 of Circular 24/856 which deals with NAV calculation errors at UCI level and, as a consequence, the requirements on the tolerance thresholds do not apply to them. However, such closed ended UCIs have to:
- comply with the NAV calculation rules provided for by regulations and UCI documents on an ongoing basis; and
- have policies and procedures in place ensuring a reliable valuation of its assets and liabilities in accordance with the regulations and UCI documents which allows for limiting as much as possible risks of a NAV calculation error emerging and detecting errors that do occur.
Notification procedure and technical guidance
The CSSF has also published the new notification procedure on NAV calculation errors and instances of non-compliance.
For further information on the provisions of Circular 24/856 we refer you to our previous article which can be found here.
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