On 21 October 2024, the CSSF issued a Communiqué regarding the ESMA Guidelines on funds’ names (the “Guidelines”)
The CSSF issued already a Communiqué on 21 August 2024, announcing the publication of the translated Guidelines in all official EU languages and making their applicability effective from 21 November 2024, i.e. three months after publication.
Circular CSSF 24/863
The CSSF has now implemented the Guidelines into the Luxembourg regulatory framework through Circular CSSF 24/863. It reminds market participants that although the Guidelines may be applied from 21 November 2024, a six-month transition period for existing funds applies as well so that the Guidelines will apply as from 21 May 2025.
Supervisory expectations
The CSSF expects from the market participants, regardless of whether they are disclosing under Article 6, 8 or 9 of the SFDR, to carry out a self-assessment on the applicability of the products they manage and to ensure compliance of fund names with the Guidelines.
The following principles are to be considered:
- Fund names should not be misleading as sustainability characteristics should be reflective of the fund characteristics.
- Adequate disclosure in the precontractual documentation of elements supporting the use of ESG or sustainability related terms in fund names.
- Given the fact that the list of ESG and sustainability-related terms mentioned in the Guidelines is not exhaustive, market participants are required, on a case-by-case basis, to review the names of the financial product managed by them and access whether the Guidelines apply to such products.
- market participants should closely monitor and take appropriate action of any further developments on this matter at European level.
Filing of updated precontractual documentation for existing funds
The CSSF grants industry actors a priority processing procedure (“PPP”) to existing UCITS and AIFs which limit the update of their issuing documents required to comply with the new Guidelines. The limit concerns amendments either a name change of at least one sub-fund or minor adjustments to the fund’s/sub-fund’s ESG engagement/SFDR precontractual disclosure.
Further conditions and modalities on benefitting from the PPP are explained in the Fund naming confirmation letter.
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