FAQ – Circular CSSF 22/811 on UCI Administrators (UCIA) Version 3 – November 2023

The CSSF FAQ Circular CSSF 22/811 on UCIA was recently updated into Version 3 and provides detailed guidance and clarification on the supervisory expectations of the competent authority, the CSSF, regarding UCI administrators. The FAQ addresses various key aspects of the UCIA Circular, including ICT resources, business continuity, and disaster recovery planning, the scope of application, administration functions, delegation, and annual reporting requirements.
In the section on ICT resources, business continuity, and disaster recovery planning, the document outlines the type of data backup expected of UCIAs, emphasizing the importance of having a secure backup of accounting balances and registrar positions in case of service interruptions. It also addresses the use of DLT for maintaining the unit-/shareholder register, highlighting the CSSF’s technology-neutral and flexible regulatory approach to accommodate innovation in the financial sector.
Regarding the scope of application, the FAQ clarifies that the UCIA Circular applies to entities performing UCI administration functions in Luxembourg for regulated UCIs established in Luxembourg, non-regulated UCIs established in Luxembourg, and foreign UCIs. It also specifies that the UCIA Circular does not apply to entities not listed under its scope, which are permitted to provide UCI administration functions, such as unregulated UCIs performing their own administration or having their registered AIFM perform the functions.
In the section on administration functions, the FAQ explains that one UCIA may perform all three administration functions or delegate them to different service providers. It emphasizes the responsibility of the UCIA for the functions for which it has been appointed, while also allowing for delegation and support from third parties under specific conditions outlined in the UCIA Circular.
The document also addresses delegation models, highlighting the requirements for sub-delegation and the need for the UCIA to ensure that its entire delegation model, including any potential sub-delegations, is based on objective reasons and does not generate additional risks for the underlying UCIs. It further discusses the compliance of sub-delegation models with the UCIA Circular and the possibility of obtaining ad hoc derogations from the CSSF for certain sub-delegations.
Lastly, the FAQ outlines the annual reporting requirements for UCIAs, specifying the deadline for filing information regarding business activities and resources, as detailed in Annex B of the UCIA Circular, at the latest five months after the UCIA’s financial year-end, starting from 30 June 2023.
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The latest update to Version 3 included the publication of questions 3.3, 4.1 and 5.1. We would like to present the qustions in their original wording , together with a brief summary of their corresponding answers:
Q3.3 May a UCIA responsible for the NAV calculation and accounting function solely compile/input accounting information received by delegates/third parties?
No. In compliance with point 28 of the UCIA Circular, merely compiling/inputting accounting information is inadequate for fulfilling UCIA duties when responsible for NAV calculation and accounting. Delegating tasks does not exempt the UCIA from critically assessing and challenging NAV and accounting-related data provided by delegates. Large-scale delegation leading to a letter-box entity violates authorization conditions per point 96 of the UCIA Circular, rendering models solely compiling accounting information non-compliant.
Q4.1 Which sub-delegation models are compliant with the UCIA Circular?
According to point 83 of the UCIA Circular, the delegation model must avoid fragmentation hindering coordination, increasing costs, or complexity without justification. The UCIA can delegate UCI administration tasks under Chapter 3.5, ensuring that sub-delegations adhere to the Circular’s requirements, even in subsequent levels. While point 99 sets a framework and restrictions for sub-delegation, it allows delegation within the UCIA’s group or the UCI and/or IFM’s group, subject to Circular compliance. Ad hoc derogation for external sub-delegation is possible if the UCIA demonstrates objective reasons and effectively manages associated risks, requiring pre-implementation CSSF approval.
Q5.1 When do UCIAs need to submit their first annual reporting under point 7 of the UCIA Circular?
As per point 104 of the UCIA Circular, UCIAs must submit information on business activities and resources, detailed in Annex B, within five months of their financial year-end, starting from 30 June 2023. For instance, a UCIA with a financial year ending on 30 June 2023 should submit the required information no later than 30 November 2023. Similarly, a UCIA with a financial year ending on 31 December 2023 must provide the reporting to the CSSF by 31 May 2024.