FAQ CSSF – Questions/Réponses relatives à la loi du 17 décembre 2010 concernant les organismes de placement collectif – version 16 (uniquement en anglais)

The CSSF FAQ – LAW OF 17 DECEMBER 2010 and contains information related to the Luxembourg Law of 17 December 2010 on undertakings for collective investment (UCI Law). It includes updates and modifications made to the FAQ over time, with this version 16 published 30 November 2023.
The document covers various topics such as the eligibility of investments in the 10% limit of Article 41(2) of the Law, the eligibility of OTC bond markets in non-Member States of the European Union, and the criteria for a financial index to qualify as such under Article 41(1)(g) of the Law. It also addresses the minimum number of independent members required in relevant bodies to comply with the requirements of Article 24 of the UCITS V Delegated Regulation, as well as the cooling-off period for individuals previously involved with entities related to the Chapter 15 ManCo or the depositary.
Furthermore, the document discusses the annual updating of KIIDs for Luxembourg retail UCITS, the application of CSSF’s Frequently Asked Questions concerning the KIID to UCITS that issue a PRIIPs KID, and the impact of the ESMA Opinion on share classes of UCITS, including the requirements for currency risk hedging strategies and transparency.
Additionally, it provides information on data transfer conditions by a central administration or a depositary to another service provider, including the required notification details to the CSSF. The document also outlines the specific information that should be included in the notification to the CSSF in case of a breach of the VaR limit by an investment fund manager.
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This Version 16, publised on 30 November 2023, introduced modification of questions 14 and 15 in Part 1 „Eligible assets“. We would like to present the original questions, together with a brief summary of their corresponding answers:
Q14. Pursuant to Article 41(2) b) of the Law of 2010, a UCITS may hold ancillary liquid assets. What is meant by ancillary liquid assets?
Ancillary liquid assets, as per Article 41(2) b) of the Law of 2010, refer to bank deposits at sight, specifically cash in current accounts accessible at any time. These assets serve to cover current or exceptional payments, facilitate reinvestment in eligible assets under Article 41(1), or address unfavorable market conditions. The permissible limit for such assets is 20% of a UCITS‘ net assets. Temporary breaches of this limit are acceptable under exceptional circumstances, like the September 11 attacks or Lehman Brothers‘ 2008 bankruptcy, provided they are justified in the investors‘ interest.
In the context of Article 77(2)(a) of the Law of 2010 for feeder UCITS, ancillary liquid assets may also encompass highly liquid assets, including deposits with credit institutions, money market instruments, and money market funds. However, the upper limit for such assets for feeder UCITS is set at 15% of their total assets.
Q15. Can bank deposits, money market instruments, or money market funds be included in the ancillary liquid assets under Article 41(2) b) of the Law of 2010?
No. Bank deposits, money market instruments, and money market funds meeting the criteria of Article 41(1) of the Law of 2010 are considered eligible assets for a UCITS. Ancillary liquid assets under Article 41(2) b) do not include these, as they already fall under the category of eligible assets. Additionally, other money market instruments can be eligible investments for a UCITS under the trash ratio, as outlined in FAQ 1.7. For further details on ancillary liquid assets for feeder UCITS, specific information is available in Question 1.14 above.