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AIFM Directive prospects backed at Luxembourg ALFI - NICSA fund conference

Friday, October 1, 2010 by Olivier Sciales

Luxembourg politicians and officials have expressed confidence that the European Union’s AIFM Directive will soon win final approval dispute this week’s latest dispute between member states on the contentious issue of access to EU markets for managers and funds based outside the union.

Speaking to delegates at the annual investment fund conference organised by the Luxembourg fund association Alfi and US trade body Nicsa on 27 -28 September, the country’s finance minister, Luc Frieden, said he hoped an agreement would be reached soon, acknowledging that “a lot of work still lies ahead.”

Frieden threw his support behind allowing third-country funds to access European investors, saying: “We do not want a ‘Fortress Europe’. We want non-European funds and those managed outside the EU to be distributed within the EU as long as they meet our rules [in areas such as] transparency and investor protection.”

Speakers from the CSSF, the Luxembourg regulator, expressed satisfaction with the general direction of the draft directive, noting that hedge funds and other alternative investment products are already regulated under existing Luxembourg legislation.

However, there is some concern about the prospect of the final version of the directive imposing strict liability on fund depositaries for a broad spectrum of losses on the part of alternative funds. The Luxembourg regulator believes the role and duties of a fund custodian should be clearly spelled out, but that depositaries should not be put in the position of guarantor of the fund’s assets under all circumstances.

By Olivier Sciales, partner of Chevalier & Sciales (Luxembourg). You may find more information on our AIFM blog at http://www.cs-avocats.lu/aifm-directive. The purpose of this blog aims to provide up to date news coverage and timely analysis of the legislative process and issues raised by the European union’s Directive on Alternative Investment Fund Managers.

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Posted at 04:53 AM

Topic: Investments