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Publication by ALFI of Q&A on AIFMD reporting Background The Directive on Alternative Investment Fund Man- agers ("AIFMD") was implemented in Luxembourg by the Law of 12 July 2013 (the "AIFM Law"). Chapter 4 of the AIFM Law establishes the transpar- ency requirements for AIFMs. Article 22 of the AIFM Law especially sets forth the reporting obligation of AIFMs to the CSSF. What’s in there? On 3 October 2014, the Association of the Luxem- bourg Fund Industry ("ALFI") published Questions and Answers ("Q&A") on Reporting to investors and annual reports under the Directive on Alternative Investment Fund Managers ("AIFMD"). The Q&A only pertains to the CSSF reporting of AIFMs under Article 22. The document was prepared by ALFI's working group for reporting under the AIFMD. The working group comprises representatives of asset manag- ers, management companies, securities service firms, audit firms, law firms, and document and information management firms. The document contains the working group's answers to questions about AIFMD reporting. However, it is not meant to be an industry standard or a best practice guide, as it represents the views of a group of market par- ticipants. The Q&A has not been validated by any regulator. The Q&A provides details on how the information identified in the reporting template (Annex IV of the AIFMD-CDR) shall be submitted to the CSSF. In particular, the Appendix of the Q&A provides guid- ance on how the total assets under management shall be calculated. The ALFI Q&A on AIFMD reporting IS AVAILABLE HERE. What’s next? The Q&A will be updated from time to time.

UCITS- Implementation by CSSF of the ESMA revised guidelines on ETFs and other UCITS issues Background On 18 December 2012, ESMA published its guidelines on ETFs and other UCITS issues (ESMA/2012/832) (the "Guidelines"). The Guide- lines applied to UCITS management companies and self-managed SICAV. On 24 March 2014, ESMA published a revised version of the Guidelines which was translat- ed in all European languages on 1 August 2014 (ESMA/2014/937). As a reminder, the update introduced a new sub- paragraph under Paragraph 43(e) laying down the derogative rules under which a UCITS may be fully collateralized in different transferable securities and money market instruments issued or guaranteed by a Member State, one or more of its local authori- ties, a third country, or a public international body to which one or more Member States belong. In this case, the revised Guidelines state that "such a UCITS should receive securities from at least six different issues, but securities from any single is- sue should not account for more than 30% of the UCITS’ net asset value. UCITS that intend to be fully collateralized in securities issued or guaranteed by a Member States should disclose this fact in the prospectus of the UCITS. UCITS should also identify the Member States, local authorities or public inter- national bodies issuing or guaranteeing securities which they are able to accept as collateral for more than 20% of their net asset value." Furthermore, under the provision of the new para- graph 48 of the revised Guidelines, in the context of OTC financial derivative transactions and efficient portfolio management techniques, the UCITS annual report must include information on:

« The name of an issuer from whom the UCITS re- ceived a collateral which exceeded 20% of the NAV; « Whether the UCITS has been fully collateralised in securities issued or guaranteed by a Member State, one or more of its local authorities, a third country, or a public international body to which one or more Member States belong. What’s in there? Without any departure from the above ESMA rules, the CSSF issued on 30 September 2014 the Circular 14/592 (the "Circular") implementing the updated Guidelines in Luxembourg. The Circular IS AVAILABLE HERE . What’s next? The Circular entered into force on 1 October 2014 and replaces CSSF Circular 13/559. However, existing structures benefit from a 12-month grandfathering period for full compli- ance. Thus, existing structures must comply with the Guidelines no later than on 1 October 2015. GERMANY CRA III – Regulation transposed in Germany Background The Regulation (EU) No. 462/2013 (CRA III) amend- ing Regulation (EC) No. 1060/2009 on Credit Rating Agencies (CRAs) came and the Directive 2013/14/ EU on the same matter have been adopted by the European Parliament and Council on May 21, 2013. The Directive has to be transposed into national law until December 21, 2014. Therefore, on June 6, 2014 the German government published the draft of a transposition law (CRA-AusführungsG). What’s in there? The Regulation’s intention is to reduce the market participants’ dependency on ratings, to improve the quality and transparency of ratings and the inde- pendence between the CRAs and the companies being rated, as well as to increase competition be- tween CRAs.

The Directive contains provisions to prevent UCITS and AIFMs from over-reliance on ratings when as-

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