Scanning Special June 2014

CACEIS European Regulatory Watch Newsletter

June

2014

Special last plenary session of the 2009-2014 European Parliament

EUROPE AIFMD: ESMA Q&A UPDATED ESMA updates AIFM reporting AIFMD guidelines for hedge fund managers ESMA consultation paper on Central Securities Depositories Regulation (CSDR) The CSDR adopted by the European Parliament The list of authorised CCPs under EMIR updated Consultation Paper on risk-mitigation techniques for OTC-derivatives ESMA Q&A on the EuSEF and EuVECA Regulations Directives MAD II and MAR adopted European Commission consultation on FX financial instruments MiFID II and MiFIR adopted by the European Parliament FSB OTC Derivatives Market Reforms Report SD Directive amendment adopted by the European Council ESMA Final Report on the Revision of the Provisions on Diversification of Collateral UCITS V Directive adopted by the European Parliament LUXEMBOURG Immobilization of bearer shares The 2 nd edition of EMIR/OTC Derivatives FAQ document published by the ALFI

FRANCE Applicable rules to French UCITS and foreign UCITS distributed in France Update of the 2013-22 AMF position on the application of AIFMD ITALY Transposition of the AIFMD in Italy IRELAND ICAV - Irish Collective Asset-Management Vehicle Bill Publication by Central Bank of Ireland of a UCITS Rulebook and First UCITS Q&A BELGIUM Draft Belgian law to modify the law of 3 August 2012 on certain forms of collective management of investment portfolio. NETHERLANDS Banker’s Vow : Compliance Requirements in financial sector in the Netherlands TAX FATCA - Luxembourg and Belgium sign IGAS FATCA - Association of the Luxembourg Fund Industry (ALFI) publishes dedicated Q&A FATCA - Extension to FFI registration period New FATCA-like system to combat tax evasion in Europe - implementation in Luxembourg ? ? W hat’s next

ALFI response to IOSCO/FSB consultation “Assessment methodologies for identifying non-bank non-insurer global systemically important financial institutions"

B ackground

W hat’s in there

...

EUROPE

competent authorities, the timing of such report- ing together with the procedures to be followed. What’s in there? On 25 March 2014, ESMA updated its AIFMD re- porting technical guidance by issuing: « Version 1.2 of ESMA/2013/1358 (AIFMD report- ing - XML documents); and « Rev3 version of ESMA /2013/1358 (AIFMD re- porting IT technical guidance). The description of changes is included in the IT technical guidance (2013/1358) in the Excel sheet “change history”. What’s next? The reporting frequency of authorised AIFMs de- pends on their assets under management, their strategies and their use of leverage. Please refer to the last update of the CSSF AIFMD Q&A as to get more information on AIFM reporting periods.

es shall be made. These guidelines reflect the legislative status and regulatory developments in Luxembourg, United Kingdom and Ireland as at 25 March 2014.

AIFMD: ESMA Q&A updated Background ESMA published on 17 February 2014 a Q&A on the application of the AIFMD. ESMA published on 25 March 2014 a Q&A on the application of the AIF- MD (ESMA 2014/296) that provides some insight on (1) the application of the AIFMD remuneration rules, (2) AIFs notification procedure and (3) the AIFM reporting to national competent authorities. What’s in there? On 25 March 2014, ESMA updated the “reporting” section 3 of the Q&A. What’s next? We will keep you informed of any further ESMA Q&A update. ESMA updates AIFM reporting technical guidance Background Regulation 231/2013 (AIFMD Level 2 Regulation) provides, inter alia, details on the AIFM reporting obligations to national competent authorities as required under Article 3 and Article 24 of AIFMD. It includes in particular, a comprehensive report- ing template that AIFMs will have to use to comply with their reporting obligations. In November 2013, ESMA issued a full set of re- porting guidelines providing clarification on the information that AIFMs should report to national THE Q&A IS AVAILABLE HERE.

AIMA’S PRESS RELEASE IS AVAILABLE HERE.

The AIFMD practical planning is available to AIMA’s members only.

ESMA consultation paper on Central Securities Depositories Regulation (CSDR) Background CSDR aims at creating a uniform European regula- tory framework for central securities depositories. The European Commission, the EU Parliament and the Council reached a political agreement on the draft legislation on 26 February 2014. What’s in there? On 20 March 2014, ESMA issued a consultation paper on the content of draft technical stand- ards (DTS) for the CSDR. This consultation paper follows the structure of the CSDR, with the first section focusing on settlement discipline. The second part focuses on CSD authorisation, representing most of the technical standards under CSDR. « A list of the possible minimum requirements for an application for registration as CSD; « A template for CSD registration application; and « A list of minimum information to be included in the CSD record so that a comprehensive The consultation paper also includes:

THE AIFMD REPORTING XML DOCUMENTS ARE AVAILABLE HERE.

THE AIFMD REPORTING IT TECHNICAL GUIDANCE IS AVAILABLE HERE.

AIFMD guidelines for hedge fund managers Background

Alternative investment funds managers falling into the scope of AIFMD must submit an applica- tion for authorisation by 22 July 2014. What’s in there? On 17 April 2014, the Alternative Investment Management Association (AIMA) released a new set of AIFMD guidelines for hedge fund managers. These guidelines highlight the impact of AIFMD on hedge funds’ managers business and identify key areas where strategic and operational choic-

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What’s next? ESMA is now drafting the regulatory technical standards laying down the clearing obligation. ESMA itself considers that this process will re- quire up to six months. ESMA inserted the information about the author- ised CCP and its authorised products for clearing in the consolidated register.

and accurate reconstruction of the operational process can be conducted. What’s next? The consultation is open until 22 May 2014. ESMA will finalise its proposed DTS based on the feedback from stakeholders responding to this consultation paper. Then, ESMA will deliver the final DTS to the European Commission, to be adopted as an EU-wide immediately enforcea- ble Regulation. The CSDR adopted by the European Parliament Background The commission proposal has been issued on 7 March 2012. A political compromise was reached on 18 De- cember 2013 between the Council and the Euro- pean Parliament. What’s in there? On 15 April 2014, the European Parliament for- mally adopted the Central Securities Depositories Regulation (CSDR). For the first time a regulatory framework will be in place for central securities depositories in the EU. The CSDR is another important part in the framework of EMIR (which regulates OTC deriv- atives clearing, central counterparties and trade repositories), Target2Securities (T2S), which aims to create a single settlement engine, and the Set- tlement Finality Directive (Directive 98/26/EC). It THE DISCUSSION PAPER IS AVAILABLE HERE.

also fits in the context of the EU’s efforts regard- ing MiFID II that regulates trading environments. The CSDR aims to dematerialise all securities by transforming them into book entry form in order to accelerate settlement cycles. It harmonises settlement periods and settlement discipline re- gimes across the EU. The Regulation also foresees a “passporting” re- gime for central securities depositories providing services throughout the EU or wanting to set up a branch in another Member State. In addition, the Regulation sets clear organisational require- ments for central securities depositories and it provides restrictions on the direct provision by CSDs of banking services ancillary to the settle- ment process. The Regulation is completed by provisions on sanctions. What’s next? The Regulation will enter into force twenty days following its publication which is foreseen for the third quarter of 2014. Article 5 on settlement cycle (T+2) will enter into force on 1 January 2015 and Article 3(1) on dematerialisation of securities will apply from 1 January 2015 for transferable securities issued after that date and from 1 January 2020 for all transferable securities. ESMA will issue draft reg- ulatory technical standards on issues such as or- ganisational requirements, settlement discipline and the information that has to be provided to obtain authorisation. The list of authorised CCPs under EMIR updated Background ESMA maintains a list of CCPs that have been au- thorised to offer services and activities in the EU in accordance with EMIR. What’s in there? ESMA has updated its list of Central Counterpar- ties (CCPs) that have been authorised to offer services and activities in the Union in accordance with EMIR as follows: THE TEXT OF THE REGULATION IS AVAILABLE HERE.

THIS CONSOLIDATED REGISTER CAN BE FOUND HERE.

Consultation Paper on risk-mitigation techniques for OTC-derivatives Background EMIR (Regulation 648/2012) establishes provi- sions aimed at increasing the safety and trans- parency of the OTC derivatives markets. Among other requirements, it introduces a legal obligation to clear certain types of OTC derivatives through central counterparties (CCP). However, not all OTC derivative transactions will be subject to the clearing obligation or will meet the conditions to be centrally cleared. In the absence of clearing by a CCP, counterparties must apply risk mitigation techniques to their bilateral relationships to reduce counterparty credit risk. What’s in there? ESMA, EBA and EIOPA have launched on 14 April 2014 a consultation about the draft RTS on risk-mit- igation techniques for OTC-derivative contracts not cleared by a CCP. The draft RTS outlines the required risk manage- ment procedures for the exchange of collateral (art. 11(3) of EMIR), the models and the framework used for it. Additionally the draft sets some minimum require- ments for the documentation of those risk man- agement procedures. What’s next? The consultation runs until 14 July 2014. After that date, ESMA, EBA and EIOPA will finalise their jointly developed draft RTS and submit them to the Commission before the end of 2014.

« 3 April – EuroCCP – NL « 8 April – KDPW_CCP

YOU CAN FIND THE LINK TO THE CONSULTATION HERE.

« 11 April - Eurex Clearing AG There are now four CCPs authorised under EMIR.

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ESMA Q&A on the EuSEF and EuVECA Regulations Background Regulation No 345/2013 on European Ven- ture Capital Funds (EuVECA) and Regulation No 346/2013 on European Social Entrepreneur- ship Funds (EuSEF) came into force on 22 July 2013 (the "Regulations"). These Regulations lay down a common EU regu- latory framework for the managers of EuVECA and EuSEF, who may benefit from an EU management and marketing passport if registered and compli- ant with the Regulations. What’s in there? On 26 March 2014, ESMA published a Q&A (ESMA/2014/311) on the application of the Regu- lations providing the following answers: « EuSEF and EuVECA managers that subsequent- ly exceed the threshold of Article 3(2)(b) of the AIFMD can set up new EuSEF and EuVECA funds once the threshold is exceeded; « EuSEF and EuVECA managers shall register twice with their national competent authorities i.e. once under the AIFMD and once under the EuSEF and EuVECA Regulations; and « EuSEF and EuVECA managers can manage and market AIFs. What’s next? The ESMA Q&A will be updated from time to time.

Directives MAD II and MAR adopted Background The regulatory framework provided by the cur- rent Market Abuse Directive (2003/6/EC) required Member States to have the power to detect and investigate market abuse (ie. insider dealing and market manipulation). « On 20 October 2011, the Commission issued its proposals for a regulation on market abuse (MAR), and a directive on criminal sanctions for market abuse (MAD II). « On 24 June 2013, the European Parliament (EP), the Council and the European Commission reached a political agreement on the MAR text. « On 10 September 2013, EP voted the MAR in plenary session and agreed to its adoption at first reading. « On 20 December 2013, the Council representa- tives approved the final compromise text on the MAD. « On 4 February 2014, EP voted the MAD in ple- nary session and agreed to its adoption at first reading. What’s in there? On 14 April 2014, the Council adopted MAD II / MAR at first reading. The new framework will ensure regulation keeps pace with market developments. It will be adapted to the new market reality, notably by including all financial instruments which are traded on organised platforms and over the counter (OTC), and adapting rules to new tech-

nology. It will strengthen the fight against mar- ket abuse across commodity and related deriv- ative markets, explicitly ban the manipulation of benchmarks, such as EURIBOR and LIBOR, and reinforce the cooperation between financial and commodity regulators. Since the sanctions currently available to supervisors often lack a deterrent effect, sanctions will be tougher and more harmonised. What’s next? After publication of the Directive in the Official Journal, expected in June, Member States shall implement MAD II within 2 years. MAR will apply 2 years after its publication.

THE MAD TEXT IS AVAILABLE HERE. THE MAR TEXT IS AVAILABLE HERE.

European Commission

consultation on FX financial instruments Background Following the letter by ESMA asking the European Commission for clarification, the European Com- mission has the intention to issue an implementing regulation in clarifying the definition of an FX spot contract. In order to define where the boundary lies between an FX forward and an FX spot contract the Com- mission initiated a consultation. What’s in there? In its consultation document from 10 April 2014 on FX financial instruments, the Commission sets out the background and main issues concerning FX financial instruments. The main issues for discussion that the Commis- sion brings up concerning FX financial instruments are:

THE Q&A IS AVAILABLE HERE.

« Foreign exchange markets; « Settlement and delivery; « FX market developments;

FX risks;

«

« Transition periods and international aspects; and « Regulatory implications of classification as a fi- nancial instrument. In total the Commission submits ten questions for discussion in its consultation. The questions range from whether a definition of FX spot contracts is

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What’s in there? Following the political agreement reached by the European Parliament, the Council and the Europe- an Commission on 14 January 2014, the European Parliament has formally adopted the MiFID II re- gime in a plenary vote on 15 April 2014. The MiFID II regime comprises an amended Directive and a new Regulation (MiFIR). What’s next? Many texts are yet to be adopted. In line with the traditional approach for European legislation, the key next steps for the complete adoption of MiFID II regime are the following: « Q2 2014: Publication in the Official Journal of the European Union « Q2 2014: Consultation by ESMA (advice, Regula- tory Technical Standards (RTS) and Implementing Technical Standards (ITS) « Q1-Q2 2015: Delivery of ESMA advice, RTS and ITS to the European Commission « Q2 2015: Drafting of Delegated acts by the Euro- pean Commission YOU CAN FIND THE LINK TO THE EP PRESS RELEASE HERE. THE TEXT OF THE MIFIR IS AVAILABLE HERE THE TEXT OF THE REVISED MIFID IS AVAILABLE HERE. FSB OTC Derivatives Market Reforms Report Background On the 7th April 2014 the FSB publishes the Guidance on Supervisory Interaction with Finan- cial Institutions on Risk Culture and a progress report on enhanced supervision. On the 31st March 2014 the FSB plenary meets in London to discuss the vulnerabilities of the global financial system, reviewing the policy work to complete core financial reforms (e.g. ending too-big-to-fail and addressing shadow banking risks). What’s in there? This report presents the state of regulatory pro- gress for the FSB member’s jurisdiction. The report presents its findings of the progress for: « Trade reporting: the majority of FSB jurisdic- tions have trade reporting, it is expected by the « Q2 2016: Transposition in national laws « Q4 2016: Application of new rules for firms in scope

end of 2014 only three of these jurisdictions will not have this type of reporting. « Central Clearing: as of April 2014 three juris- dictions reported having some Central Clearing requirements, it is also presented the state of operation of the CCP (e.g. jurisdictions where they can operate). « Capital requirements: state of the Basel III re- quirements for centrally cleared and non-cen- trally cleared derivatives. « Margin requirements: some regions started to develop regulatory reforms needed to im- plement the recently finalised BCBS-IOSCO margin standards for non-centrally cleared derivatives. « Exchange and electronic platform trading: presents the state of the legislative frame- works and says it lacks consistency over juris- dictions (e.g. timing of implementation, scope of applicable rules etc.). This report also targets the implementation is- sues (e.g. cross-border regulatory issues) and the market developments when implementing these reforms. Last topic presented is the pro- gress work stream support. What’s next? It is expected that in November 2014 G20 Lead- ers summit, the Key international policy stand- ards will be finalised. It is also expected that trade repository reporting will continue expand- ing until the end of 2014. PRIIPS regulation voted by the European Parliament Background A draft Regulation for PRIPs was published on 3 July 2012, following publication of research into PRIPs and a consultation from the Commission on the leg- islative steps for the PRIPs initiative. A compromise was reached by the COREPER and the European Parliament, on 4 April 2014. What’s in there? With the vote on plenary session of the PRIIPS regulation on 15 April 2014 a further step is made towards the ongoing goal of boosting consumer trusts in financial markets. The basic message here is that PRIIPS manufacturers will need to provide a standard key information document (the KID) while advising or selling their vehicles to retail investors. THE PUBLICATION IS AVAILABLE HERE.

necessary to what the main uses of FX spot con- tracts are. The Commission stresses that there are divergent approaches across Member States and interna- tionally concerning the delineation between FX forwards and FX spot contracts. It aims to tackle the divergence by issuing the implementing regu- lation taking into account the input from the con- sultation. What’s next? The European Commission will accept contribu- tions to the consultation until 9 May 2014. The consultation will be considered by the Commis- sion in drafting the implementing regulation that will define FX spot contracts. MiFID II and MiFIR adopted by the European Parliament Background The original Markets in Financial Instruments Di- rective (MiFID) came into effect on 1 November 2007. Nearly six and a half years after its entry into force, work on the revision of the MiFID regime is en- tering the final straight. MiFID II aims to address a number of issues underlying the operations of firms and financial markets, as identified by the Financial Stability Board and by the European Commission during the financial crisis. The imple- mentation of MiFID II will prove to be challenging for the financial industry. The 720-page directive will have a substantial impact on the distribution activities and the value chain of asset managers, investment firms, banks, distributors and market operators. MiFID II developments should be fol- lowed actively by all financial firms in order to keep abreast of events. THE CONSULTATION PAPER IS AVAILABLE HERE.

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What’s next? The Regulation will have to be formally approved by the Council at first reading and then published in the Official Journal of the EU. Manufacturers shall have KIDs ready by 2 years following entry into force of the Regulation. UCITS Manufacturers will be exempted until at least 5 years after entry into force of the Regulation. YOU CAN FIND THE LINK TO THE EP PRESS RELEASE HERE. THE TEXT OF THE REGULATION IS AVAILABLE HERE. SD Directive amendment adopted by the European Council Background The Council Directive 2003/48/EC (Savings Di- rective - SD) applies since 1 July 2005. It aims at tackling cross-border tax evasion by creating an information exchange system for tax authorities to help identify individuals that receive savings income in a Member State other than their own. The core of the SD is the automatic exchange of information. This means that Member States col- lect data on the income from savings of non-res- ident individuals, and automatically provide this data to the authorities where the individual re- sides. Currently, 26 Member States apply the automatic exchange of information. Luxembourg is allowed, for a transitional period, to apply a withholding tax instead of engaging in the auto- matic exchange of information. What’s in there? EU Council adopted on 24 March 2014 an amendment to the SD. The below list evidences the main features of the future SD regime: « The concept of income would be enlarged as to include not only interest but other substantially equivalent income; « It would cover income received from non-UCITS funds independently of their legal form and of their country of incorporation. « Circumvention of the SD rules would be pre- vented by requiring paying agents to apply a "look-through approach" in case of payments to entities established in countries where the SD or equivalent measures do not apply.

What’s next? The amendment should be adopted at a forth- coming plenary session of the EP in 2014. Once entered into force, Member States will have until 1 January 2016 to transpose the amendments to the SD into national law. Luxembourg has announced on 21 March 2014, that from 2015 onwards it will participate in the automatic exchange of information, and opt out of the withholding tax framework. ESMA Final Report on the Revision of the Provisions on Diversification of Collateral Background In December 2012, ESMA published guidelines on ETFs and other UCITS issues (ESMA/2012/832), which entered into force on 18 February 2013 (the "Guidelines"). ESMA launched a consultation in December 2013 after stakeholders requested it to reconsider its position on the requirements on collateral diversi- fication set forth in § 43(e) of the Guidelines. What’s in there? On 24 March 2014, ESMA issued its final report on the revision of the Guidelines (the "updated Guidelines"). Their new provision should state that all UCITS may be fully collateralised in securities referred to in Article 54-1 of the UCITS Directive (e.g. government securities), to the extent that: « They receive securities from at least six different issuers; and « They comply with additional prospectus and an- nual report disclosure requirements. What’s next? The updated Guidelines would enter into force 2 months after publication. However, UCITS that would exist before the application date of the up- dated Guidelines would not be required to com- ply with the provisions relating to the prospectus transparency on collateral diversification until the earlier of: (i) the first occasion after the application date of the updated Guidelines on which the prospectus, having been revised or replaced for another pur- pose, is published; and THE DIRECTIVE IS AVAILABLE HERE.

1) What is a PRIIP? The Regulation does not include an exhaustive list of the vehicle in scope. PRIIPS are basically all type of vehicle available to retail investors which package exposure to assets purchased by the vehicle. The PRIIP landscape will be composed of investment funds, MiFID insurance-based products, structured securities and structured deposits not exclusively offered to institutional investors are covered by the Regulation. However corporate shares, sovereign bonds directly held by a retail investor as well as other insurance products and pension schemes are explicitly excluded from the scope of the Regulation. The Regulation applies to the Manufacturers and persons advising on or selling PRIIPs. It will thus typically impact fund managers, insurance under- takings, credit institutions and investment firms. 2) What shall I do if I am a Manufacturer? Manufacturers are responsible for: « Drawing up the KID in compliance with the strict requirements set out in the Regulation or moni- toring any service providers to which this duty is delegated; « Ensuring that the KID is provided free of charge to retail investor before the conclusion of the trans- action; « Establishing appropriate internal procedures as to (1) ensure investors have an effective way of submitting complaints and (2) process such com- plaint in a timely manner; and « Updating the KID and informing investors of any revised provisions. Manufacturers will also be required to update their marketing documentation as to indicate that a KID is available. « Publishing the KID on its website ;

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(ii) twelve months after the application date of the updated Guidelines. Requirements to publish information in the report and account of an existing UCITS would not apply in respect of any accounting period that ended be- fore the application date of the updated Guidelines.

cluded with the EP last February. The UCITS V Directive is therefore expected to be adopted and published in the Official Journal of the EU before the end of June 2014. YOU CAN FIND THE LINK TO THE EP PRESS RELEASE HERE. THE TEXT OF THE DIRECTIVE IS AVAILABLE HERE.

The 2 nd edition of EMIR/OTC Derivatives FAQ document published by the ALFI Background EMIR, Regulation 648/2012 of 4 July 2012 on OTC derivatives, central counterparties (CCPs) and trade repositories, entered into force on 16 August 2012. Many obligations under EMIR required addi- tional specification via regulatory and imple- menting technical standards and thus will take effect following the entry into force of these technical standards. The European Commis- sion on 19 December 2012 adopted 9 of these regulatory technical standards developed by ESMA. The technical standards were published as Commission Delegated Regulation in the Official Journal of the European Union. Others were published in February and March 2014. ESMA is to draft the remaining technical stand- ards for the Commission to adopt later on. What’s in there? This document, published on 17 April 2014, contains the answers of ALFI’s working group to the industries frequently asked questions about the regulatory and implementing techni- cal standards that complement the obligations defined under EMIR. This document currently covers primarily the following topics: the scope of EMIR, the report- ing requirements, the legal entity identifier. The updated version includes the information communicated by the CSSF in press release 14/11 (clarification of FX derivative definition and reminder of reporting duties to TRs), ex- pansion of the section regarding legal entity identifiers and the announcement of new TR registrations. ALFI's members are welcome to submit a question to the working group, which will re- view it and consider whether to include it in a future copy of this document. Please send your questions if any to info@alfi.lu. What’s next? ALFI’s EMIR FAQ is updated on a regular basis. Sections for frequently asked questions re- garding centrally cleared and non-centrally cleared OTC derivatives are foreseen.

THE FINAL REPORT IS AVAILABLE HERE.

UCITS V Directive adopted by the European Parliament Background On 3 July 2012, the European Commission adopt- ed a proposal to amend Directive 2009/65/EC on undertakings for collective investment in transfer- able securities (“UCITS IV”) in the areas of deposi- tary banks, remuneration rules and sanctions. The proposed Directive (“UCITS V”) aims to align the regulatory framework governing UCITS with the AIFMD framework in the above areas and to there- by strengthen investor protection in the EU. An informal agreement to back the Commission’s proposal was reached on 25 February 2014 be- tween the European Parliament (EP) and the Council of the European Union, agreeing on sev- eral amendments to the original text after heated rounds of negotiations. What’s in there? On 15 April 2014, the EP adopted its final position on UCITS V, reflecting the agreement reached with the Council last February. As the two co-legislators had already agreed on a set of amendments on an informal basis, the final text adopted by the EP featured only minor changes to the compromise text and no substantial amendments. The vote, held in plenary, marked the end of the first reading of the proposal by the European Par- liament under the ordinary legislative procedure. There was no material change compared to the compromise text covered in our February 2014 tracker. What’s next? The EP having completed its first reading of the proposal, the adopted text will also have to be formally approved by the Council for the draft Di- rective to be adopted at first reading (Council first reading). This will most likely be a straightforward procedure following the informal agreement con- The text was approved by 607 votes to 28, with 34 abstentions.

LUXEMBOURG

Immobilization of bearer shares Background

Bill 6625 was introduced on 4 October 2013 follow- ing FATF’s recommendations; it seeks to amend the law of 10August 1915 by setting rules applying to the immobilisation of bearer shares. In particular, it will put an end to the free transfer of bearer shares by de- livery of certificate and will require (i) the immobilisa- tion of the bearer shares by a professional depositary and (ii) the identification of the bearer shares holder. Bill 6625 covers both shares to be issued after the entry into force of the law and existing bearer shares. Only bearer shares exchanged on a regulated market are out of scope. Amongst other, bearer shares issued or to be issued by investment funds (SICAV or FCP) are in scope of Bill 6625. What’s in there? On 1 April 2014, the Luxembourg Government made some changes to Bill 6625. 1- Reduction from 18 to 6 months of the deadline for suspension of the voting and distribution of bearer shares which would not have been immobilised fol- lowing entry into force of the law; 2- Reduction from 8 to 5 years of the deadline for cancellation of bearer shares which would not have been immobilised following entry into force of the law; and 3- In addition to cash , companies may deposit at the Caisse des depôts et consignation any assets whose value is equivalent to the cancelled shares. What’s next? Bill 6625 to be voted by the Chambre des Députés (vote not scheduled so far).

YOU WILL FIND THE GOVERNMENT AMENDMENTS HERE.

YOU WILL FIND THE FAQ HERE.

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ITALY

ALFI response to IOSCO/FSB

Transposition of the AIFMD in Italy The legislative decree n°44/2014 transposing into Italian law the provisions of the EU AIFM Directive on Alternative Investment Fund Managers has been published in the Official Gazette of the Italian Republic on March 25th, 2014 and has entered into force on April 9th, 2014. This legislation is the legal framework that defines the basic obligations imposed by the AIFMD in the Italian system, while the issuance of secondary rank rules is delegated to Bank of Italy and Con- sob, according to their respective competences and in compliance with the provisions of the Eu- ropean Union. It will therefore be necessary to wait for the adop- tion of the Delegated Regulations to assess how the financial operators will take advantage from the new European regulatory framework with spe- cific reference to the Italian market. IRELAND ICAV - Irish Collective Asset-Management Vehicle Bill The IFSC Strategy Statement 2011-2016 commit- ted the Irish Government to the development of proposals for a new type of corporate vehicle for the funds industry. The general scheme of the Irish Collective Asset-Management Vehicle ("ICAV") Bill was published on 20 December 2013 - it is ex- pected to come into effect in November 2014. The ICAV is a new type of Irish corporate vehicle which has been specifically designed for invest- ment funds and will be an alternative to Irish public limited company (“plc”) structures. This initiative aims to increase the attractiveness of Ireland as a location for establishing investment funds. A key feature of the ICAV is that it will not be con- sidered a “plc” for Irish corporate law purposes. This is important as it will provide much needed flexibility to Irish funds wishing to structure in cor- THE DECREE IS AVAILABLE HERE

consultation “Assessment methodologies for identifying non- bank non-insurer global systemically important financial institutions” Background The FSB and the IOSCO published on 8 January 2014 a consultation paper on the assessment methodologies for identifying non-bank non-insur- er ("NBNI") global systemically important financial institutions ("SIFIs"). The new SIFI framework that to date only covers banks and insurers would be extended to all other financial institutions. The consultation closed on 7 April 2014. What’s in there? On 7 April 2014, ALFI responded to the consulta- tion as follows: 1) Highly regulated funds such as UCITS in Eu- rope or regulated AIFs that already comply with detailed diversification rules and rules on leverage are not systemically important and do not cause systemic risk; and 2) Asset managers are also not a source of sys- temic risk, because (i) they are not counterparties to the trades they perform on their clients' behalf, and (ii) they are not responsible for the allocation by clients of their assets. What’s next? The FSB and the IOSCO will develop within the SIFI framework the incremental policy measures need- ed to address the systemic risks posed by NBNI SIFIs, once the identification methodologies have been finalised and published.

FRANCE Applicable rules to French UCITS and foreign UCITS distributed in France AMF has published on February 21st, 2014 its n°2011-19 instruction regarding the rules that ap- ply to French UCITS and foreign UCITS distributed in France as regards the approval procedure, the drafting of a key investor information document (KIID) and a prospectus, and periodic reporting. Clarifications are provided about the creation of a French UCITS, changes during the life of UCITS, and the requirements regarding reporting to inves- tors and to the AMF. Update of the 2013- 22 AMF position on the application of AIFMD On March 19th 2014, the Autorité des Marchés Fi- nanciers (AMF - French regulator) updated its 2013- 22 position on the application of AIFMD. AMF Posi- tion 2013-22 aims to answer questions raised by professionals in connection with the transposition of the AIFM Directive. It provides further information for market participants involved in managing AIF on au- thorization and registration requirements, as well as reporting requirements and obligations as regards the notification of major shareholdings. The amendments relate to (1) advice given by fi- nancial investment advisers; (2) transitional provi- sions; (3) AMF website to find authorized entities under the AIFMD and (4) legal entity managing “Other AIFs”. THE AMF INSTRUCTION IS AVAILABLE HERE

THE AMF POSITION IS AVAILABLE HERE

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BELGIUM

ing and oral, in front of senior management in which they declare to fulfill their function with prudence and care and acting in the interests of the clients. The Banker’s Vow will get a wider scope and will be applicable for all employees of financial institutions as per 1 January 2015. The financial sector will work on a disciplinary law with ethical values in addition to the existing finan- cial law and the banker’s vow. Both the disciplinary law and the wider scope of the banker’s vow are part of the law amending the Dutch Act on Financial Su- pervision (Wijzigingswet financiële markten 2015), yet to be formally approved. TAX FATCA - Luxembourg and Belgium sign IGAS Background FATCA requires the identification of all US clients and investors (incl. certain non-US entities with controlling US persons) as well as gathering of rel- evant account/capital balances and global income and proceeds. Generally, all foreign financial insti- tutions ("FFI") must adapt new client on-board- ing and monitoring procedures for identifying US customers. The FFI definition is very extensive and includes banks, insurance undertakings and in- vestment vehicles. Service providers are likely to be indirectly impacted. FFIs which do not make the agreement with the IRS and the process modifications in time or which re- fuse to comply with the regulation will face a 30% withholding tax on US sourced income for pay- ments made on or after 1 July 2014 (and as from 1 January 2017 on gross proceeds, which can pro- duce interest or dividends that are US source FDAP income) - regardless of whether they have US cli- ents or not. As from 1 January 2017, certain non- US sourced income ('foreign passthru payments') might become subject to withholding as well. What’s in there? The United States and the Grand-Duchy of Luxem- bourg announced on 28 March 2014 that they have signed an Intergovernmental Agreement ("IGA") to improve international tax compliance and to imple- ment FATCA. The United States and the Kingdom of Belgium an- nounced on April 25 2014 that they have signed on 23 April 2014 their IGA intended to implement FATCA in Belgium.

Draft Belgian law to modify the law of 3 August 2012 on certain forms of collective management of investment portfolio On 3 April 2014, the Belgian Chamber of represent- atives voted a draft law modifying several Belgian laws, and in particular the law of 3 August 2012 on certain forms of collective management of invest- ment portfolio: the administrators and the effective managers of UCITS offering shares to the Belgian public will be only natural persons. Legal entities will be prohibited as administrators and/ or effective managers in those public UCITS. The draft law has not been published in the Belgian Gazette yet. Banker’s Vow: Compliance Requirements in financial sector in the Netherlands The Dutch government has decided to create poli- cies including special requirements for policy mem- bers and employees of financial institutions.As per 1 January 2014, the official policy members of finan- cial institutions are held to make a vow, both in writ- NETHERLANDS

porate form while also meeting the requirements of certain US investors and US focused investment managers’ for US “flow-through” tax treatment. To date, this has been a significant gap in Ire- land’s investment funds offering when compared to competing jurisdictions, as an Irish corporate fund could only be established in the form of a plc and as such was not an “eligible entity” for the US “Check the Box” rules. The introduction of the ICAV fills this gap as it is expected to be considered an “eligible entity” for these purposes existing funds will have the option to convert to ICAV status. Publication by Central Bank of Ireland of a UCITS Rulebook and First UCITS Q&A The Central Bank of Ireland has published a con- sultation on a UCITS Rulebook (CP77). It proposes publishing a UCITS Rulebook which will consoli- date into one document all of the conditions which the Central Bank imposes on UCITS, their man- agement companies and depositaries. In addition, the question arises as to whether any aspects of the current regulatory regime which are within the discretion of the Central Bank are no longer nec- essary or appropriate. The format of the UCITS Rulebook follows closely that of the AIF Rulebook. It contains the following three chapters: (a) Product Requirements. (b) Management Company Requirements. (c) Depositary Requirements. Draft versions of each of these chapters form part of this consultation which closed on 28 March 2014.

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FATCA - Association of the Luxembourg Fund Industry (ALFI) publishes dedicated Q&A Background The IGA model 1 has been signed by Luxembourg on 28 March 2014 (the IGA). This agreement sets forth the rules applying to the automatic exchange of information between Luxembourg and the US tax authorities regarding assets held by US citi- zens and US residents with Luxembourg financial institutions. What’s in there? ALFI released its FATCA Q&A on 15 April 2014 (the Q&A). It is first composed of an introductory note describing the background of FATCA and focussing on the content of the IGA. The Q&A further deals with the FATCA status and registration require- ments applying to Luxembourg reporting FIs and non-reporting FIs. Within the section dedicated to due diligence requirements, the Q&A lays down the de minimis rule under which no account's holder identification is required and the due dili- gence rules to be complied with in respect of new and pre-existing account holders. Sections regard- ing reporting and withholding obligations will be added later. What’s next? The IGA shall be made into Luxembourg law within the next months. FATCA withholding on US sourced income will start on 1 July 2014 and FIs need to update their investor/client on-boarding procedures before that date.

FATCA – Extension to FFI registration period Background As part of the effort to facilitate an effective start of FATCA on July 1, 2014, the IRS has announced in its 2014-17 announcement that deadline for FFI registration with the IRS to be on the first IRS FFI list has been delayed to 5 May 2014 (instead of 25 April 2014). Furthermore, entities which register by 2 June 2014 will be included in the updated IRS FFI list published beginning of July 2014. What’s in there? Beside the list of IGA countries, the IRS US De- partment of Treasury published on its website the list of countries currently in an advanced stage of negotiation with the IRS. The investors based in these countries, even in the absence of signed IGA, may be considered as "good investors" resident in country having an IGA in place. The list includes 20 countries among which Belgium, British Virgin Islands and Liechtenstein; more countries are ex- pected to follow. What’s next? Despite the fact that entities can register with the IRS by 3 June 2014 in order to be on the IRS FI list published on 1 July 2014, we have observed that big players stick to the 5 May deadline for reg- istration to be on the first IRS FFI list, which will be published on 2 June 2014. The IRS FFI list will include all FI registered and will be updated on an ongoing basis. New FATCA-like system to combat tax evasion in Europe - Implementation in Luxemboutg Background The USA already took unilateral actions and enact- ed the FATCA regime (2010) to combat tax evasion ; regime that appeared to be attractive to many other jurisdictions which want now to replicate it. The US FATCA has been an icebreaker to extend THE IRS ANNOUNCEMENT IS AVAILABLE HERE

Both IGAs are Model I reciprocal agreements, mean- ing that financial institutions in each country will re- port specific information to their own governments, which will then automatically exchange that infor- mation annually on a reciprocal basis. One of the specific features of the Luxembourg IGA is that the category of "Restricted Funds", which was considered too burdensome by the industry, may become more attractive for Luxembourg funds. In addition, having issued physical shares in bearer form until 31 March 2013 (instead of 31 December 2012 for most other IGAs) does not jeopardise the deemed-compliant status of Luxembourg funds. What’s next? As from 30 September 2015 the IGAs will be op- erative. By 30 September 2015 at the latest, tax authorities have to transmit information relating to 2014 to the US tax authorities. In this context two working groups bringing together different actors from the public and private sectors were set up by the Luxembourg tax authorities. First one will be in charge of the general questions about the implementation of the project while the other will deal with the technical and electronic issues. The Luxembourg agreement contains provisions on the automatic exchange of information between Luxembourg's tax authorities and the US's, on assets owned by US citizens and residents and entrusted to Luxembourg's financial institutions. The piece of legislation will be published on the Min- ister of Finance's website in early April 2014. The provisions of the Belgian IGA will now also need to be implemented into national Belgian laws with a view on the entry into force of FATCA on 1 July 2014. Important to note also is that Belgian FFIs should in principle register on the portal of the IRS before 3 June in order to be included on the first IRS FFI list.

THE PRESS RELEASE REGARDING LUXEMBOURG IS AVAILABLE HERE.

THE ALFI Q&A IS AVAILABLE HERE.

THE BELGIAN IGA IS AVAILABLE HERE

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the scope of automatic exchange of tax informa- tion agreements to EU member states. The 2011 Council Directive on Administrative Cooperation in the Field of Taxation (the 2011 Directive) then pro- vides that any tax information which is shared with a third country (i.e. the US) must be shared to any other EU member state as well (“most favoured nation clause”). The Directive 2011/16/EU on the administrative cooperation in the field of taxation provides differ- ent types of exchange of information as well as other forms of administrative cooperation. These forms of exchange of information encompass: (i) an exchange of information upon request; (ii) a mandatory and automatic exchange of infor- mation; and (iii) a spontaneous exchange of information. The Directive 2011/16/EU was already partly implemented by the Law dated 29 March 2013 which introduced in domestic legislation the ex- change of information upon request, the sponta- neous exchange of information and certain forms of administrative cooperation. What’s in there? The law of 26 March 2014 implements Article 8 of the Directive 2011/16/EU in domestic legislation. In particular, it introduces the mandatory and au- tomatic exchange of information for five different kinds of income, to be determined based on the legislation of the Member State exchanging the information: (i) income from employment; (ii) director’s fees; (iii) life insurance products not covered by other EU legal instruments on exchange of informa- tion and other such measures; (iv) pensions; and (v) ownership of and income from immovable property. In Luxembourg, data related to employment in- come, director’s fees and pension can be easily collected and are not protected by the banking se- crecy. As a result, these three kinds of income can be easily exchanged. What’s next? The law of 26 March 2014 applies to the exchange of information relating to taxable periods from 1 January 2014 onwards. Categories of income that are still not concerned by the mandatory and automatic exchange of in- formation are dividends, capital gains and royal- ties. These three categories of income may be in- cluded in the scope of the exchange of information as from 2017 or earlier depending on evolution of discussions at OECD or European level. THE LAW OF 26 MARCH 2014 IS AVAILABLE HERE.

Scanning This publication is produced by Legal and Compliance teams of CACEIS with the kind support of Communication teams and Group Business Development Support teams.

Editors Gaëlle Kerboeuf, Group General Counsel @ Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) @ Permanent Editorial Committee Gaëlle Kerboeuf, Group General Counsel Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) Chantal Slim, Head of Legal (CACEIS Bank France) Eliane Meziani-Landez (Head of Fund Structuring France) Emilie Zaracki (Legal Officer) Ana Vazquez, Head of Fund Structuring and Domicile (Luxembourg) Véronique Bastin, Head of Compliance (Luxembourg) Stefan Ullrich, Head of Legal (Germany) Costanza Bucci, Legal and Compliance Manager (Italy) Mireille Mol, Legal and Compliance Manager (Netherlands) Laura Guzzi, Legal Manager (Belgium) Helen Martin, Head of Legal (Ireland) Sarah Perrier, Head of Legal and Compliance (Switzerland) Philippe Naudé, Marketing and Communication Specialist (France) Arianna Arzeni, Head of Group Business Development Support

Additional Contributors Eliane Jacquet @ Joëlle Préhost @

Design Sylvie Revest, CACEIS, Communicatons

Photos credit Yves Maisonneuve, Yves Colllinet, CACEIS, Fotolia

CACEIS 1-3, place Valhubert 75 206 Paris CEDEX 13 www.caceis.com

This publication is provided by CACEIS from sources believed to be reliable. The present publication is not intended as an offer to sell or a commercial solicitation and may be amended at any time by CACEIS. Information contained in the present newsletter are not a substitute to legal, taxation or investment consultation or advice from an appropriately qualified profes- sional. CACEIS does not warrant the accuracy and completeness of this newsletter, nor endorse or make any interpretation about its content. In no event will CACEIS be liable for any damages whatsoever arising out of the use of, or reliance on the content of this newsletter. Unauthorized used or distribution without the prior written permission of CACEIS is prohibited.

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