Luxembourg has moved to attract more funds business, with the adoption of a new law for Specialist Investment Funds.
It is a step on from the law relating to collective investment schemes reserved for institutional investors, in that offers a broader definition of eligible investors to include both professional and private “well informed” investors.
The law requires that the directors of a Specialised Investment Fund, as well as the directors of the custodian bank and the auditor, be approved by the Commission de Surveillance du Secteur Financier (CSSF). However, the promoter is not subject to CSSF approval.
Furthermore, since the investors in funds targeted by this law are deemed to be sufficiently experienced to make their own decision with regard to the fund manager, there is no need for the CSSF to verify the status and financial standing of a company to which asset allocation has been subcontracted.
Thomas Seale, president of ALFI, said the law brought with it opportunities for the industry. He said: “I am convinced that this innovative new legal framework will open up new possibilities for fund promoters in the area of alternative and institutional investment funds.”
Robert Glaesener, managing director at international online brokerage Internaxx, said the lightly regulated structure offered a lot of flexibility, and there was also a focus on self-regulation.
He said it also encompassed both traditional and alternative investment products. He added: “This law for Specialised Investor Funds will only apply to sophisticated investor. What the regulator has said is that they can open up this structure to either institutional investors, professional investors or private informed investors.
“This is quite a good change in that it gives an opportunity to private investors who still have to be knowledgeable and well informed, to invest in sophisticated investment funds that are less regulated than the usual Ucits II funds.
“There is no problem with that, because these investors are better informed than the normal retail investor.” Glaesener said he expected the change would encourage new funds Luxembourg. He said: He said: “It just opens up lightly regulated funds to private investors, not just institutional and professional investors.”
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