Investment funds

We would like to kindly remind you that from 7 January 2019 to 28 March 2019, the Financial Conduct Authority ("FCA") online system ‘Connect’ is open for EEA-based firms and fund managers of EEA-domiciled investment funds (UCITS and AIF) currently passported into the UK to notify the FCA about their intention to participate in the temporary permissions regime (“TPR”). We would like to kindly remind you that from 7 January 2019 to 28 March 2019, the Financial Conduct Authority ("FCA") online system ‘Connect’ is open for EEA-based firms and fund managers of EEA-domiciled investment funds (UCITS and AIF) currently passported into the UK to notify the FCA about their intention to participate in the temporary permissions regime (“TPR”). Two (2) separate forms are being made available by the FCA under the TPR depending on the services or funds passported in the UK. Prior to applying for the TPR, it is of the essence to verify in a first step the information currently available in the FCA’s database thus enabling you to contact the FCA to update it should it not be accurate. In a second step, you may then proceed with the relevant TPR application. Indeed, in case of a “no deal” Brexit, the TPR allows EEA-based firms currently passporting into the UK to continue new and existing regulated business within the scope of their current permissions in the UK for a limited period, while they seek full FCA authorisation. It also allows EEA-domiciled investment funds that market in the UK under a passport to continue temporarily marketing in the UK. Having notified their EEA UCITS/AIFs prior to 28 March 2019, fund managers using the TPR may continue to notify new/additional sub-funds via the Connect system after 29 March 2019. If you fail to apply for the TPR until 28 March 2019, your authorisations (firms and funds) may be cancelled in the event of a no-deal Brexit. Please bear in mind that as soon as a notification has been made under the TPR, firms and funds established in Luxembourg must inform the CSSF accordingly by sending a corresponding email to the following address: [email protected]. This email notification must include the name of the firm, fund or sub-fund and a detail of the services/activities for which the TPR notification has been submitted as well as the date of the TPR notification.   For the PDF, please click here. 

On 31 January 2019, the bill of law n°7401 (the “Bill”) was issued on measures to be taken in relation to the financial sector in case of the withdrawal of the United Kingdom (“UK”) and North Ireland from the European Union (“EU”) (“Brexit”). Said Bill relates to the scenario where, on 29 March 2019, no withdrawal agreement has been entered into between the UK and the EU (“No-deal Brexit”). In a No-deal Brexit scenario, actors of both the UK financial sector and the UK investment funds sector would no longer be able to rely on the European passport to provide their services to EU clients, neither on a cross-border basis nor by way of the establishment of a branch (or appointment of agents). According to the Bill, this situation could lead to financial instability and market turmoil. Along with other European Member States, the Luxembourg government has adopted the Bill to mitigate these risks. In this context, the Bill notably grants both the Commission de Surveillance du Secteur Financier, the Luxembourg financial supervisory authority (“CSSF”) and the Commissariat aux Assurances, the Luxembourg authority in charge of the supervision of the insurance sector (“CAA”), with a series of powers to take temporary measures (1) and furthermore extends certain protective rules of the Settlement Finality Directive (Directive 98/26/EC) to third country systems (2). Powers to take temporary measures The Bill gives the CSSF power to continue to apply for a maximum period of 21 months as of 29 March 2019 (i.e. until end of December 2020), the EU passporting provisions for the freedom to provide services and the freedom of establishment in favour of UK-based institutions (credit institutions, investment firms, payment institutions and electronic money institutions) when providing their services into Luxembourg. This derogatory regime is only available for (i) contracts concluded before 29 March 2019 and (ii) for contracts concluded thereafter where they have a close link to contracts concluded before 29 March 2019. The preparatory works specify that such a close link may e.g. exist in case of “life-cycle events” affecting an existing contract. Similar powers have been granted to the CAA in relation to the freedom of services and freedom of establishment of UK-based insurance actors (insurance and reinsurance companies). The Bill is less clear in relation to insurance distributors. As regards the investment funds sector, although the Bill also grants powers to the CSSF to apply the same grandfathering period including the derogatory regime referred to above, the situation is somewhat more complex. As a result, the Bill (which is still subject to comments) might need to be updated as regards the investment funds aspects. Indeed, as regards Luxembourg UCITS management companies and Luxembourg AIFMs, these are governed by a specific set of rules deriving from the UCITS Directive and AIFMD referring in particular to the concept of collective asset management and providing for specific requirements in case of delegation. In this context it is important to note that even without the Bill, the delegation of portfolio management of UCITS/AIFs to UK based investment managers will continue to be possible as a result of the no-deal Brexit MOU with the FCA. Indeed, as ESMA announced on 1 February 2019 that ESMA and the EU/EEA securities regulators agreed on a no-deal Brexit MoU with the FCA (which will only take effect in case of a no-deal Brexit scenario), this shall mean in practice with respect to Luxembourg UCITS and AIFs, that investment management/portfolio management functions may continue to be delegated to UK based entities on behalf of such Luxembourg UCITS and AIFs. Extension of the settlement finality directive protections to third country systems The protection of payment and securities settlement systems (« Systems ») against the insolvency of a Luxembourg participant as provided for in the Settlement Finality Directive in favour of EEA systems will be extended to third country systems which are admitted to a list managed by the Luxembourg Central Bank. Admission to such list is granted by the Luxembourg Central Bank upon request of a participant or a system provided the latter (i) meets the criteria of the first indent of the definition of « system » of the Settlement Finality Directive, (ii) is governed by the laws of a third country and (iii) is supervised or subject to the oversight of a supervisory authority of a State whose central bank holds an equity stake in the Bank for International Settlements. Third country systems will also be treated alike EEA systems for purposes of the Luxembourg law enacting the Bank Resolution and Recovery Directive (Directive 2014/59/UE).   >For the PDF version, please click here. 

On 19 April 2018, the European Parliament adopted the new directive on the prevention of the use of the financial system for the purposes of money laundering or terrorism financing. The new directive on the prevention of the use of the financial system for the purposes of money laundering or terrorism financing (2016/0208/COD) (the “5th AML Directive” or “Directive”), which partially amends Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorism financing (the “4th AML Directive”), has been adopted by the European Parliament on 19 April 2019 and is expected to be published in the official journal of the European Union any day now. > Please click here to read the full Newsflash

The 5th AML Directive was published in the Official Journal of the European Union on 19 June 2018, and will enter into force 20 days thereafter. The new directive (Directive (EU) 2018/843) on the prevention of the use of the financial system for the purposes of money laundering or terrorism financing (the “5th AML Directive”) amending the 4th AML Directive was published in the Official Journal of the European Union on 19 June 2018, and will enter into force 20 days thereafter. Member States are required to implement the 5th AML Directive into national law by 10 January 2020. The key aspects of the 5th AML Directive are: an extended scope of the persons subject to the anti-money laundering and counter terrorism financing requirements (in particular to address terrorism financing risks linked to virtual currencies and anonymous prepaid cards and the constant technological evolutions in such field); enhanced customer due diligence measures (in particular in the context of financial transactions involving high-risk third countries); new increased transparency measures (including enhanced access (for some even public!) to BO registers and through central registries of bank and payment accounts holders at Member State level); and enhanced powers for the relevant supervisory authorities and the EU financial intelligence units. >>To find out more about the changes brought by the 5th AML Directive, please click here_

On 31 May 2018, the law on markets in financial instruments (the “2018 Law”) as well as the grand-ducal regulation relating to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (the “Grand-Ducal Regulation”) were published in the Luxembourg official gazette. On 31 May 2018, the law on markets in financial instruments (the “2018 Law”) as well as the grand-ducal regulation relating to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (the “Grand-Ducal Regulation”) were published in the Luxembourg official gazette. Such texts aim at implementing into Luxembourg law the EU Directive 2014/65 on markets in financial instruments (“MiFID 2”) and the EU Delegated Directive 2017/593 with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (the “Delegated Directive”). Whereas the 2018 Law directly implements MiFID 2, Article 6 of the Delegated Directive (which relates to the inappropriate use of title transfer collateral arrangements) and some specific provisions of the EU Regulation 600/2014 on markets in financial instruments (“MiFIR”), the Grand-Ducal Regulation in turn implements the remaining provisions of the Delegated Directive. In implementing the above, the 2018 Law notably amends in such context quite substantially the law of 5 April 1993 on the financial sector (the “LFS”) but also replaces the law of 13 July 2007 on markets in financial instruments, as amended. The Grand-Ducal Regulation replaces the grand-ducal regulation of 13 July 2007 on organisational requirements and rules of conduct in the financial sector. In this context, the Luxembourg supervisory authority for the financial sector, the Commission de Surveillance du Secteur Financier (the “CSSF”) has in its newsletter of May 2018 already announced that the CSSF circular letters 07/302, 07/306 and 08/365 are now outdated as their content related to the former MiFID regime1. >>Please click here to read the full Newsflash

Reducing barriers for cross-border distribution of investment funds within the EU, thus reducing the costs of going cross-border, while deepening the single marketing procedure for investment funds is the proclaimed purpose of the two legislative proposals published by the EU Commission today, on 12 March 2018. According to the EU Commission proposal, the envisaged harmonisation of rules for cross-border distribution should occur through a new directive amending both the UCITS and AIFM Directives with regard to the cross-border distribution of collective investment funds, and through a new regulation on facilitating cross-border distribution of collective investment funds and amending the EuVECA Regulation (Regulation on European venture capital funds) and the EuSEF Regulation (Regulation on European social entrepreneurship funds). Reducing barriers for cross-border distribution of investment funds within the EU, thus reducing the costs of going cross-border, while deepening the single marketing procedure for investment funds is the proclaimed purpose of the two legislative proposals published by the EU Commission today, on 12 March 2018. According to the EU Commission proposal, the envisaged harmonisation of rules for cross-border distribution should occur through a new directive amending both the UCITS and AIFM Directives with regard to the cross-border distribution of collective investment funds, and through a new regulation on facilitating cross-border distribution of collective investment funds and amending the EuVECA Regulation (Regulation on European venture capital funds) and the EuSEF Regulation (Regulation on European social entrepreneurship funds). The proposed legislative pack suggests the following amendments: > Definition of pre-marketing and addition of transparency The EU Commission proposes to introduce a harmonised definition of pre-marketing and to lay down the conditions under which an EU AIFM may engage in pre-marketing activities. The AIFM Directive as well as the EuVECA and EuSEF Regulations will be amended in this respect. Furthermore, with respect to the cross-border distribution of AIFs and UCITS, the proposed Regulation will introduce more transparency as to marketing requirements at national and EU level. > Regulatory fees The legislative proposals call for more transparency of regulatory fees at national and EU level. High-level principles are proposed in order to ensure more consistency in the way regulatory fees are determined. > Local facilities The EU Commission, while supporting that facilities should be available in each Member State where marketing activities are carried out, proposes rules that modernise the requirements for providing facilities to retail investors at the same time ensuring that investors have access to the information they are entitled to. Considering the limited added value of local facilities, given the use of digital technology, the Commission’s proposal bans the imposition of a physical presence. > Notification requirements Further harmonisation of the procedures and requirements for updating notifications of the use of the marketing passport (or for de-registrations as the case may be) are suggested to be introduced for both UCITS and AIF environments. The proposed legislative pack published today is the result of several consultations undertaken by the EU Commission among NCAs, industry and investor associations and other stakeholders. It forms part of the EU Commission’s Capital Market Union (CMU) initiative. The CMU Action Plan, published in September 2015, aims to address fragmentation in the capital markets, remove regulatory barriers to the financing of the economy and increase the supply of capital to businesses by establishing a genuinely internal capital market. The EU Parliament and the Council of the EU are now asked to review the legislative proposals. To see the Proposal for a Directive amending the UCITS Directive and the AIFM Directive with regard to cross-border distribution of collective investment funds, please click here. To see the Proposal for a Regulation on facilitating cross-border distribution of collective investment funds and amending Regulations EuVECA and EuSEF, please click here. Luxembourg Newsflash - Cross-border distribution of investment funds: a proposal for harmonisation

A significant number of so-called Part II UCIs may remain within the scope of the AIFMD depositary regime. Luxembourg’s Parliament (Chambre des Députés) has voted yesterday to amend the respective legislation to this effect. This amendment clarifies the scope of the UCITS-like and the AIFMD depositary regimes in Luxembourg for these funds. A significant number of so-called Part II UCIs may remain within the scope of the AIFMD depositary regime. Luxembourg’s Parliament (Chambre des Députés) has voted yesterday to amend the respective legislation to this effect. This amendment clarifies the scope of the UCITS-like and the AIFMD depositary regimes in Luxembourg for these funds. In general, all Part II UCIs should fall within the scope of the AIFMD depositary regime upon entry into force of the voted amendments, provided they adapt their marketing strategy. The extent of the application of the AIFMD depositary regime will depend on whether or not the alternative investment fund manager of such Part II UCI is considered to be a sub-threshold alternative investment fund manager or whether the alternative investment fund manager is located in a third country. Only Part II UCIs which are distributed to retail investors in Luxembourg will fall within the scope of the more stringent UCITS-like depositary regime. To ensure that a Part II UCI falls within the scope of the AIFMD depositary regime, these funds are required to include in their sales documentation information stating that they are prohibiting the marketing of shares of the fund to retail investors in Luxembourg. The amendments voted yesterday clarify the confusion created in 2016 when changes were introduced to the depositary regime for Part II UCIs following the implementation of the UCITS V Directive. The changes made at that time caused uncertainty as to which Part II UCIs will remain within the scope of the AIFMD depositary regime and which will be subject to the UCITS-like depositary regime. Provided that the Council of State (Conseil d’Etat) refrains from its second vote, the amendments voted yesterday may be published in the Mémorial, the Luxembourg official journal, and will enter into force on the fourth day following its publication. See our previous newsflashes - Luxembourg implements the UCITS V Directive (dated 21 April 2016) - The majority of Luxembourg Part II UCIs to remain within the AIFMD depositary regime (dated 1 August 2016) Luxembourg Newsflash - Clarification of the scope of the UCITS and AIFMD depositary regimes

Through the law of 27 February 2018 implementing the EU regulation (UE) 2015/751 on interchange commissions for card based payments, which amends various laws relating to the financial sector (and was published in the Luxembourg official gazette on March 1st 2018), the Luxembourg parliament has now relaxed the rules on professional secrecy for banks, investment firms, other regulated professionals of the financial sector, payment institutions, electronic money institutions and insurance undertakings (together the « financial institutions ») to facilitate outsourcing arrangements. Through the law of 27 February 2018 implementing the EU regulation (UE) 2015/751 on interchange commissions for card based payments, which amends various laws relating to the financial sector (and was published in the Luxembourg official gazette on March 1st 2018), the Luxembourg parliament has now relaxed the rules on professional secrecy for banks, investment firms, other regulated professionals of the financial sector, payment institutions, electronic money institutions and insurance undertakings (together the « financial institutions ») to facilitate outsourcing arrangements. Until now there was some uncertainty around the possibility to rely on a client’s consent for the transfer of client data to third parties, since the professional secrecy rules incumbent upon financial institutions were considered by courts to be public policy provisions, i.e. provisions to which contractual derogations are not allowed. The new law provides that clients of financial institutions may consent to the transfer of their data by such financial institutions to an outsourcee. Consent can be explicit or implied based on the information provisions agreed among parties. Many financial institutions have agreed on general terms and conditions with their clients which provide that amendments may be made thereto by merely giving notice to the client and that they will become effective within a certain period of time failing an objection by the client. Such financial institutions can now rely on this implied consent provision to amend their general terms and conditions and provide for a right to outsource certain functions to a third party outsourcee who will have access to confidential client data. It seems that the wording of the law even allows for other methods to obtain an implied consent from clients. The consent needs to be informed in the sense that clients must be informed on (i) the type of data that will be accessible by or transferred to the outsourcee, and (ii) the country where the outsourcee is based. The outsourcee must be bound by legal professional secrecy duties or by contractual confidentiality duties. Data protection, governance and data integrity rules are not affected by the above changes. Finally, the new law broadens also the possibilities to exchange client data among financial institutions. Luxembourg Newsflash - Outsourcing made easier: professional secrecy in the financial and insurance sector softened

Earlier this week, the European Supervisory Authorities (ESAs) published draft amendments to EMIR-related regulatory technical standards (RTS) that align the treatment of variation margin (VM) for FX forwards with the supervisory guidance applicable in other key jurisdictions. More specifically the draft amendments propose that the requirement to exchange VM for physically settled FX forwards shall only target transactions between institutions (credit institutions and investment firms). Luxembourg Newsflash - Permanent exemption from variation margin obligation for FX forwards?

The draft laws implementing AMLD 4 set out strict rules to allow for protection against improper access to the information on BOs. On 6 December 2017, the Luxembourg Parliament published two draft laws to implement new transparency measures provided by Directive 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (“AMLD 4”). They are both intended to create central registers of beneficial owners (“BOs”) which is one of the main innovations of AMLD 4 and which will be (and to a large extent has already been) implemented in all EU Member States. Although these are merely draft laws which will still have to undergo the complete legislative process in Parliament in Luxembourg (and which could therefore still be amended in this context), we wish at this stage to shed some light on the concrete intended functioning of these new central registers of BOs related information. However, as the draft laws are in line with the provisions of AMLD 4, one may only expect certain a minima amendments in such legislative process. Whereas these central registers will contribute to a new level of transparency as required in AMLD 4, it is worth bearing in mind that the Luxembourg government conversely has also provided for some specific safeguards against improper access to these registers. The draft laws include the setting-up of two central registers, namely (i) a central register of beneficial owners of Luxembourg legal entities (companies, partnerships, etc.) under the authority of the Minister of Justice (Draft law No 7217) and (ii) a central register of beneficial owners of fiduciary arrangements under the authority of the Administration de l’Enregistrement et des Domaines (“AED”) (Draft law No 7216). 1. Central register of beneficial owners of Luxembourg legal entities Scope of the draft law No 7217 All Luxembourg commercial companies as well as any other legal entities registered with the trade and companies’ register fall within the scope of such draft law. This includes, among others, the following types of entities: public limited companies (sociétés anonymes), private limited companies (sociétés à responsabilité limitée), partnerships limited by shares (sociétés en commandite par actions), common limited partnerships (sociétés en commandite simple), special limited partnerships (sociétés en commandite spéciale), foundations, civil companies, interest groupings (GIE), European interest groupings (GEIE) and investment funds (fonds d’investissement).  Listed companies under certain circumstances, common funds (FCPs) and branches of foreign companies are out of scope.  New requirements for legal entities Relevant “in scope” Luxembourg entities are required to obtain and hold adequate, accurate and up-to-date information on their BOs at their registered office. Such information must be kept up-to-date by the entities (or their representatives appointed to that effect, such as a notary) and uploaded into the central register of BOs (Registre des bénéficiaires effectifs), the so-called REBECO, maintained by the Luxembourg trade and companies’ register. Existing entities will have up to 6 months after the entry into force of the draft law to register the relevant information with the REBECO. Criminal sanctions will be imposed on relevant “in scope” Luxembourg entities or their representatives who (i) do not register the information in the REBECO within the required timeframes, (ii) knowingly provide incorrect or partial information or information which has not been updated or (iii) fail to obtain and keep the information at their registered office. Information to be available in the REBECO The information must include the identity of the BO, date and place of birth, nationality and private or professional address of residence as well as the BO’s nature and extent of beneficial interests held in the relevant entity. The information must be accurate, complete and up-to-date. The information will be kept in the REBECO for a period of 5 years after the winding-up of the subject entity. All persons having access to the REBECO and becoming aware of incorrect or missing information must inform the REBECO thereof without delay. Access to the central register of BOs (REBECO) The information contained in the REBECO will be made available electronically only to national competent public authorities, including but not limited to the prosecutor, the Commission de Surveillance du Secteur Financier (CSSF), the Commissariat aux Assurances (CAA) and tax administrations. This electronic access is unrestricted. Self-regulatory bodies (such as the Bar Council, Notary Chamber and the Institut des Réviseurs d’Entreprises) will also have a limited electronic access to the REBECO. This electronic access is only to be used within the strict context of their supervisory functions. Access is subject to the authorisation of the REBECO manager. Only partial information may be disclosed to these self-regulatory bodies. Obliged entities (such as for instance credit institutions, professionals of the financial sector, insurance undertakings and UCITS management companies) will have a limited electronic access to the REBECO which may be used only where obliged entities are required to carry out client due diligence measures in relation to their clients. Physical access may also be granted to any person or organisation that (i) can demonstrate a legitimate interest in relation to AML, (ii) is resident in Luxembourg and (iii) has made an official written and duly justified request in this respect. Such access is subject to the prior approval of a formal commission to be created by the Minister of Justice. Any subject entity may request a restriction of access to the REBECO where such access would expose the BO to a risk of fraud, kidnapping, blackmail, violence or intimidation, or where the BO is a minor or otherwise incapable. Furthermore, criminal sanctions may be imposed on the self-regulatory bodies or on the obliged entities if they purposely access the REBECO outside the aforementioned circumstances. 2. Specificities regarding the central Register of BOs in fiduciary arrangements  A register of fiduciary arrangements, the Registre des Fiducies, is subject to largely the same regime as the REBECO. Some differences however should be outlined at this stage: Fiduciary agents subject to any express fiduciary arrangements governed by Luxembourg law (as long as the fiduciary arrangement generates tax consequences) must obtain, hold, keep up-to-date and upload information in the central Registre des Fiducies. The competent authorities supervise the performance of these new requirements by the fiduciary agents and may impose administrative sanctions, such as a fine or a temporary prohibition on exercising a professional activity.  The information must include the identity of the principal, the fiduciary agent, the protector (if any), the beneficiaries or class of beneficiaries and any other natural person exercising effective control over the fiduciary arrangement. The information must be kept in the Registre des Fiducies for a period of 5 years after the termination of the fiduciary arrangement. All persons having access to the Registre des Fiducies and becoming aware of incorrect or missing information must inform the AED thereof without delay. Finally, the national competent public authorities shall cooperate among themselves and exchange all relevant information in the context of the performance of their duties as provided by the draft law and the AML Luxembourg law. File Registers of beneficial ownership: new rules to be implemented soon

Earlier this week, the European Supervisory Authorities (ESAs) published draft amendments to EMIR-related regulatory technical standards (RTS) that align the treatment of variation margin (VM) for FX forwards with the supervisory guidance applicable in other key jurisdictions. More specifically the draft amendments propose that the requirement to exchange VM for physically settled FX forwards shall only target transactions between institutions (credit institutions and investment firms). The publication of the draft amendments follows on discussions at European level regarding a permanent exemption for certain counterparties entering into non-centrally cleared OTC derivatives from the obligation to exchange variation margin (VM), with the ESAs (EBA, ESMA and EIOPA) having published a statement in this respect back in November 2017. In this statement the ESAs announced that they would be working on new regulatory technical standards containing a permanent exemption for FX forwards from VM obligations. At present counterparties using FX forwards benefit from an exemption from the obligation to exchange VM, but this exemption will cease to exist as from 3 January 2018. As a consequence, from that date onwards FX forwards will in principal be subject to the EMIR margin requirements. The question remains as to how the period between 3 January 2018 and the date of entry into force of the new RTS should be dealt with. In the statement made in November 2017, the ESAs recommend that the competent national authorities should apply their supervisory powers in a proportionate manner until the proposed amendments by the ESAs enter into force. File Luxembourg Newsflash - Permanent exemption from variation margin obligation for FX forwards?

In less than 4 months the Priips-Kid regulation will come into force. The exercise of ensuring compliance with this regulation is not an easy one. - What should the Kid include? - What are the key questions to ask before building your Kid? - What are the actions to take before building your Kid? Our experts would be pleased to help you to answer these questions and advise you on how to proceed in order to comply with this complex regulation. Please click on this link to read our new brochure entitles "Investment Funds: Get ready for Priips-Kid" which will allow you to identify all the questions you need to ask before building your Kid.

The pieces of the puzzle are finally falling into place. The long-awaited level 3 and 4 measures have been published earlier this week, half a year before the PRIIPs KID becomes compulsory. On 4 July 2017 the European Supervisory Authorities (ESAs) published a Questions and Answers document related to the PRIIPs KID which reverts to questions linked with the presentation, content and review of the KID, including the methodologies underpinning the risk, reward and costs information. The Q&A document is rather technical and remains high level, focusing on the methodologies, especially the calculation of costs, but does not contain any surprises. An accompanying press release states that the Q&A document refers to questions that were raised by different stakeholders, such as product manufacturers and distributors and that the ESAs will continue to answer further questions and publish them subsequently.  On the same day, on 4 July 2017, the European Commission adopted guidelines on the application of the PRIIPs Regulation and released a copy of the text adopted. The final version of this document is not yet available. The guidelines issued by the European Commission seek to facilitate the implementation of the PRIIPs Regulation by smoothing out potential interpretative divergences throughout the EU. It builds on feedback from stakeholders received during a workshop and subsequent queries raised by the ESAs. The guidelines provide clarification on some highly discussed topics such as the territorial scope, existing commitments, distribution and KIDs “on demand”. Two days later, on 6 July 2017, the CSSF published a set of FAQ dealing with PRIIPs KID. In version 11 of its FAQ on AIFMs, the CSSF recommends to Luxembourg AIFs which are sold to professional investors to amend their offering documents prior to 1 January 2018 by including a statement that their units are reserved to professional investors. As an alternative to the aforementioned amendment of the offering document, the CSSF can be provided with a duly completed and signed self-assessment form in such respect. Background The KID is a mandatory three-page A4 information document to be provided to consumers before they purchase Packaged Retail and Insurance-based Investment Products (PRIIPs). The KID will become a compulsory document as from 1 January 2018. We, in conjunction with Arendt Regulatory & Consulting, have prepared an offer of services that we are in a position to render to you. Please do not hesitate to contact us for any assistance you may require.    The Questions and Answers document on the PRIIPs KID, published by the ESAs may be downloaded here. The adopted text of the Commission Guidelines on the application of the PRIIPs Regulation may be downloaded here. The FAQ by the CSSF concerning the 2013 Law on AIFMs may be downloaded here. See also our newsflash of 15 March 2017 and the text of the revised RTS referred to therein.