ALFI conference: Opportunity for Luxembourg through regulation
At the end of day one of the ALFI spring conference, most speakers felt Ucits has propelled Luxembourg’s status as a funds servicing centre.
Excitement filled the auditorium on Tuesday 15 March as the investment fund industry saw opportunity to build Luxembourg’s case for attracting new business through oncoming regulation, mainly Ucits IV and the Alternative Investment Fund Managers Directive (AIFMD).
“Regulatory developments are challenging, presenting opportunities for all of us.”
“There is a unique opportunity for us to replicate our success in alternatives. AIFMD pushes the alternative investment management industry towards a more regulated model,” said Marc Saluzzi, financial services leader at PwC Luxembourg.
But conference speakers admitted Luxembourg has some way to go to win over the alternatives industry.
“We have still a way to go to achieve the level of expertise and the same status that we have in Ucits. In hedge funds, we are not a dominant centre yet,” said Saluzzi. The same applied to private equity funds, he said.
Freddy Brausch, co-chair of ALFI’s legal and regulatory committee and partner at Linklaters LLP, said he saw changes taking place.
“Private equity funds have Luxembourg on their radar screen. Hedge funds managers are already in Luxembourg. But there are challenges beyond the political willingness to help.”
Industry representatives agreed that the Commission du Surveillance de Secteur Financier (CSSF), Luxembourg’s local regulator, made the jurisdiction an attractive place to domicile funds.
Jeremy Soutter, Aviva Investors’ global head of product compared his experience of dealing with the CSSF against the UK regulator. “When we work with the Treasury on issues we as an industry deem to be important, they just don’t get it sometimes. In Luxembourg, they would have 100% of their attention.”
Ahead of the implementation of Ucits IV across Europe, already agreed by Luxembourg’s Parliament in December 2010, a panel debated whether it will be advantageous to Luxembourg.
“Luxembourg is well-placed to take advantage of what companies do,” said Allan Pelvang, group head of tax and country head for Fidelity International in Luxembourg.
But others were more cautious. “The product offering of a domicile is a league ahead of the importance of its infrastructure,” said Sanjiv Sawhney, Citi’s global head of fund services in Luxembourg.
“Luxembourg needs to be careful. The limit is Luxembourg itself and its capacity to do it,” said Marnix Arickx, managing director of hedge fund engineering at BNP Paribas Investment Partners Belgium.
“We create local law firms just because of capacity issues in Luxembourg,” he added.