ALFI’s Kremer to open debate in Luxembourg
Before opening a two-day conference on regulatory issues facing the European funds industry, Association of the Luxembourg Funds Industry (ALFI) chair Claude Kremer talks to Luisa Porritt about the opportunities and challenges that lie ahead.
Do you see new regulation such as the AIFMD as an adequate solution to the financial crisis?
I welcome all regulation that aims at providing clearer information and better protection to investors: the KIID, PRIPS, Ucits V, etc. Regarding the AIFMD, we have always said that if we get it right and take inspiration from the factors that made Ucits a success, this new regulation could provide a quality brand for alternative investments. Currently, our main efforts go towards providing input to ESMA with regards to so-called ‘Level 2′ measures.
In your experience, is new regulation driving or hampering the growth of the European funds industry?
There is no doubt that the Ucits regulation, which has just celebrated its 25th anniversary, has been an outstanding success for the European Union. Who would have thought that Ucits would become the world-wide leading product,
with strong brand recognition and impressive net sales also outside Europe in Asia, the Middle East and Latin America? The latest figures from EFAMA show that the cross-border industry, mainly domiciled in Ireland and Luxembourg, has continued to grow and now represents more than 40% of assets under management in European funds. Alternative funds have also been quite successful, either within Ucits or in specialised investment vehicles. I would anticipate that with AIFMD, the number of alternative funds domiciled in Europe would continue to grow.
What has been your experience of dealing with local and European regulators?
Regulators have a very important function as they make sure that regulation is complied with, that investors are protected as they should be and that the quality of the product remains intact. Their job is not to make the industry happy, but what we can expect is that they are open to new ideas and products, and they do not add unnecessary procedures and requirements to the supervision process. I believe that our local regulator CSSF has done a great job in keeping this balance. With ESMA as a new European regulatory body with extended powers, we will see further harmonisation in the industry.
What do you think is unique about the Luxembourg funds industry?
What is so unique about Luxembourg is that it is truly international. Our funds and the people working in the industry stem from all around the globe: they come not only from the main European jurisdictions, but also from the US and increasingly from Asia. Almost half the population in Luxembourg is foreign, which gives the place a cosmopolitan atmosphere. But as diverse as their origins and cultures may be, they all work together as one industry: our ALFI working groups, our conferences and our roadshows show that it is possible for competitors to
work hand-in-hand to achieve common goals.
Is there an area of financial services that Luxembourg could better provide for?
Nothing is as permanent as change, and if our industry has been able to grow, it is due to a constant drive to improve quality in our products and services. A big challenge will be to adapt to the wave of new regulation that is coming our way without losing momentum when it comes to creating new products that meet with client expectations.
The ALFI conference takes place 15-16 March. Investment Europe will be bringing you further news from the conference floor as it happens.