Implementation Of Securities Financing Transactions Regulation (SFTR)

The Luxembourg Law of 6 June 2018 implementing the Securities Financing Transactions Regulation (EU) 2015/2365 (" SFT Regulation") and amending the UCI Law1, the AIFM Law2 as well as the Insurance Sector Law3 entered into force on 12 June 2018 ("SFT Law").

The SFT Law designates the CSSF (Commission de Surveillance du Secteur Financier) and CAA (Commissariat aux assurances) as competent authorities responsible for the supervision of compliance with the SFT Regulation in the Grand Duchy of Luxembourg and, in this context, gives them the power to impose administrative sanctions and other administrative measures in case of violation of the SFT Regulation.

In particular, the SFT Law amends the UCI Law and the AIFM Law in order to include non-compliance with the transparency obligations provided for by Articles 13 (periodical reports) and 14 (pre-contractual documents, such as UCITS prospectus and AIF disclosure to investors4) of the SFT Regulation in the list of cases in which the CSSF may impose administrative sanctions and other administrative measures on, inter alia, UCITS management companies or UCITS investment companies, and AIFMs respectively. For AIFMs, the maximum fine is EUR 250,000. In the context of UCITS, the CSSF may impose fines of up to EUR 5 million or 10% of the total annual turnover of the UCITS or the UCITS management company, as appropriate.

Furthermore, the SFT Law gives the CSSF and the CAA the power to impose fines of (i) up to EUR 5 million (or 10% of the total annual turnover) for violations of the relevant counterparty's reporting obligation of securities financing transactions and (ii) up to EUR 15 million (or...