In August 2018, the CSSF addressed a European Market Infrastructure Regulation ("EMIR") questionnaire to investment fund managers under its supervision ("IFMs"). The IFMs were required to complete and return the questionnaire to the CSSF in order to assess compliance with EMIR.
The aim of the questionnaire was to collect a self-assessment from IFMs on the existence of adequate EMIR monitoring and oversight procedures to ensure that IFMs, and the funds they manage, comply with EMIR obligations.
Unfortunately, the CSSF noticed that in many cases, IFMs were not yet compliant with the monitoring and oversight duties as well as the requirements of CSSF Circular 18/698.
MAIN CONCLUSIONS DRAWN DOWN FROM THE RESPONSES TO THE QUESTIONNAIRE
The CSSF identified a lack of formalization and reminded that adequate written procedures and arrangements have to be put in place by the IFMs to comply with all EMIR obligations even when a specific obligation does not apply further to the IFMs’ assessments.
Their assessments need to be documented and their monitoring and oversight procedures reviewed on a regular basis to ensure adequacy.
The CSSF mentioned that IFMs remain responsible to ensure that the funds they manage comply, even in case of delegation, with their EMIR obligations. Thus, IFMs must, in order to appropriately monitor their EMIR obligations, carry out initial and ongoing due diligence over the delegate. As a general principle of the delegation, the CSSF reminded that the arrangements concluded between the IFM and the delegate shall clearly establish the roles and responsibilities and ensure an adequate ongoing oversight by the IFM of the EMIR obligations which they have delegated.
The CSSF further reminded, as already clarified in its press release 15/36, that EMIR applies to derivative contracts concluded for investment purposes as well as for hedging purposes and noted that some IFMs erroneously considered that derivative contracts concluded for hedging purposes are not subject to EMIR obligations.
Finally, the CSSF reminded that registered AIFM are in scope of EMIR.
The CSSF already contacted IFMs with potentially significant deficiencies to improve their EMIR monitoring and oversight procedures by the end of 2019.
In the near future, the CSSF will assess the compliance with EMIR requirements, including the procedures of IFMs which have to be amended to comply with the EMIR Refit and act to improve the data quality of trades reported to trade repositories.