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Luxembourg's financial regulator, has announced a deadline of December 31, 2023, for investment funds and their managers to comprehensively evaluate their valuation framework and update it as necessary.

The review stems from a common supervisory assessment, or CSA, by the European Securities and Markets Authority, Esma. The CSSF's directive has been set out in a 19-page report released on 18 July. Esma issued its guidance on 24 May when it posted its CSA report and reported on shortcomings, weaknesses  and vulnerabilities in the valuation of European funds.

„Luxembourg is home to some 14,000 alternative investment funds that all have their own different characteristics, ranging from venture capital and private equity to private debt, infrastructure and real estate markets. The applicable rules are heavily modelled on the Ucits funds, which account for the bulk of assets domiciled in Luxembourg.

CSSF, in its July communication, said it currently is actively engaging with the fund managers in its 2022 sample, requiring them to rectify the identified weaknesses, shortcomings, and vulnerabilities. The Esma findings also have given reason to launch the comprehensive valuation assessment for the entire fund sector.”

"The CSSF hereby asks all IFMs managing UCITS and/or AIFs to conduct a comprehensive assessment of their valuation framework in relation to, respectively, the views and observations of ESMA and the CSSF presented in the ESMA report on the CSA on Valuation and in the report “CSSF Feedback Report – ESMA Common Supervisory Action on Valuation” and to take, if applicable, the necessary corrective measures by 31 December 2023."

About the CSSF

The Commission de Surveillance du Secteur Financier is a public institution that supervises professionals and products of Luxembourg's financial sector. The Commission de Surveillance du Secteur Financier (CSSF), as part of its remit, ensures that authorized entities and issuers comply with the regulations that apply to them, including those designed to ensure the protection of financial consumers and prevent the use of the financial sector for money laundering or terrorist financing purposes. The CSSF represents Luxembourg in the area of European and international supervision.

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