As 2024 unfolds, Luxembourg’s fund industry is still awaiting the much-anticipated update to Circular 02/77, which was expected to be released in 2023. This revision promises to align with modern fund management practices and two decades of CSSF’s insights.
๐ 2022 ๐๐ญ ๐ ๐ ๐ฅ๐๐ง๐๐
The CSSF recorded 1,844 declarations of NAV errors and rule breaches in 2022, highlighting the critical need for precise compliance. With a notable rise in cases requiring detailed indemnification to funds and investors, it’s clear that specialized insurance solutions are more vital than ever.
๐ ๐๐ซ๐จ๐๐๐ฌ๐ฌ๐ข๐จ๐ง๐๐ฅ ๐๐ง๐๐๐ฆ๐ง๐ข๐ญ๐ฒ (๐๐) ๐๐ง๐ฌ๐ฎ๐ซ๐๐ง๐๐ & 02/77 ๐๐ง๐๐๐ฆ๐ง๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง
While standard Professional Indemnity (PI) policies typically exclude correction costs for NAV errors or breaches of investment rules, pending a ‘formal claim’ for activation, the market has developed specific endorsements to cover the indemnification costs mandated by Circular 02/77 without needing a third-party claim. However, these endorsements vary significantly among insurers, making it crucial for fund managers and service providers to scrutinize the details to ensure comprehensive risk mitigation.
