Your Regulatory

ScoutThe future of regulatory

compliance

kpmg.lu

January 2014

THE TAKEAWAYOUR OFFERING TO YOU IN ONE SENTENCE AND A FIVE-MINUTE READ …

Focus on your core business whilst KPMG’s Centre of Excellence

for investment management regulation concentrates on scanning your regulatory

compliance watch.

0:30

THE REGULATORY TEAMTHAT WILL WORK WITH YOU 1:30

Charles is the Head of the Regulatory Centre of

Excellence for Investment Management Regulation.

He has strong ties with decision makers across the European and global

regulatory network.

Anne-Sophie is leading the regulatory practice for Banks and PSFs. She is an experienced practitioner with a clear view of the industry and how best to transform regulation into strategic vision and operational execution.

Isabelle LauterbachAdviser

Martin ReinhardSenior Manager Nancy Che

Adviser

Juergen Rieder

Senior Manager

Gabrielle JaminonDirector

Daniel Meyer

Adviser

Clara Braunstein

Adviser

Sven MuehlenbrockPartner

Berengere D’HavrincourtAssistant Manager

Audrey GuyotAssistant Manager Michal Pochec

Senior Adviser

Berengere D’HavrincourtAssistant ManagerAssistant Manager

Kian NavidSenior Adviser

Sébastien Leleu

Manager

Charles Muller

Partner

Anne-Sophie is leading the regulatory practice for Banks and PSFs. She is an experienced practitioner with a clear view of the industry and how best to transform regulation into strategic vision and operational execution.

Anne-Sophie MinaldoPartner

Dee RuddyDirector

Sandrine Periot

Director

Stefan JunglenManager

Sébastien Leleu

ManagerLaetitia HamonManager

Thomas ErtlManager

Virginie DobritchAdviser

Stefan JunglenManager

Sophie GrallSenior Manager

Our regulatory team comprises over 20 experts.

2© 2013 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Timeline of regulatory developments for Investment Management

20152014December 2013June 2013

December 2012

UCITS V

UCITS VI

AIFMD

EuVECA & EuSEF

ELTIF

MiFID II / MiFIR

PRIPS

Solvency II

ICSD

CRD IV

CRAs

FTT

FATCA

EMIR

Short-Selling Regulation

MMF

SLL

Detailed Technical Rules

ConsultationLegislative processNational transpositionEffective

Today

Technical Standards

2© 2013 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Timeline of regulatory developments for Investment Management

20152014December 2013June 2013

December 2012

UCITS V

UCITS VI

AIFMD

EuVECA & EuSEF

ELTIF

MiFID II / MiFIR

PRIPS

Solvency II

ICSD

CRD IV

CRAs

FTT

FATCA

EMIR

Short-Selling Regulation

MMF

SLL

Detailed Technical Rules

ConsultationLegislative processNational transpositionEffective

Today

Technical Standards

Timeline of regulatory developments in Investment Management

KEEP TRACK OF REGULATION, UNLOCK HIDDEN OPPORTUNITIES, AVOID LAST-MINUTE RUSH

3© 2013 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Matrix - How do the various regulatory initiatives impact the business?

Regulation

R&DKYC

Liquidity mgt Marketing Fund

managing

Derivatives trading/short

selling

Investment services RM PM Depositary Compliance

Internal process

Retail Profs Accounting TAX IT

UCITS V, VI

AIFMD

PRIPs

MiFID / MiFIR

Short-Selling

EMIR

CRAs

MMF

ICSD

FATCA

FTT

EuVECA

EuSEF

ELTIF

SLL

CRD IV

Solvency II

Service

Matrix of how the various regulatory initiatives may impact your business

10© 2013 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

MMF RegulationA harmonized environment for money market funds (MMFs)

What is coming up?

A ‘product oriented’ Regulation harmonizing the EU legal framework for MMFs set up as UCITS or AIFs.

■ Introduces a new definition of a MMF and two MMF categories: ‘Short-term MMF’ and ‘Standard MMF’

■ Applies to MMFs established, managed or marketed in the Union.

■ Implements authorisation procedures for MMFs.

■ Narrows the list of eligible assets to money market instruments, deposits, financial derivative instruments used for hedging and reverse repurchase agreements.

■ Provides a clear framework for risk management: defines diversification and concentration restrictions, requires Internal assessment procedures including an Internal Rating System, requires a KYC policy and clearly defines stress testing for MMFs.

■ Re-defines the portfolio valuation rules.

■ Provides additional requirements to constant NAV MMFs including a 3% NAV buffer.

■ Requires a frequent detailed reporting on the fund’s portfolio to the competent authorities.

How can the MMF Regulation affect you?

What are the implications for Management Companies?

■ Firms managing or marketing MMFs in the Union will have to fully comply with the Regulation and request an authorisation for each of these MMFs.

■ Firms will have to put in place a strengthened risk management to comply with all the Regulation’s requirements.

■ Investments by firms will be narrowed down to a few eligible assets.

■ Management companies (or their sponsor) of CNAV MMFs will have to establish a 3% NAV buffer for each of them.

What is the next step?

Regulatory

■ The European Parliament issued a proposal on 4 September 2013 for a Regulation on Money Market Funds

■ The Commission's proposal is a draft and will have to be approved by the EU Council and the European Parliament.

■ According to the European Commission, the proposed Regulation is likely to be agreed in the course of 2014.

■ Existing MMFs would have 6 months after the entry into force of the regulation to submit an application to their local authority demonstrating their compliance with the Regulation.

■ Additional detailed rules will be issued by ESMA on certain aspects (e.g. internal credit rating system requirements).

■ The Regulation will be reviewed 3 years after entering into force.

Impact analysis

■ Management Companies should asses whether their operational models are capable to deal with the new risk management, valuation and reporting requirements.

■ Investment managers will need to asses their systems, processes and controls for the integration of the eligibility, diversification and concentration restrictions.

■ An assessment of the additional requirements for CNAV MMFs should be done in order to take possible remedial actions.

Contact persons

Partner■ [ADD]

Technical Leader■ [ADD]

Regulatorydevelopments

201820172016

FATCA

EuVECA EuSEF

SLLAIFMD UCITS FTT Short-selling

MiFID

EMIR PRIPs

Credit RatingICSD Remuneration CRD Solvency

2015

MMF

ELTIF

13© 2013 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Packaged Retail Investment Products Regulation (PRIPs)EU retail investment market – raising investor protection standards

What is coming up?

Product disclosure regime that will require investment product manufacturers to produce a standardized Key Information Document (KID) which needs to be provided to retail investors before the sale of the product.

PRIPS covers a range of investment products that are sold to retail investors:

■ All structured products

■ All types of investment funds

■ Insurance-based investments

■ Derivative instruments

■ Pension products

PRIPS does not cover:

■ Direct holdings in shares and bonds

■ Deposits (if the return is determined by interest rate)

■ Plain insurance products (without investment component)

■ Occupational pension schemes

■ Pension products which are required by law or where the employee has no choice as to the provider

Responsibilities:

■ All manufacturers of these investment products (e.g. investment fund managers, insurers, banks) would need to produce a KID for each investment product that is being offered to retail investors.

■ Each KID will have to follow the same standard regarding the structure and content and will need to provide retail consumers with information on the product’s main features, risks and costs associated with the investment.

■ Distributors of investment products are also affected, as it sets out that whoever sells the product has the obligation to provide retail investors with the KIDs in good time before the investment decision.

■ Disclosure requirements set out in the Prospectus Directive or the Solvency II Directive will exist in parallel. So products that fall under the scope of these Directives will have to comply both with them and PRIPS.

How does PRIPs affect you?

■ No immediate impact on UCITS managers - will be allowed to produce the UCITS KIID for at least 5 years.

■ Banks, insurers and non-UCITS managers need to prepare up to date KIDs in the languages of the countries where they sell their range of packaged retail products across the EU.

What is the next step?

The Commission’s proposal is with the European Parliament and the Council for their consideration under the co-decision. The vote by Parliament is not expected before November 2013 and therefore the final regulation may not be expected before the first quarter of 2014.

The regulation will enter into force two years after it becomes effective, meaning that the new rules would apply from the 1st quarter of 2016.

Impact Analysis

■ Assess for which investment products a KID will need to be produced.

■ Implementation planning.

Contact persons

Partner■ [ADD]

Technical Leader■ [ADD]

Regulatorydevelopments

2018201720162012

AIFMD

EuVECA EuSEF

UCITS

MiFID Credit RatingICSD

SLL

Remuneration

AIFMD UCITS FTT Short-selling

MiFID

EMIR

Credit RatingICSD Remuneration CRD Solvency

20142013 2015

ELTIF

MMF

2016

SolvencySolvency

PRIPs

Regulatory path

Sanctions

MS / National Regulators

EU / ESMA

FSB / IOSCO

G20

Sanctions

MS / National RegulatorsMS / National Regulators

EU / ESMAEU / ESMA

FSB / IOSCOFSB / IOSCO

G20

One year full serviceOne year full service

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Your Regulatory Scout

KPMG sorts through the multitude of regulations to give you a clear understanding of impacted areas and your responsibilities

Regulators are introducing sanctions and are enforcing them for non-compliant entities. Don’t be caught out

Take a proactive approach to avoiding sanctions and to unlocking the hidden opportunities of mandatory compliance exercises

Take Ownership

Non-compliance is not an option

Create success stories

With our expertise, we identify key regulations that apply to your business ...

A dedicated relationship officer guides you through the regulatory wilderness, showing you how to tame the directives and take control.

CRD IVIORP

EuSEF

PRIPS

MiFID II

UCITS VI:Eligible assets/EPM/liquidity

UCITS VI:Money Market Funds

UCITS V

EMIR

Securities Law

Benchmarks / Market Indices

Dodd Frank

Credit Rating Agency

AIFMD

Investor Compensation

Schemes Market

Abuse II

UCITS VI:Securities lending / Repos

UCITS VI:Depositary Passport

Manager

Depositary

Investor Protection

Market Infrastructure

FATCAAML

EuVECA

Fund Products

Distribution

FTT EU Savings Tax Short Selling

Solvency II

Directive

Regulation

Consultation

Foreign regulation

Mapof the challenges

Under construction

2013Passport EU AIFMs

2015Passport for non-EU AIFMs 2018AIFMD Review and NPPR final stop

Take control of compliance and secure peace of mind!

Do you see regulatory opportunities for your business?

Are you up-to-date with all the rights, responsibilities, and liabilities for conducting officers, heads of, or supervisory functions?

Do you have the resources and experience to maintain an overview of the whole regulatory landscape?

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-

-

Credit Rating Agency

AIFMD

Investor Compensation

Schemes

UCITS VI:Depositary Passport

Depositary

Investor Protection

Foreign regulationUnder construction

2013Passport EU AIFMs

2015Passport for non-EU AIFMs

For whom? Why?

Board members

Service providers

3 Ensure compliance at the top level

3 Be aware of global and EU opportunities

3 Make strategic decisions (location, opt-in or opt out strategies, etc.)

3 Identify and review new responsibilities and duties

3 Review effectiveness of policies, arrangements and procedures

Asset Manager

3 Adapt existing products to upcoming regulatory requirements

3 Assess new product opportunities

3 Review marketing strategy

Compliance officer

3 Establish and maintain adequate compliance policies and procedures

3 Ensure compliance with upcoming laws, rules, and regulations

3 Report to Senior Management & BoD

… and give a helping hand in matching these requirements to your target operating business model.

Update on regulatory developments- European Regulation

- Options add-on module for Luxembourg

Outsource your regulatory research to our experts.

6x 1.5 hours

Conference calls for regulatory updates

and insights

Initial get- to know seminar

To ensure a regulatory watch tailored to your vision and goals.

2x half day workshops

Regulatory updates and strategic priority

discussions

Ongoing

Ad-hoc alerts depending on the news

Regularly updated

A dashboard for decision makers

Updated every 3 months

Regulatory “Bible”

What can you expect fromYour Regulatory Scout?

4:30

Optimize your time and money, let us keep a watch on regulation

© 2014 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

CONTACT DETAILS

Contact Us

Charles MullerPartnerP: +352 22 51 51 7950E: charles.muller@kpmg.lu

Gabrielle JaminonDirectorP: +352 22 51 51 7635E: gabrielle.jaminon@kpmg.lu

Laetitia HamonManagerP: +352 22 51 51 6560E: laetitia.hamon@kpmg.lu

www.kpmg.lu

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