On 3 November 2021, the CSSF published an updated version of its
FAQ on the Law of 17 December 2010 on undertakings for collective
investment (the "FAQ on the Law of 2010"), and an updated
version of its FAQ on Regulation (EU) 2017/1131 on money market
funds (the "FAQ on the MMF Regulation"). These updates
aim to clarify the circumstances under which, and the extent to
which, UCITS are permitted to hold ancillary liquid assets.
Through its FAQ on the Law of 2010, the CSSF gave the following clarifications:
- A UCITS must limit ancillary liquid assets as referred to in
article 41(2)(b) of the Law of 2010 to bank deposits at sight, such
as cash held in current accounts with a bank accessible at any
time. The ancillary liquid assets held are limited to 20% of the
UCITS' net assets. The 20 % limit may only be temporarily
breached where exceptionally unfavourable market conditions so
require and where such breach is justified by the interests of
- Bank deposits, money market instruments or money market funds
that meet the criteria of article 41(1) of the Law of 2010 should
not be included in the ancillary liquid assets referred to in
article 41(2)(b) of the Law of 2010.
- A UCITS is only authorised to hold (for investment purpose,
cash management or in case of unfavourable market conditions) bank
deposits, money market instruments or other eligible assets listed
under article 41(1) of the Law of 2010 if this is clearly provided
for in its investment policy. If a UCITS invests in a category of
assets that is not foreseen in its investment policy, the
provisions of CSSF Circular 02/77 on the protection of investors in
case of a net asset value calculation error apply.
- Margin accounts do not qualify as bank deposits under article
41(1)(f) of the Law of 2010, nor do they qualify as ancillary
liquid assets under article 41(2)(b) of the Law of 2010.
- The 20% limit on deposits made by a UCITS with a same body
under article 43(1) of the Law of 2010 applies to ancillary liquid
- The 20% limit on deposits made with a same body under article 43(1) of the Law of 2010 does not apply to margin accounts.
Furthermore, through its updated FAQ on the MMF Regulation, the CSSF clarifies that the 10% limit on deposits made by a money market fund with the same credit institution under article 17(1)(b) of the MMF Regulation applies to the holding of ancillary liquid assets under article 9(3) of the MMF Regulation. Ancillary liquid assets held by a money market fund are limited to 20% of its net assets.
The CSSF expects UCITS to comply with the conditions described in the FAQs as soon as possible, and by no later than 31 December 2022.
To access the CSSF FAQ on the Law of 2010, click here
To access the CSSF FAQ on the MMF Regulation, click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.