Luxembourg Active ETF News: Relaxation of transparency rules and subscription tax exemption

Relaxation of Portfolio Transparency Rules

On 19 December 2024, the Luxembourg regulator (CSSF) published an updated version of its FAQ concerning the Luxembourg Law of 17 December 2010 on undertakings for collective investment, which includes new rules relating to disclosures of portfolio holdings of actively managed UCITS ETFs. 

While active UCITS ETFs were traditionally required to disclose their full portfolio holdings daily, such information shall now be published at least on a monthly basis with a maximum time lag of one month.

This new regulatory position enables managers to better protect their proprietary information and prevent other market participants from being able to replicate their investment strategy.

The relaxation of the portfolio transparency rules comes along with a number of principles and good practices, such as principles relating to the transmission of the portfolio composition files (PCF) to authorised participants and market makers, confidentiality requirements and compliance with the Market Abuse Regulation.  

Abolition of Subscription Tax 

Actively managed UCITS ETFs will be exempt from the annual subscription tax following the vote by Parliament on 11 December 2024 of a bill of law amending, amongst other things, Articles 175 and 176 of the Law of 17 December 2010 on undertakings for collective investment. The exemption is expected to apply as from 1 January 2025. As a reminder, passively managed UCITS ETFs already benefit from such exemption.

Under the current CSSF regulatory practice, it is possible to have ETF and non-ETF sub-funds and/or share classes within the same UCITS fund, in which case the ETF sub-funds and/or ETF share classes can also benefit from such exemption.