Last Updated on June 3, 2025 by Arnaud Collignon
Update on CSSF FAQ: Clarifications for UCITS Regarding Shortened Settlement Cycle in the United States
The Commission de Surveillance du Secteur Financier (CSSF) has recently updated its FAQ to provide essential clarifications for Undertakings for Collective Investment in Transferable Securities (UCITS) in relation to the shortened settlement cycle in the United States. This update is particularly relevant for investment firms and fund managers operating in or with ties to the U.S. market.
Key Highlights of the Update
- Shortened Settlement Cycle: The U.S. has implemented a T+1 settlement cycle, meaning that trades settle one business day after execution. This change aims to enhance efficiency and reduce counterparty risk.
- Impact on UCITS: UCITS must adapt their operational processes to align with this new settlement timeline, ensuring compliance with both U.S. regulations and European standards.
- CSSF Guidance: The CSSF emphasizes the importance of clear communication between UCITS and their service providers to facilitate smooth transitions and compliance with the new settlement cycle.
Recommendations for UCITS
To effectively navigate the implications of the shortened settlement cycle, UCITS are encouraged to:
- Review and adjust their operational frameworks to accommodate T+1 settlement.
- Engage with custodians and other service providers to ensure readiness for the new timeline.
- Monitor ongoing developments and updates from regulatory bodies to stay informed of any further changes.
Conclusion
As the financial landscape evolves, it is crucial for UCITS to remain proactive in adapting to regulatory changes. The CSSF’s updated FAQ serves as a valuable resource for understanding the implications of the U.S. shortened settlement cycle and ensuring compliance.
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