11th Private Roundtable – a forum for frank and open exchange of views

October 13, 2017

MDO Management Company and The Directors’ Office would like to thank their clients and colleagues in the Luxembourg fund service industry for contributing their time, expertise and knowledge to the high quality discussions in the 11th Private Roundtable.  Our speakers and panellists included:

Welcoming around 100 personally invited delegates, including representatives from asset managers, fund service providers, law firms and industry bodies, Martin Vogel, CEO of MDO Management Company said, “What we aim to create with our Roundtables is a forum where our clients and our colleagues from service providers can get together to exchange open views on the key issues we face.  We want to share our experiences and, maybe unusually in such a competitive field, we want to learn from each other.”  He then continued, “At MDO we aim to help our clients to not only meet regulatory requirements but to anticipate new ones and are continuously revisiting and tailoring the services we offer.  We continue to grow, to expand our offering and are looking forward to the challenges of the future.”

Martin Vogel then welcomed the key note speaker, Luc Frieden, Partner at leading Luxembourg Law Firm, Elvinger Hoss and formerly Minister for Finance for Luxembourg. 

Luc Frieden addressed the plenary session on, ‘European Financial law in times of crisis – flashback and outlook ten years after the outbreak of the financial crisis,’ giving his unique perspective on the development of financial law in Europe and highlighting the processes by which laws are made.  “I often find there are parallels between the anti-terrorism laws implemented post 9/11 and those implemented post the financial crisis.  In both cases, governments and policy makers had to react to events, to be seen to be doing something even though the efficacy of the measures taken was debateable.  Financial laws were introduced as a reaction to the public perception of the financial crisis.  The aim was twofold; to keep stability of the system and to prevent further crises.”

Luc Frieden spoke openly for an hour with candour and humour, referring to his enforced retirement from politics as gifting him a unique perspective and, in his closing statements said, “The aim of legislators is to achieve prosperity for all, to avoid excessive risks, to maintain stability but it is crucial to recognise that not everything can be regulated.  Legislators must be prepared to be self-critical, to look back dispassionately to see if what they did stands up to the scrutiny of hindsight.  Above all we must recognise that there is no such thing as a risk free environment.”

Luc Frieden then joined one of the separate individual roundtable discussions focussing on the implications of Brexit on Luxembourg.  Speaking as a member of the expert panel he said, “Post-Brexit we need to establish a new partnership with the City of London.”  He noted that, “The current Luxembourg Government’s non-aggressive approach to attract businesses to Luxembourg is the right one.”

European regulation was further covered in one of the individual roundtable discussions.  Sheenagh Gordon-Hart, Partner of The Directors’ Office, chairing a session looking at the developing regulatory landscape voiced the frustration of the industry saying, “It has been said that the road to hell is paved with good intentions and that’s the path we’re having to tread now.  MiFID, GDPR, AML and the draft regulation on the powers of European Supervisory Authorities, all these requirements are piling up on the industry and the unforeseen, unintended consequences have the potential to stifle growth and innovation and to kill the goose that lays the golden eggs in the first place!  And we, the industry have to keep all this on board, and keep our focus on what is good for the investor.”

Other Private Roundtable discussions looked at fund costs, MiFID II, socially responsible investing, the competitive landscapes of Ireland and Luxembourg, and finally, Risk Management for Real Assets.

John Li and Eduard van Wijk chaired the panel looking at the costs of running a fund and the related Board responsibilities.  John Li said, “Whatever we think about the FCA report on Fund charges, Fund Boards will have an increasing responsibility to understand what is being charged to their funds and be comfortable that these are reasonable and fair and in line with competitive products.  One key challenge for them will be to obtain such information that they consider accurate and objective.”

Garry Pieters took an in depth look at whether socially responsible investing leads to better corporate governance, coming to the conclusion that , “a social conscience implies consideration for others, in our world perhaps this is the investor, while responsibility implies taking accountability for ones’ actions.  Together these are probably the two key elements at the heart of good governance which is, after all, about doing the right thing!”

Alan Ridgway, together with Richard Dinn, General Manager of MDO Ireland, examined the competitive landscapes in Luxembourg and Ireland - two locations that jointly manage 40% of funds in the EU and 88% of all cross border distributed funds. 

Richard Goddard chaired a panel looking at the Market Abuse Regulation that will be implemented in January 2018 and the implications it has for Luxembourg funds and management companies.  The panel highlighted that many market participants in Luxembourg think insider dealing does not affect them because portfolio management for Luxembourg funds is normally performed overseas.  However, directors of Luxembourg funds are responsible for portfolio management wherever it is performed, and there are even other opportunities for other parties to use inside information, for example in respect of fair valuation of funds, windfall gains and losses.  

The next Private Roundtable will be held in 2018.