Communication on the CSSF Feedback Report - Thematic review - valuation framework for less liquid and illiquid assets

What Changed

• - The CSSF publishes a dedicated Feedback Report on the thematic review of valuation frameworks for less liquid and illiquid assets and formally expects IFMs to use it as guidance for implementing robust valuation policies, procedures and controls.
• All Luxembourg IFMs are required to conduct a benchmarking exercise of their valuation frameworks against the CSSF’s observations and recommendations set out in the new Feedback Report.
• Where gaps or weaknesses are identified through this benchmarking, IFMs are expected to implement corrective measures to strengthen their valuation policies, procedures and lifecycle controls for AIFs and UCITS.
• The thematic review scope formally covers AIFMs of AIFs investing in less liquid and illiquid assets (including private equity, real estate, infrastructure, private debt and fund of funds), and, on an ancillary basis, UCITS exposures under Article 41
• The CSSF explicitly links this thematic work to previous supervisory exercises (ESMA CSA on valuation, CSSF self‑assessment questionnaires, and on‑site inspection feedback) and consolidates expectations around valuation governance, methodologies and
• Valuation risk for less liquid and illiquid assets is confirmed as a key supervisory priority for 2026, signalling heightened ongoing scrutiny, including possible targeted inspections and follow‑up requests.

Suggested Considerations

• Perform a structured benchmarking of existing valuation policies, procedures, methodologies and controls against the detailed observations and recommendations in the CSSF Feedback Report on valuation frameworks for less liquid and illiquid assets.
• Document, at IFM and fund level, all identified gaps or weaknesses in the current valuation framework, including for AIFs in illiquid strategies and UCITS Article 41(2) trash ratio positions.
• Develop and approve a remediation plan with clear owners, milestones and target dates to address identified shortcomings in valuation governance, methodologies, model validation, data sources and control processes.
• Review and, where necessary, update valuation policies and procedures to ensure they explicitly cover less liquid and illiquid assets, stressed market conditions, use of external valuers, and documentation standards across the investment lifecycle.
• Enhance valuation governance by clearly defining roles and responsibilities (including segregation from portfolio management where applicable), escalation procedures, and oversight by the board/senior management.
• Reassess the design and operation of valuation controls (including price challenge, model validation, back‑testing, periodic reviews of assumptions and inputs) and ensure they are effectively implemented in practice.

Key Dates

Who is Affected