CSSF FAQ – Use of Securities Financing Transactions by UCITS (Updated)
Executive Summary
This CSSF FAQ (Version 2) provides guidance on the use of securities financing transactions (SFTs)—specifically securities lending, reverse repurchase agreements, and repurchase agreements—by Luxembourg-domiciled UCITS, clarifying regulatory requirements based on the applicable framework and CSSF's supervisory experience. It matters because it updates prior guidance to reflect evolved practices, helping UCITS managers ensure compliant SFT usage amid heightened scrutiny on liquidity, risk management, and investor protection in Luxembourg's fund sector. #
What Changed
The document is an updated FAQ (Version 2), originally published on 18 December 2020 and revised on 12 February 2026, but the provided content does not detail specific changes from Version 1 beyond incorporating recent supervisory experience and regulatory framework updates. It emphasizes clarity on SFT eligibility, operational controls, and risk mitigation for UCITS, without introducing new prohibitions or mandates visible in the summary; full details require accessing the PDF (201.4Kb). Related CSSF updates in 2026, such as those on risk-spreading for UCIs and crypto exposures, suggest a broader supervisory push toward refined investment rules, though not directly altering this FAQ's core SFT scope.
Suggested Considerations
- Review and update policies: UCITS managers must assess current SFT programs against the FAQ's clarifications, ensuring alignment with regulatory framework (e.g., UCITS Directive) and CSSF supervisory expectations on risk, collateral, and transparency.
- Enhance disclosures: Update fund prospectuses, KIIDs, and annual reports to reflect SFT usage, risks, and revenues, per CSSF emphasis on investor clarity.
- Conduct gap analysis: Audit SFT counterparties, collateral management, and liquidity tools for compliance; remediate any deviations based on gained supervisory experience.
- Train staff and delegates: Implement training on updated FAQ to cover securities lending, repos, and reverse repos specifics.
- Monitor ongoing use: Maintain records of SFT volumes, counterparties, and performance for CSSF inspections; integrate with broader UCI regulatory updates like risk-spreading.
Key Dates
Compliance Impact
Urgency: High – The 12 February 2026 update coincides with today's date, signaling immediate relevance for Luxembourg UCITS engaging in SFTs, which are common for yield enhancement but carry liquidity and counterparty risks. Non-compliance risks supervisory actions, given CSSF's focus on practical experience; firms should prioritize review to avoid findings in upcoming audits or inspections, espec
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original CSSF source before acting. Full disclaimer.
Summary
This publication is a CSSF FAQ in relation to the use by Luxembourg-domiciled UCITS of the following Securities Financing Transactions: securities lending transactions, reverse repurchase agreement transactions and repurchase agreement transactions. The objective of the FAQ is to bring further clarity concerning the use by UCITS of these SFTs, thereby taking into account the applicable regulatory framework as well as the supervisory experienced gained by the CSSF over the last years.Version 2