Life Settlements Governance and Regulatory Framework

Episode 6, with Didier Morin

My name is Didier Moran. I act as a chief compliance officer for Carlisle. I originate from Paris, where I graduated as a certified public accountant before moving to Luxembourg back in 2005. I have an experience in audit because I worked for a big four firm for about three and a half years before switching to the compliance slash operational and risk management area, working for other asset managers. I have about 20 years of experience on the compliance field, and I currently head department of five team members. I joined Carlisle in 2018 as an employee because previously I was a service provider. So that’s basically we can say I have now seven years of exposure to Carlisle.

What are the benefits of Luxembourg domiciled funds for investors, especially when it comes to governance and regulatory framework?
If I were to describe the main features of the Luxembourg financial place, what I would say is that first, it is the primary hub for investment funds in Europe. It is the second largest financial centre worldwide, just after the US. So, despite it is a tiny country, I believe it’s a major achievement for the financial place. I believe the success of Luxembourg has been driven by first, an investor friendly ecosystem. What I mean is that Luxembourg has been attracting large players on the asset management side for more than 30 years. They are investment platforms and prominent funds that have chosen Luxembourg as their prime location. I believe, it explains, by the long term stability of the country, but also by the ecosystem, that coupled a robust regulatory framework with a credible and reputable regulator as well as a flexible company law. And this is, I believe, the key drivers. I would see that Luxembourg is a kind of a toolbox for investment fund structure. We have a well-established tradition of innovation in Luxembourg. We have implemented all the European directives within just after their release by the European Commission. And we have tax qualifications and regulatory frameworks that are well combined to attract investors. While the stability encourages the fund promoters to harbour in in Luxembourg, one of the key points of recent changes of implementing new framework, I would think about the incorporation of the SCSp, which is basically limited partnership, very close to the Anglo Saxon word, but also the RAIF, which I believe we benefit at Carlisle because we have a successful RAIFs, which brings a certain degree of regulation, but also flexibility regarding the implementation of the of the investments.

What are the future trends towards investment fund regulation when it comes to investor’s protection?
The European directives, which is named AIFMD 2, is about to be implemented, and what we can see already is that there will be an increase of responsibilities of the depositary as well as of the AIFM towards the investor. The aim of this regulation is to basically ensure that the delegation framework, applicable to both the AIFM and the depositary, is well monitored and overseen so that there is no chain of sub delegations where well everybody will lose control. And there is also a focus on reporting. I must say, we at Carlisle are subject to various reporting’s that we submit to both the CSSF and the regulator of the regulator, which is the ESMA. But I know already that this degree of reporting will be increased with a little more look through. So that’s going to be a challenge for us. And there is also a focus on liquidity and valuation. So this is really the trend that we see. That should definitely benefit for the investor.