With the introduction of CSSF Circular 24/856 on 1 January 2025, private market fund managers operating in Luxembourg face stricter oversight on NAV calculation errors, investment rule breaches, and operational mistakes. The Circular replaces CSSF 02/77 and introduces updates to its scope of application, which may impact private market funds, including private equity and private debt funds, alongside traditional UCIs.
While the broader equity markets remain largely unaffected, the new requirements place greater accountability on private market funds, increasing compliance obligations for fund managers, administrators, and depositaries. The focus is on governance, investor protection, and operational transparency, making compliance an integral part of fund management processes.
Expanded error classification – NAV miscalculations, swing pricing errors, and incorrect fee payments must be documented and reported.
Stricter reporting obligations – Errors must be notified to the CSSF via its eDesk platform or API, ensuring transparency but increasing administrative burden.
NAV error thresholds – Alternative funds must define and justify their own tolerance levels (up to 5%), with clear investor disclosures.
Investment rule compliance – Active breaches require immediate rectification, while passive breaches still demand internal review and correction.
These changes introduce operational complexity, particularly for closed-ended funds, where NAV errors are less frequent but can be material. Fund managers must now ensure that compliance processes are embedded in daily operations rather than treated as an afterthought.
The solution lies in better data management, automation, and structured reporting. Firms need systems that:
Streamline NAV and error reporting – Reducing manual effort while ensuring data integrity and compliance.
Monitor investment rule breaches in real time – Identifying active vs. passive breaches efficiently to prevent regulatory issues.
Provide transparency and auditability – Ensuring that all compliance actions are documented and traceable.
Integrate seamlessly with regulatory platforms – Facilitating error notification and regulatory submissions through automation.
For firms operating in Luxembourg and beyond, meeting these new requirements demands a shift from fragmented, spreadsheet-based compliance processes to a structured, technology-driven approach.
This is where daappa’s modular data management and reporting solutions provide an advantage—helping private market firms stay compliant, reduce operational friction, and focus on investment performance.
Sources:
CSSF Circular 24/856: Protection of investors in case of an NAV calculation error, an instance of non-compliance with the investment rules and other errors at UCI level
ESMA Guidelines on Fund Management and NAV Calculation: Guidelines on performance fees in UCITS and certain types of AIFs
ALFI (Association of the Luxembourg Fund Industry): ALFI Official Website