rbs (luxembourg) s.a. brochure

RBS (Luxembourg) S.A.

A market-leading Independent Management Company

and provider of risk management services to the

Investment Fund industry

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RBS (Luxembourg) S.A. is a market-leading independent management

company based in Luxembourg, with the full backing of The Royal Bank

of Scotland Group. We bring together the powerful combination of the

Group’s size, strength and wide-ranging capability, with our local

experience and expertise to provide tailored independent third party

Management Company and Risk Management services to our

investment fund clients.

RBS (Luxembourg) S.A. provides the required capital and substance as

a management company for Collective Investment Schemes domiciled in

Luxembourg and elsewhere in Europe. We carry out oversight monitoring

of the appointed service providers within a robust framework of

Corporate Governance.

Our Mission:

“To be the leading independent third party Management Company and

provider of Risk Management services for our clients”

RBS (Luxembourg) S.A. – Independent Management Company Services 3

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4 RBS (Luxembourg) S.A. – Independent Management Company Services

Working for our clients

Market leader

The Royal Bank of Scotland Group is one of the world’s largest

banking and financial services groups, which has a long history

of providing quality fiduciary services to collective investment

schemes (“scheme” or “fund”).

In the UK, our Trustee & Depositary Services business (TDS) is

the market-leading independent trustee/depositary to the unit

trust and Open Ended Investment Company (OEIC) industry.

Having provided trustee and depositary services for over 70

years, TDS now works with more management companies and

more investment schemes than any other depositary in the UK –

giving us extensive experience of all aspects of collective

investment scheme operations.

Building on this unparalleled success in the UK, RBS

(Luxembourg) S.A. (“RBSL”) was established in 2004 to provide

independent third party Management Company services

to UCITS and non-UCITS schemes (e.g. Specialised

Investment Funds).

The market demand for these services originally arose from the

UCITS III Directive which included a requirement for the entity

that sponsors the fund (“Promoter”) of Luxembourg-domiciled

funds to have ‘local substance’, with certain minimum capital

requirements and operational, monitoring and reporting

responsibilities. For non-local Promoters, these substance and

operational requirements can be quite onerous – both financially,

in relation to capital requirements, operations and management

time and from a risk perspective, given the need to ensure

compliance with changing local regulatory requirements.

The introduction of UCITS IV has further increased the

focus on corporate governance and independent oversight,

with additional emphasis on the oversight role of the

Management Company.

Today, the added value of appointing an independent

Management Company to act as the fund’s local representative

is undeniable, providing comfort to both “the Promoter” and the

fund’s Board of Directors.

Our services

RBSL is committed to providing a “first class” service to

financial institutions of all sizes looking for a partner with a

proven record of robust corporate governance to act as their

Management Company. In addition to our traditional

European based clients, RBSL has extensive client

relationships from North and South America (incl. USA and

Brazil), through Central and Eastern Europe, to Australia and

the Far East (incl. China, Hong Kong and Singapore).

We understand what is important to our clients and provide:

�solid client support and guidance backed by quick,proactive and responsive decision making;

�a real focus on building long-term, successful businessrelationships;

�a comprehensive product range with the flexibility to tailorindividual solutions.

Once appointed as Management Company for a fund, RBS

(Luxembourg) S.A. supervises and controls the activities of

the main service providers, (the Central Administrator, the

Investment Manager and the Principal Distributor) on behalf

of the client Board.

In addition to carrying out the oversight of the delegated

entities, RBS (Luxembourg) S.A. retains certain key

functions which are undertaken in-house:

�Monitoring of the Investment Restrictions by the RBS(Luxembourg) S.A. Investment Compliance team;

�Monitoring of Market Risk by the RBS (Luxembourg) S.A.Portfolio Risk Services team.

By providing the necessary substance in Luxembourg,

RBS (Luxembourg) S.A. allows its clients to focus on

managing the performance of their funds, and growing

their assets.

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Independence

A key aspect of the RBS (Luxembourg) S.A. Management

Company proposition is that our operations are genuinely

independent.

RBS (Luxembourg) S.A. is independent from any single

custody, fund accounting or transfer agency provider. On

that basis, our systems and processes have been designed

to accept multiple data feeds from a range of suppliers.

Our independence ensures:

� the avoidance of potential conflicts of interest in fulfillingour management company duties;

�an objective and diligent review of the performance ofservice providers, with regular and detailed reporting

to clients;

�constant monitoring of the developing trends in corporategovernance and a timely and appropriate response to any

subsequent changes to relevant legislation.

As a direct consequence of our independence, we have

been able to develop strong working relationships and

systems interfaces with most of the major custodians and

third party administrators servicing the investment industry

within Europe. This enables our clients to select their

preferred mix of quality specialist service providers, secure

in the knowledge that all parties will work together in an

efficient and entirely seamless manner. This also places

RBSL in a strong position to help clients deal with the new

UCITS IV requirements, such as conflicts of interest, at

arm’s length.

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Société d’Investissement à Capital Variable (SICAV)


RBS (Luxembourg) S.A. – A leading independent thirdparty Management Company

Our business model

Our independent management company model is

designed to be as efficient as possible, enabling all of

the parties within the chain to focus on their respective

areas of expertise.

Contractual arrangements are designed to be straightforward

and practical, without unnecessary layers of bureaucracy.

A typical – but by no means exclusive – arrangement for a

SICAV structure is as follows:

�RBS (Luxembourg) S.A. is appointed via a ManagementCompany Agreement with the SICAV.

�RBS (Luxembourg) S.A. and the Board of Directors ofthe SICAV appoint the Registrar/Transfer Agent via a

tripartite Transfer Agency Agreement.

�RBS (Luxembourg) S.A. and the Board of Directors of theSICAV appoint the Investment Manager via a tripartite

Investment Management Agreement.

�RBS (Luxembourg) S.A. and the Board of Directors ofthe SICAV appoint the Distribution Agent via a tripartite

Distribution Agreement.

�RBS (Luxembourg) S.A. and the Board of Directors ofthe SICAV appoint the Administrator via a tripartite

Administration Agreement.

�The Custodian is appointed directly by the Board of Directors of the SICAV.

Within the above structure, RBS (Luxembourg) S.A.

becomes a contracting party to the Agreements with the

service providers for which we provide oversight duties,

whilst the Board of Directors retains full control of product

development.

N.B. For other scheme structures, a different arrangement may apply.

Administrator

Registrar &

Transfer

Agent

Investment

Manager

Promoter/

Distributor*

Custodian

& DepositoryBipartite Agreements

Management

Company RBS

Luxembourg (S.A.)

SICAV Board(with

representation from Promoter)

Tripartite

Agreements

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Key responsibilities

As Management Company, the key responsibilities of RBS (Luxembourg) S.A. include:

�Monitoring of compliance with the Investment Restrictions and Policies.The investment compliance team at RBS (Luxembourg) S.A. is highly experienced and capable. It enjoys a strong track

record in diligently monitoring the compliance of our clients’ funds with the investment restrictions and policies laid

down in the fund’s constitution documents and the prevailing investment legislation.

�Portfolio risk management services.UCITS funds are required to employ an independent risk monitoring process – the complexity of which is driven by the

extent of derivatives usage. RBS (Luxembourg) S.A. has invested heavily in robust IT systems that provide the foundation

of our Risk Management Process (“RMP”) which has been fully approved by the Luxembourg Regulator.

Key elements of our investment market risk monitoring include:

Monitoring performed by the Management Company (typically at each NAV)

�At overall fund level (and at manager level for multi-manager structures)�VaR at a 99% confidence level and/or other confidence level as agreed�Line-by-line asset level contribution�Parametric, historical, Monte Carlo VaR at a 99% confidence level (or other confidence level as agreed)�Marginal VaR at asset level – how the fund VaR will change if a stock is removed/sold. � Incremental VaR at asset level – how the fund VaR will change with an increased weighting �Highlighted large contributors or changes to VaR day-on-day�Top ten contributors approach to risk (countries, currencies, assets, etc.)�Exceptions (over an agreed tolerance) and large movements in the VaR�Stress-testing scenarios�Daily back-testing

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�Supervision of the delegated entities.RBS (Luxembourg) S.A. is permitted to delegate the

functions of Investment Management, Central

Administration and Distribution for its Management

Company clients, but at all times retains the responsibility

for these delegated functions. As a consequence, all

delegates are subject to rigorous ongoing monitoring by

RBS (Luxembourg) S.A., including initial and periodic

(minimum annually) due diligence reviews and frequent

(typically monthly) reviews of Key Performance Indicators

(“KPI”).

Our operational activities include the following monitoring:

Scope of key control Frequency of performance of control

Price sheet delivery Each NAV report

Trial balance delivery Each NAV report

Monthly NAV variances Monthly

Stale and manual prices Monthly

Performance fees: receipt and review Monthly

Tax reporting Annually

Budget review Annually

Review of financial reports and Long Form report Annually/semi-annually

NAV errors Upon occurrence

NAV suspension/liquidation Upon occurrence

Distribution payment Upon occurrence

Cash and security reconciliation Monthly

Total Expense Ratio (TER) Monthly

Securities lending Monthly

Share reconciliations Sampling

Cash movements Sampling

Cash reconciliations Sampling

Market timing/late trading Monthly

KYC and blocked accounts Monthly

Queries/complaints Upon occurrence


Above all, the main role of the Management Company is to ensure Investor Protection.

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Our Mission:

“To be the leading independent

third party Management

Company and provider of

Risk Management services for

our clients”

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Comprehensive product rangeOur existing broad product range is constantly evolving in

response to market and regulatory changes. We currently

provide management company services for both UCITS

and non-UCITS funds, including:

�Sociétés d’Investissement à Capital Variable (SICAVs) –open-ended investment companies;

�Fonds communs de placement (FCPs) –contractual funds;

�Specialised investment funds (SIFs).

Unbundled services

In addition to our full management company proposition,

we also offer many of our services on an unbundled,

standalone basis. These services include assistance to

proprietary management companies and self-managed

SICAVs, monitoring of portfolio risk and monitoring of the

investment restrictions applicable to the client’s funds.

Ancillary Services

With the wealth of experience and expertise built up by

RBS (Luxembourg) S.A., we can provide additional

assistance to our clients with other related services,

either in-house or in conjunction with carefully selected

partners, including:

�Assistance in establishing Luxembourg-domiciledinvestment funds, on a consultative basis;

� Introduction to key players in Luxembourg (serviceproviders, auditors, legal advisers, etc.);

�Assessment of overall risk to which a fund is exposedand advice on risk mitigation from a corporate

governance perspective;

� Introduction to independent directors;�Assistance with cross-border registration.

Long-term investment in client partnerships,

products and technology

RBS (Luxembourg) S.A. is a well-established provider of

services to the investment fund industry. Our product

range, the quality of our service and our continuing

investment in people, systems and technology, have all

contributed to our prominent position within the industry.

Our technology investment programme contributes to an

improved product and reporting capability, resulting in a

speedy service, with more accurate and timely information

for clients. Our client partnership approach has resulted in

long-term relationships with key fund managers and

investment companies across the globe.

Our continuing investment in each of these areas helps

us to ensure we will continue to meet and exceed the

expectations of our clients.

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Next steps

If you would like to find out how we can assist with your

funds or would like further information on any aspect of our

services, please contact our business development team:

Contact:

RBS (Luxembourg) S.A.

33 Rue de Gasperich

L-5826 Hesperange

Luxembourg

Telephone: +352 27 111 343

+352 27 111 344

Website: www.rbs.com/gts

E-mail: [email protected]

Fund Promoters can take comfort from our significant

expertise in the management of collective investment

schemes and in the consequent knowledge that all

necessary day-to-day monitoring is being dutifully

conducted on their behalf.

The key benefits of appointing RBS (Luxembourg) S.A. as

your Management Company include:

� capital, substance and infrastructure are provided byRBS (Luxembourg) S.A.;

� product development is retained by the Promoter andBoard of Directors;

� our solution is fully independent and commercially robust;

� complete flexibility in your choice of service providers;� risk is significantly mitigated;� considerable expertise based on wide experience;� robust and proven processes and technology;� speed to market with a scaleable solution;� our solution enhances investor protection and provides added comfort to fund Promoters and

Boards of Directors.

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The Royal Bank of Scotland plc.

Registered office: 36 St Andrew Square, Edinburgh EH2 2YB

Registered in Scotland No. 90312

Authorised and regulated by the Financial Services Authority. 90037935_02/11

RBS (Luxembourg) S.A. (“RBSLux”) is authorised by the

Commission de Surveillance du Secteur Financier (CSSF)

in Luxembourg to conduct collective portfolio management.

This material is issued by RBS (Luxembourg) S.A. and is

intended to provide the recipient (the “Recipient”) with a

summary of the services provided by RBS (Luxembourg) S.A.

Unless and until RBS (Luxembourg) S.A. and the Recipient

agree to, and sign, formal written contracts for the provision

of services, it is not intended that RBS (Luxembourg) S.A.

or the Recipient are, or will be, bound by anything

contained within this material.

Any views or opinions expressed in this material (including

statements or forecasts) constitute the judgement of

RBS (Luxembourg) S.A. as of the date indicated and are

subject to change without notice. RBS (Luxembourg) S.A.

does not undertake to update this document. The Recipient

should not rely on any representations or undertakings

inconsistent with the above paragraphs.

RBS (Luxembourg) S.A. is a member of The Royal Bank of

Scotland Group (“RBS Group”). RBS (Luxembourg) S.A.

and its affiliates, connected companies, employees or

clients may have an interest in financial instruments of

the type described in the material or in related financial

instruments. Such interest may include dealing, trading,

holding, acting as market-makers in such instruments and

may include providing general banking, investment

banking, credit and other financial services to any

company or issuer of securities or financial instruments

referred to herein.

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rbs (luxembourg) s.a. brochure

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