CSSF Circular 24/856, annotated — thresholds, procedures and the FAQ, in one place
People arrive at this circular by googling a paragraph number — "paragraph 121 of circular 24 856", "point 35 tolerance threshold", "24/856 de minimis" — because they are reading a 100-page CSSF text unaided, at the desk, mid-remediation. The law-firm alerts that landed in April and December 2024 are day-one summaries; useful, but they stopped at the circular. The CSSF's own FAQ (Version 1, 24 December 2024) sits alongside the text and answers the operational questions the circular leaves implicit — closed-ended funds, settlement-mismatch breaches, what actually counts as a fee error, whether you need CSSF sign-off before applying de minimis. This page puts the circular and its FAQ in one place, point-numbered, so you can stop scrolling the PDF.
Circular CSSF 24/856 entered into force on 1 January 2025 and repealed Circular 02/77, the 2002 text the industry had memorised (pt 162). Errors detected before that date still run under 02/77 and its old FAQ (pt 163). Everything below is the new regime — for errors detected on or after 1 January 2025.
The cross-domicile view — how Luxembourg's thresholds compare with Ireland, the UK, Jersey and Guernsey for the same NAV error — lives on the NAV error correction matrix. This page stays inside 24/856.
Scope — which vehicles, and which chapters
The circular applies to UCITS, Part II UCIs, SIFs and SICARs directly, and reaches ELTIFs, MMFs and EuVECAs/EuSEFs through points 2–4 of Section 2.1 (its scope section). The FAQ's first clarification is the one most people need: RAIFs are not in scope — except where a RAIF falls into a listed category for which the CSSF is the competent authority, the worked example being a Luxembourg ELTIF (FAQ Ch. I, Q1). If your RAIF is a plain SIF-regime RAIF, 24/856 does not bind it; if it is set up as an ELTIF, it does.
Two chapters do the heavy lifting, and they switch on separately:
| Chapter | What it governs | When it applies |
|---|---|---|
| Chapter 4 | Tolerance thresholds + significant NAV error correction | Open-ended UCIs in scope. Closed-ended UCIs are out (pt 27) — no obligation to set a threshold under the circular |
| Chapter 9 | Notification to the CSSF | Where a significant error/breach is identified. Closed-ended UCIs are outside it too — no CSSF filing even if they breach an internally-set threshold (FAQ Ch. II, Q3) |
Closed-ended funds are not off the hook, though: under points 26–27 they must still value reliably, keep the NAV correct on an ongoing basis, and take corrective measures for any error. The FAQ goes further and recommends a closed-ended fund define a tolerance threshold internally, purely to identify which errors need correcting — and confirms that doing so does not pull it into the Chapter 9 notification duty (FAQ Ch. II, Q3). So the sensible closed-ended posture is: set a threshold for your own control file, correct above it, notify no one.
The tolerance thresholds (pt 35)
The threshold is the error size — as a % of NAV — above which the error is significant and the full correction-and-notification machinery switches on. Below it, you fix the cause and move on. The grid is prescribed for retail vehicles and self-set (within a hard cap) for professional ones.
| Vehicle | Tolerance threshold (% of NAV) |
|---|---|
| MMFs under the MMF Regulation (Table 1) | 0.20% |
| UCITS — bond or mixed investment policy (Table 2) | 0.50% |
| UCITS — equity or other eligible assets (Table 2) | 1.00% |
| Part II UCIs & ELTIFs open to retail (Table 3) | 0.50% / 1.00% by policy, mirroring Table 2; may exceed 1% for "other assets" only with a documented analysis and investor disclosure |
| Part II/ELTIF reserved to professional or well-informed investors, SIFs, SICARs, EuVECAs, EuSEFs (pt 35(d)) | Self-set by the IFM/dirigeants on a documented analysis, Table 3 as the reference point; never above 5%, and 5% may not be used as a default |
The mechanics that trip people up, all in pt 37 and pt 38:
- One threshold per sub-fund, across all share classes (pt 37(i)) — you do not set a looser threshold for an institutional class inside a retail sub-fund.
- Look-through for funds-of-funds, index trackers and feeders — the threshold keys off the target exposure, not the wrapper (pt 37(iv)).
- The cross-border ratchet — if a foreign distribution country imposes a stricter threshold and you adopt it, it applies to the whole sub-fund and every investor in it, not just that country's investors (pt 37(v)). A single Nordic or UK registration can quietly tighten your Luxembourg tolerance.
- Aggregation — sub-threshold errors that run simultaneously or in succession are added together; if they stack past the threshold, they count as one significant error (pt 38). An error log that looks clean line-by-line can still be reportable.
- A lower internal threshold binds you — if your own approved policy sets a threshold below the circular's, you must apply all of 24/856 (correction and notification) at that lower number. You cannot set 0.30% internally and then notify only at 0.50% (FAQ Ch. II, Q2).
The notification procedure — form, and the 4–8 week window
Every significant error goes to the CSSF on its prescribed notification form. The form is filed in full — all fields, the quantitative impact calculation attached — and an incomplete filing is refused, so a half-finished form does not stop your clock.
The deadline is 4 to 8 weeks from the date of detection (not from the error date, and not from when compensation finishes). Where compensation reaches many investors across several jurisdictions and cannot be completed inside that window, the filing still goes in on time; the compensation completion date follows through the completed form, with monthly progress updates to the CSSF while payouts run.
Three more procedural points worth an ops-checklist line:
- Notify even when nobody was paid. A significant NAV error with no subscriptions or redemptions in the error period — so no compensation due to investors or the fund — still requires a notification. The form must carry the source of the error and the corrective measures taken to stop it recurring (FAQ Ch. II, Q1). "No money moved" is not a reason to skip the filing.
- The auditor's special report (the réviseur d'entreprises agréé / REA, the fund's approved statutory auditor), where one is required, is due within 3 months of the complete notification (pt 157).
- The CSSF does not pre-approve your remediation. It takes the filing and reserves the right to intervene ex post (pts 159–160). Host-country regulators of any market where the fund is distributed must also be informed under their local rules (pt 161).
Investor compensation, de minimis, and who bears the cost
Recalculate the NAV for every date in the error period; compensation is compulsory only for the dates on which the error was actually significant (pt 39). Direction matters: an undervalued NAV means you compensate redeeming investors and the fund; an overvalued NAV means subscribing investors and the fund (Tables 4–5). The financial impact runs on a compound or non-compound method — pick one in your procedures and apply it consistently (pt 47).
De minimis — a cap on the payout, not on the error
A de minimis amount is a per-investor floor below which a compensation payment is not made — it caps the payout, it does not change whether the error was significant. Under 24/856 it is a lump sum reflecting the actual bank charges of transferring the compensation, documented per fund or sub-fund (pts 124–127). Two hard limits on it:
- It applies to investor payouts only — never to amounts owed to the fund. Money owed back to the fund is paid down to the last unit of currency (pts 124–127).
- Compensation delivered by allocating extra units rather than cash skips de minimis entirely (pts 128–129).
The FAQ adds the operational detail the circular leaves out: you do not need CSSF approval before applying de minimis (FAQ Ch. V, Q1). But the CSSF can ask you to justify the level ex post and to evidence that it genuinely represents the bank charges — and it flags EUR 25 as the level above which it will expect that documentary evidence. Your IFM's internal policy must set out the use and the level of de minimis for NAV errors; an undocumented de minimis is a finding waiting to happen.
Clawback, orphaned amounts, and the sting
- Clawback from investors who accidentally gained is acceptable for well-informed/professional investors, but "in principle not appropriate" for retail (pt 44).
- Unclaimable amounts owed to investors who have since left go to the Caisse de Consignation, Luxembourg's state deposit office for unclaimed funds (pt 132).
- The sting, and the line people miss: the costs of running the correction cannot be charged to the fund (pt 133). The party that caused the error carries the remediation cost — not the NAV. This is the single most expensive sentence in the circular.
The FAQ, point by point — what each clarification actually settles
The FAQ is short (nine questions) but each one closes a real operational gap. This is the part the day-one law-firm alerts do not cover, because most of it did not exist until 24 December 2024.
| FAQ point | Question, in short | What it settles |
|---|---|---|
| Ch. I, Q1 | Do RAIFs / non-CSSF-authorised UCIs fall in scope? | No — unless the RAIF is a listed category the CSSF supervises (e.g. a Luxembourg ELTIF). Plain SIF-regime RAIFs are out. |
| Ch. II, Q1 | Significant error but no subs/redemptions — still notify? | Yes. Correct the source, strengthen controls, and file the notification stating the source + corrective measures. No compensation ≠ no filing. |
| Ch. II, Q2 | Internal threshold lower than the circular's — notify at which? | At the lower internal threshold. Every provision of 24/856 keys off your own number once it is set below the circular's. |
| Ch. II, Q3 | Closed-ended UCIs — what applies? | Out of Chapters 4 and 9 (no mandated threshold, no CSSF filing), but must still value reliably and correct errors (pts 26–27). CSSF recommends an internal threshold; using one does not create a notification duty. |
| Ch. III, Q1 | Settlement-mismatch breaches of the 20% deposit limit — active or passive? | Active (i.e. correctable and compensable). A T+3 redemption against a T+1 sale, a same-day buy/sell with different settlement, or a bond maturity that pushes deposits over 20% are all predictable/avoidable — so not "beyond the control" of the UCITS. |
| Ch. III, Q2 | US move to T+1 — what must UCITS do? | Pre-trade compliance checks must factor settlement cycles. Toolkit named: shorten the dealing cycle, cash-sweep programs, an extra bank relationship, temporary borrowing (max 10%, Art. 50), extended settlement. Only a genuinely unavoidable, self-resolving gap is "passive" — and you must be able to justify that. |
| Ch. III, Q3 | 5/40% breach — which security to sell, how to price the impact? | You need not sell the security that caused the breach — any position that restores compliance works. Three impact-calc methods are acceptable (impact on the causing security, on the sold security, or the economic method). If your policy is silent, method (a) applies by default. |
| Ch. III, Q4 | Negative-interest deposit breach — can you net interest rates between banks? | No. The fund must be indemnified for the interest and charges it actually bore. Use the accounting method unless the economic-method conditions of §5.5.3.2 are met. |
| Ch. III, Q5 | Mix accounting + economic methods within one UCI? | Yes — if the internal policy formally sets out which method for which breach type and applies it consistently. |
| Ch. III, Q6 | Leverage above the disclosed level — notify under 24/856? | No. Exceeding disclosed leverage (CESR-10/788 box 24 for UCITS; Art. 21(1)(a) of the 2013 Law for AIFs) is monitored and corrected through internal escalation procedures, not the 24/856 notification. |
| Ch. IV, Q1 | What is a "non-compliant payment of costs/fees error" (Section 6.2)? | Three worked examples. (1) An audit-fee accrual that later proves too low, booked in good faith on reliable info, is not a fee error. (2) A wrong fee accrual corrected before any wrong payment, with no significant NAV error, engages neither Section 6.2 nor Chapter 4. (3) A wrong accrual that is paid out (management fee underpaid) does engage Section 6.2 — correct it via one of the two methods in pt 105. |
| Ch. V, Q1 | Does de minimis need CSSF pre-approval? | No. But justify the level ex post, evidence it as real bank charges (expect scrutiny above EUR 25), and set the use + level in your internal policy. |
What this means at the desk
Read the circular and the FAQ as one document, because the FAQ is where the money is. The circular gives you the thresholds and the form; the FAQ tells you that a lower internal threshold binds you, that "nobody was paid" still means "file", that a settlement-mismatch deposit breach is your fault not the market's, and that de minimis above EUR 25 will be questioned. The costliest single line remains pt 133 — correction costs cannot touch the fund — so the cheapest remediation is the control you evidenced before the error, and the de minimis you documented before you needed it.
For how the same NAV error is treated in Ireland, the UK, Jersey and Guernsey — where the thresholds are lower, absent, or left to the depositary — see the NAV error correction matrix.
To verify
- Circular point numbers — the paragraph references for the threshold grid (pts 35, 37, 38), notification (pts 152–161), the REA special report (pt 157), compensation and de minimis (pts 39–47, 123–133), the fee-error correction methods (pt 105) and the repeal (pts 162–163) are cross-referenced from the CSSF circular text and its published summaries; worth a final line-by-line check against the official English PDF before quoting a specific point in correspondence.
- FAQ currency — the FAQ cited throughout is Version 1 (24 December 2024), confirmed as the current version on the CSSF FAQ page as at this page's last-verified date. The FAQ itself states the CSSF may add questions or adapt positions at any time — re-check for a Version 2 before relying on it.
- EUR 25 de minimis line — the FAQ frames EUR 25 as the level above which the CSSF will expect ex-post documentary evidence of actual bank charges; it is an evidence trigger, not a stated hard cap on the de minimis amount. Confirm the exact wording of FAQ Ch. V, Q1 before treating EUR 25 as a ceiling.
Changelog
- 2026-07-06 — page created. Built from CSSF Circular 24/856 (English PDF) and the CSSF FAQ on Circular 24/856, Version 1 (24 December 2024), read in full; notification window, REA report deadline, thresholds and repeal corroborated against the CSSF text and EY Luxembourg's circular summary. Cross-linked to the NAV error correction matrix page.