Publication by the FSMA of the 2017 statistics regarding pension funds

The Financial Services and Markets Authority (“FSMA”) published the statistical data on 21 September 2018 on the sector relating to institutions providing occupational retirement provisions (“IORPs”) regarding the financial year 2017.

The total balance sheet of the IORPs continues to rise mainly as a result, according to the FSMA, of the increase of cross-border activities.

The 8th edition of this statistical overview is available on the FSMA’s website (in French or in Dutch).

Amongst the most relevant items reflected in this overview, it can be stated that: 

• At the end of 2017, there were 201 IORPs (versus 199 in 2016).
• The IORPs comprise a total of 1,734,315 members (i.e. an increase of nearly 4% in one year).
• At the end of 2017, the total balance sheet of all IORPs reached EUR 35.1 billion (i.e. an increase of 18% compared to 2016). Such an increase is essentially the result of the asset transfers from foreign pension funds.
• Belgian IORPs invested approximatively 75% of their assets in collective investment funds, mainly shares and bond funds. They also directly invested 11% of their assets in bonds and 9% in shares. The return on such investment came out to 5.3%.

Read: The FSMA’s press release on this topic (French) and (Dutch)

Update by the National Bank of Belgium (“NBB”) and the FSMA on asset management and shadow banking in Belgium

The NBB and the FSMA published a joint updated study on asset management and shadow banking in Belgium on 25 October 2018, which represented an amount of EUR 147 billion at the end of 2017. The first joint report on this topic was dated 3 October 2017.

The report addresses the trend towards a more market-based financial system, where financial intermediation also takes place outside the banking sector. 

According to this report, the term “shadow banking” should in fact be replaced by the more appropriate term “non-bank financial intermediation,” which can take many forms and support the economy by offering an alternative to bank borrowing. These assets mainly consist of money market funds and non-equity investment funds. 

It is generally admitted that non-bank financial intermediation can rise to systemic risks threatening the stability of the financial system. However, the report confirms that, at this stage, no substantial systemic risks have been identified in relation to asset management and non-bank financial intermediation. Developments in both areas and links with other sectors of the economy do, however, require careful monitoring.

The so-called “step-in” risk is that groups selling investment funds may de facto feel (voluntarily) obliged to compensate clients for the risks associated with such investment funds, even if they are not contractually bound to do so.

The regulators underline the importance of collecting data on asset management and non-bank financial intermediation. The FSMA has adjusted and expanded the statistical information to be submitted by investment funds. A Belgian royal decree providing investment funds with specific tools in case of liquidity problems should be published within the next few weeks.

Read: The FSMA’s press release

FSMA issues a new warning regarding investments in cryptocurrencies

Despite prior FSMA warnings (see Dechert OnPoint, July 2018), cryptocurrency fraud continues to trap more victims in Belgium. On 26 October 2018, the FSMA published a new warning against these forms of fraud and updated the list of fraudulent cryptocurrency trading platforms (21 new suspicious sites have been added, the list now totaling 99 websites).

The FSMA’s warning describes how these types of fraud get started and what the fraudsters offer to the investors. It also provides some guidelines on how to determine if an offer constitutes fraud, gives a few recommendations and strongly advises victims of this type of fraud to file a complaint.

Read: The FSMA’s warning

Read: The list of fraudulent cryptocurrency trading platforms