CSSF Circular 24/856: what NAV errors and investment breaches ask of a Luxembourg fund manager

Short answer: since 1 January 2025, Circular CSSF 24/856 has governed NAV calculation errors, breaches of investment rules and four other kinds of error at fund level, in place of Circular CSSF 02/77. Where a fund has designated an investment fund manager (IFM), the IFM, under the supervision of the fund's dirigeants, is responsible for correcting the error and making good any loss, and delegating the NAV calculation to an administrator does not change that (CSSF 24/856, points 16 and 19). Every error in scope is notified to the CSSF on its form, as a rule within 4 to 8 weeks of detection (point 158).

This is an evergreen guide to what the circular asks the IFM to have in place, and what the second line should check. It rests on the circular of 28 March 2024, the CSSF FAQ of 24 December 2024 (the only version listed on the circular's page on 5 October 2026) and the CSSF's notification guide.

Which funds are in scope

The circular applies in full to UCITS, Part II UCIs, SIFs and SICARs, including those that are money market funds, ELTIFs, EuVECAs or EuSEFs (point 1). It also reaches ELTIFs and money market funds for which the CSSF is the competent authority without being CSSF-authorised funds, an ELTIF set up as a RAIF for instance, minus the chapter on the auditor (points 2 and 3). Other RAIFs are outside it (FAQ, chapter I, Q1).

Closed-ended funds sit outside the NAV error chapter and do not notify NAV errors to the CSSF, but they must still correct them (point 27). The CSSF recommends that they set an internal tolerance threshold all the same (FAQ, chapter II, Q3).

Who does what

Two principles run through the text. The party that caused an error that led to a loss must make it good (point 15). And the arrangements with service providers, contracts included, have to reflect the circular (point 14). The delegation itself stays governed by Circular CSSF 18/698, covered in our guide to 18/698.

NAV errors and the tolerance threshold

Only an error that reaches the tolerance threshold is "significant": it must be corrected under the circular and notified. Below it, the firm fixes the source and prevents a repeat (points 32 and 33). Several untreated errors below the threshold count as one significant error if together they reach it (point 38).

Source: point 35, Tables 1 to 3.

Three details matter in practice.

• Going above the table needs a file. A retail Part II UCI or ELTIF investing mainly in other assets may use a threshold above 1% on a documented analysis, and investors are told of any threshold above the table (point 35).
• A lower threshold becomes the trigger. A fund may apply a lower threshold, but then "all provisions of Circular CSSF 24/856 have to be applied based on the lower threshold", notification included (FAQ, chapter II, Q2).
• One threshold per sub-fund. It applies to all share classes and is fixed on a documented basis before the first NAV is published (point 37).

For a significant error, the remedial plan identifies and fixes the source, recalculates the NAVs of the error period, reapplies them to the subscriptions and redemptions, books the result, informs and compensates the investors concerned, and strengthens the controls (point 40). The policy chooses between the compound and non-compound calculation methods (point 47). Compensation is paid in one go, not in instalments and not deducted from future fees (point 118). The cost of the correction, staff time, legal advice and the auditor's special report included, is never charged to the fund (points 133 to 135). A de minimis amount can spare investors a compensation smaller than their bank charges, never the fund, and it belongs in the policy (points 123 to 127). The CSSF may ask for the evidence behind it, "notably where the de minimis amount exceeds EUR 25" (FAQ, chapter V, Q1).

Investment breaches: active or passive

The first decision is the classification. A passive breach comes from events beyond the fund's control, such as market moves, or from the exercise of subscription rights. It is corrected within a reasonable time, monitored by the dirigeants and not notified (point 55). An active breach results from an action, or from a failure to act where the breach was foreseeable or avoidable, at the level of the dirigeants, the IFM or a delegate (point 56). The FAQ treats deposit-limit breaches caused by predictable settlement mismatches as active (chapter III, Q1).

For an active breach, the correction is decided without delay. UCITS and funds holding liquid assets act straight away; for less liquid funds the decision is immediate but its execution may take longer (point 66). Tolerance thresholds do not apply (point 71). The loss is calculated with the accounting method by default, and with the economic method only if the policy provides for it with a defined comparative reference (points 79 and 85). In principle, the method cannot be changed for a breach already identified (point 74), and a net profit stays with the fund (point 75). The IFM also checks whether the breach caused a significant NAV error on any NAV of the period (point 91).

Controls run before and after each trade, and the post-trade check happens "at the latest when calculating the next NAV" (point 58). Exceeding the leverage disclosed to investors is not notified under 24/856, but it must be monitored and corrected under internal procedures (FAQ, chapter III, Q6).

Four other errors

Chapter 6 sets the treatment of four further errors: incorrect swing pricing or other anti-dilution tools, payment of fees out of line with the constitutive documents or prospectus, wrong application of cut-off rules, and investment allocation errors. For any other error, the fund assesses each time whether correction and compensation are due (point 96).

Notification and the auditor

• Channel. The form is filed on eDesk or as a structured file through the CSSF's S3 channel. The firm's arrangements say who files: the fund, the IFM, a mandated delegate or the UCI administrator (notification guide, sections 2.3 and 4).
• Content. Every field is completed and a quantitative impact calculation is attached. The CSSF refuses incomplete notifications (points 153 to 155).
• Deadline. 4 to 8 weeks at the latest after detection for an error that needs no compensation to investors. Complex cases, with many investors to compensate in several countries, are notified within the same window and the compensation date is added later. The CSSF is kept informed of compensation payments every month (point 158).
• No approval. The CSSF does not approve the corrective actions and gives no specific feedback, but it can act afterwards (points 159 and 160). Authorities of the countries where the fund is marketed are informed under their own rules (point 161).
• Special report. For UCITS and Part II UCIs, when total compensation exceeds EUR 50,000 or one investor's compensation exceeds EUR 5,000, the auditor issues a special report, sent to the CSSF in principle within 3 months of the complete notification (points 138 and 157).

What the second line should check

• The error policy is current and approved, and states the tolerance threshold of each sub-fund, the documented analysis where one is required, the calculation methods and the de minimis amount with its justification.
• The administration agreement sets who detects, who notifies the IFM, who approves the remediation plan, and by when (points 14 and 23).
• The error log records the detection date, so the 4 to 8 week deadline and the monthly compensation updates can be tracked.
• Each active or passive classification is documented. The auditor samples the passive ones (point 143).
• Investors who hold through intermediaries are told that their compensation rights may be affected, in the prospectus where there is one (points 122 and 164).
• No correction cost has reached the fund.

Where Klavius fits

Klavius's control library includes monitoring tests drawn from 24/856: the NAV error policy and remedial plan, the tolerance thresholds of funds that set their own, the active or passive classification, compensation without delay, the contractual arrangements with service providers and the information of host-country authorities. Officers adopt them into their compliance monitoring plan as drafts and adapt them. On the delegate side, Delegate Oversight tracks the administrator's NAV errors, and those above tolerance, as KPIs each period, with findings and escalation to the management line. Klavius prepares; your officers validate and sign. See the Compliance and Delegate Oversight pages.

Sources

• CSSF, Circular CSSF 24/856 on the 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, 28 March 2024, in force since 1 January 2025. The French text prevails. Publication page.
• CSSF, FAQ on Circular CSSF 24/856, version 1, 24 December 2024.
• CSSF, UCI notification in accordance with Circular CSSF 24/856, practical and technical guidance, version 1.2, 16 July 2025.