If an agency contract is concluded for an indeterminate period, for a limited period with the possibility of early termination or for an indeterminate period in the event of an indeterminate agreement (see avbove), each party may terminate the agency contract without notice. Nevertheless, Luxembourg is still under pressure to reduce the costs of the front office, especially the distribution sector. «I think the EC will recognise that if you want a capital markets union, you need a standardised allocation,» he said. «On the product side, we are quite harmonized. We miss harmonization on the sales side. Regulation helps. Distribution to a few large institutional investors has little real impact on costs, unlike distribution to millions of individuals. «It`s always the wide distribution of your retail fund that costs the money,» says Fechter. A joint report by Deloitte and Fundsquare last year indicates that it still costs the sector to enter the market at 1.3 billion euros per year. The report «The benefits of communitisation of distribution costs» indicated that this could be reduced by 70% (EUR 1 billion). The introduction of D2C platforms and «robo consultants» could revolutionize the distribution of funds in the future, but in the meantime, efficiency gains are still focused on existing models. Therefore, a centralized KYC would require a strong willingness of market participants to enter into firm and binding contractual agreements.
If this were the case, it would reduce compliance costs and increase the willingness to accept new business relationships by eliminating KYC`s multiple process model between transfer agents and distributors/investors. Claude Marx, Director General of the CSSF, said: «Hong Kong and Luxembourg have a long history of cooperation in the field of investment fund distribution. One of the proposals it contained was an automated centralized system of fund contracts between distributors and fund managers – a way to eliminate costly friction in the distribution of funds and to be at the heart of the idea of «mutuality» of costs. But the distribution of D2C is still in its infancy. According to a report by research and analysis firm Mackay Williams last year, D2C accounted for only 1.5% of European assets. Until a new solution is found in terms of distribution costs, the size of a single Luxembourg cross-border fund remains its driving force or its Achilles heel. There are no binding rules under Luxembourg`s legislation on minimum sales quotas. As a general rule, agreements on minimum wind quotas are valid. The fencer agrees. «If the market focuses on the efficiency of the existing structure, they lose the plot and lack the whole image.