TITLE: French Banking Law // VOLCKER Rule Analysis

Guidelines for the reading of the selected funds.

Weekly analysis of the 02 April 2022: BAKERSTEEL GLOBAL FUNDS SICAV – ELECTRUM FUND S EUR

The analysis will be made thanks to EURONEXT FUNDS360. This Fund has been selected for its orientation in the Natural Resources market and its performance.

1)   Overall performance on the 01/04/2022:


Historical performance of the fund: +24,82% over the last year.

The purpose of this analysis is to determine if this fund shall be or not considered as a leveraged UCI (Undertakings for Collective Investments).

If a fund is considered as a leveraged UCI, an eligible guarantee must be established by the banking entity for any transaction.

2)   Fund overview:

Type of UCI: UCITS

“The investment company described in this Sales Prospectus (including Articles of Association and Annexes) (the “Sales Prospectus”) is a Luxembourg investment company (société d’Investissement à capital variable) that has been established for an unlimited period in the form of an umbrella fund (« Investment Company ») with one or more sub-funds (« sub-funds ») in accordance with Part I of the Luxembourg Law of 17 December 2010 on Undertakings for Collective Investment in Transferable Securities, as amended (the “Law of 17 December 2010”).”

Legal form: Luxemburg OEIC

Type of investment policy:

« The sub-fund may be subject to performance fees, which are calculated by reference to the EMIX Global Mining Index [Price Index, Bloomberg code: JCGMMG] (the « Index »). The sub-fund’s investment universe is not limited to the index components. The sub-fund’s performance may therefore differ significantly from that of the benchmark index. »

This fund is an Equity Fund, focused in the natural resources sector, especially gold mining.


ISIN : LU1923360744

Profile of investors:

This fund is open to both retail and institutional investors.

Level of investment in other UCIs:

“Units in UCITS or other UCIs (« target funds ») may be acquired up to a maximum limit of 10% of the sub-fund assets, making the sub-fund eligible as a target fund.”

This fund shall not invest more than 40% in any leveraged UCI (10%).


« Commitment approach

The commitment approach is used for monitoring and measuring the total risk associated with derivatives.”

The total fund exposure is regulated by the UCITS Regulation. Therefore, the global exposure of the SICAV shall not exceed 300% of the net asset value.

Asset Manager : IPConcept (Luxemburg) SA


To be considered as a leveraged UCI, a fund shall:

  • Have a global exposure of more than 3 times the NAV
  • Invest in more than 40% in others leveraged UCI

Regarding the investment policy and the characteristics described, this fund shall not be considered as a leveraged UCI.

Therefore, global exposure shall not be above 300% of the total assets.

Therefore, any financial institution that would make an operation with this fund shall not need to set an eligible guarantee.

4)  Volcker Rule Analysis

4.1) Introduction to the Volcker Rule

Source: https://www.nortonrosefulbright.com/en-a/knowledge/publications/ce3b3aa3/implications-of-the-volcker-rule-for-foreign-banking-entities

“Section 13 of the Bank Holding Company Act of 1956, as amended (the “Volcker Rule”), introduced in the Dodd-Frank Act, 3 generally “prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring or having certain relationships with a hedge fund or private equity fund, subject to certain exemptions”

The Volcker rule targets a covered fund, which includes an issuer that would be an investment company, but for the exclusions contained in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act of 1940, as amended (the “1940 Act”).

Source :


Description of section 3©(1) and 3©(7) of the US investment company act of 1940 :


After the description of the Volcker Rule, let’s determine if the fund BAKERSTEEL GLOBAL FUNDS SICAV – ELECTRUM FUND S EUR

shall be considered as a covered fund or not.

4.2) Exclusions of Volcker Rule

To determine if a fund is a covered fund, let’s look about the exclusions of the law:

  • Foreign public funds
  • Wholly-owned subsidiaries
  • Joint ventures
  • Acquisition vehicles
  • Securitization related vehicles
  • Funds regulated under the 1940 Act
  • Other excluded entities

In addition, permitted activities and market-making are allowed:

“The prohibition against proprietary trading does not apply to permitted underwriting activities and market making-related activities. (…) To engage in either permitted activity, a banking entity must comply with three overall conditions:

  • the banking entity must maintain an internal compliance program required by Subpart D (and discussed below) to ensure that the banking entity complies with the conditions permitting the activity;


  • the compensation arrangements of people involved in these activities must not be designed to reward or incentivize prohibited proprietary trading; and


  • the banking entity must be licensed or registered to engage in the permitted activity.

In addition, the following specific conditions apply.

  • Underwriting: “Underwriting activities are permitted only if the trading desk’s underwriting position is related to a “distribution” of securities for which the banking entity is acting as underwriter.”


  • Market-making: “Market making-related activities are permitted only if the relevant trading desk routinely stands ready to purchase and sell one or more types of financial instruments related to its financial exposure and is willing and available to quote, purchase or sell those types of financial instruments for its own account in commercially reasonable amounts and throughout market cycles on a basis appropriate for the liquidity, maturity and depth of the market for the relevant types of financial instruments”


  • Permitted risk-mitigating hedging activities: “The prohibition on proprietary trading does not apply to certain risk-mitigating hedging activities.”


The Volcker 2.0 “(…) add four new exclusions to the definition of “covered fund” — credit funds, venture capital funds, family wealth management vehicles and customer facilitation vehicles — thereby exempting them from the scope of the Volcker Rule.”


4.3) Volcker Rule analysis

Before checking any exclusion or exemption, we must determine is the fund can be sold or not to any U.S. person: “The Fund’s units are not, have not and will not be authorised in accordance with the U.S. Securities Act of 1933 (the « Securities Act ») in its latest version or under the stock market regulations of individual Federal States or local authorities of the United States of America or its territories or possessions either in the ownership or under the jurisdiction of the United States of America, including the Commonwealth of Puerto Rico (the « United States »), or otherwise registered or transferred, offered or sold directly or indirectly to or in favour of a U.S. person, as defined in the Securities Act.
The Fund is and will not be authorised or registered under the Investment Company Act of 1940 (the « Investment Company Act ») in its latest version or in accordance with the laws of individual Federal States of the USA and investors have no claim to the benefit of registration under the Investment Company Act.
In addition to the other requirements set out in the prospectus, management regulations/articles of association or the subscription form, investors must (a) not be « U.S. persons » within the meaning of the definition of Regulation S of the Securities Act, (b) not be « Specified U.S. persons » as defined in the Foreign Account Tax Compliance Act (« FATCA »), (c) be « non-U.S. persons » within the meaning of the Commodity Exchange Act and (d) not be U.S. persons within the meaning of the US Internal Revenue Code of 1986 in its latest version (the « Code ») and in accordance with the Treasury Regulations enacted pursuant to the Code.”

As mentioned above, the fund is open to both retail and institutional investors.

Based on the extract from the prospectus, we can determine that:

–        The fund is a Non-US issuer

–        It is sold predominantly outside of the United States

–        the subscription is restricted for US investors

–        the fund be authorized to offer and sell ownership interests, and such interests be offered and sold, through one or more public offerings (See Type of Eligible investors).

We could conclude that this fund shall not be considered as a Covered Fund as described in the 1940 Investment Company Act.


shall not be considered as a Covered Fund, relying on the exclusion from the Investment Company Act of 1940: Foreign Public Fund.

Sources :






https://www.amf-france.org › Epargne-et-prestataires › OPCVM



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