Laws and Regulations

An inconvenient truth about the financial industry is that it cannot be trusted; there have been too many scandals to remember. Common solutions, such as rules and regulations, no longer seem to be improving trust, necessitating the exploration of new measures.

Trust

A positive correlation exists between economic growth and trust; people who trust each other are more likely to engage in transactions together. The purpose of rules and regulations is to foster trust among economic participants so that they can transact securely.

The Sustainable Finance Disclosure Regulation (SFDR) framework’s Article 6 has often been perceived as a dumping ground for non-sustainable investments. However, experts question whether this perception is accurate. Some argue that an Article 6 fund can sometimes be even greener than an Article 8 fund.

The European Commission this week disappointed sustainable investment organisations by ignoring their collective call for mandatory reporting requirements that would force companies to make public core indicators for their non-financial sustainability performance.

The Luxembourg Sustainable Finance Initiative (LSFI) on Wednesday launched a new toolkit to support financial professionals in navigating the complex maze of the European Union’s sustainable finance regulation.

Negotiators from the European Council and European Parliament have reached a provisional agreement on new rules aimed at enhancing European capital markets and bolstering investor protection within the EU. The deal, reached during the early hours on Thursday, includes consensus on leverage limits and passporting rules for Loan Originating Funds (LOFs), marking a significant milestone in the regulatory landscape.

Luxembourg’s Fuchs & Associés Finance SA is no longer allowed to provide services in Belgium after its Luxembourg licence as a financial services professional was revoked by CSSF, Belgium’s financial markets supervisor FSMA said.

The 60-seat Luxembourg parliament has finalised its adoption of a major upgrade of five investment laws, making its popular international framework for investment funds even more attractive for new types of funds coming into the market, in particular Eltifs. The industry has widely welcomed the changes, with one ManCo CEO describing them as “an evolution rather than a revolution.”

Global financial regulators and industry insiders clashed over the implementation of liquidity management tools (LMTs) to mitigate the impact of mass redemptions in open-ended investment funds at a meeting in Dublin on Wednesday.

Luxembourg’s parliament, with 55 votes in favour and only two against, has embraced a highly anticipated law that revamps its legislative arsenal for investment funds. Several fund categories, including European Long Term Investment Funds (Eltifs) and money market funds, are to be exempted from the registration tax imposed on Luxembourg-domiciled funds.

With a clear vision in mind, Jean-Marc Goy, chairperson at the Association of the Luxembourg Fund Industry, Alfi, is determined to foster the growth of the Grand Duchy’s asset management sector by encouraging effective collaborations with diverse stakeholders, including regulators. “The common goal is to strike the right balance between investor protection, and not putting in the way of the industry too many hurdles and obstacles that would stifle innovation”, Goy said in an IO Talks podcast interview.