Laws and Regulations

The Luxembourg fund industry was given its ESG marching orders last week by CSSF CEO Claude Marx at the Alfi European Asset Management conference. “I am sometimes irritated by those who over inflate small issues or imperfections in this area,” he said.

Even as limited trading resumed on Moscow’s exchange on Thursday, prospects for emerging market funds exposed to Russia remained cloudy as determining accurate asset values continued to be nearly impossible. Fund managers now await guidance from financial supervisors before taking next steps on suspended funds.

Luxembourg is discussing the innovative use of a particular liquidity management tool known as “side pockets” in order to deal with the suspensions of investment funds with significant exposure to Russia.

The UK has taken a further cautious step towards the permanent regime which will govern access to its market for EU-based Ucits funds. This came with the introduction of regulations establishing the Overseas Funds Regime (OFR) on 23 February. This gives a clearer but still incomplete picture of how Luxembourg-based retail funds could access UK-based investors over the long term. 

Luxembourg’s financial supervisor CSSF on Thursday acknowledged that there is ‘some’ room for improving its international cooperation with other supervisors after a peer review conducted by the EU’s securities markets authority found a number of shortcomings in the supervision of financial institutions that provide cross-border services to retail clients under the European passporting system.

The EU’s financial supervisory authorities on Thursday warned consumers that many crypto-assets are highly risky and speculative. The authorities - including the bodies that supervise securities markets and the banking sector, set out key steps consumers can take to ensure they make informed decisions.

A comprehensive review by the European Commission has the potential to put the European long-term investment funds (Eltif) regime back on track and set it up for the kind of success Ucits funds have experienced. Eltifs can become competitive with AIFs by removing many factors that made Eltif take-up much lower than had initially been hoped. The investment community has been broadly supportive of the reset.

Luxembourg has joined the international move to impose sanctions against Russia for its ruthless invasion of Ukraine. It has followed steps taken by other European and global countries and organisations, including condemning Russia’s aggression, even sending some weaponry and equipment to Ukraine’s beleaguered defenders. But there’s one area where Luxembourg appears to be out of step: the high profile application of the sanctions to Russian oligarchic assets held in this country.

Russian interests have found Luxembourg’s expertise useful as a European business hub for several decades. Here we look at the state of this relationship before the invasion of Ukraine, and how these arrangements might be affected by the subsequent sanctions and the decisions of business leaders and politicians in Luxembourg.

Part of Luxembourg’s effort to tackle allegations that it enables questionable business and tax practices through a lack of transparency will be significantly upgraded through new rules, technical capacities, increased staff and administrative penalties by 2023.

Under a reform project involving a draft Grand-Ducal regulation announced last week, the Luxembourg government body that makes available business registration information – including a ultimate beneficial owner registry -  will be overhauled and have its staff doubled.