Supervision

Almost half of European fund investors’ costs go to distribution, according to a new report by the European Securities and Markets Authority (ESMA).

Claude Marx, head of Luxembourg’s financial regulator CSSF, has sent a stark warning to the financial sector: Europe’s banks and asset managers are already falling behind in the race to adopt artificial intelligence. “We are facing an economic revolution and we should embrace it,” he said.

Artificial intelligence has become the dividing line between progress and obsolescence in Luxembourg’s financial industry.

The CSSF has ordered all Luxembourg-based investment fund managers to review and, if necessary, correct their sustainability risk policies and disclosures, following a Europe-wide supervisory exercise that found compliance broadly satisfactory but still in need of significant improvement. The order also applies to managers of so-called Article 6 funds, which do not claim ESG characteristics.

Scott Bessent, the U.S. Treasury Secretary and key architect of President Trump’s economic agenda, is being discussed as a potential successor to Federal Reserve Chair Jerome Powell. Bloomberg cited anonymous sources saying his name has been floated for the role.

Anti-money laundering compliance has become a defining test for Luxembourg’s investment sector. At a closed-door AML/CFT conference on 28 March, the CSSF warned of persistent governance gaps, just as EU reforms raise the bar for compliance.

Private debt continues to expand in Luxembourg, but regulators, fund managers and legal experts warn that the market is becoming harder to navigate

ESMA has asked the European Commission to clarify Eltif 2.0 implementation rules, as inconsistent supervision across member states risks delaying investor access to semi-liquid private market funds.

Luxembourg, which hosts more than a quarter of all assets held in European investment funds, has raised a red flag over fresh European Commission plans to create a single supervisor for financial services.