Stephen Evans

Despite some last-minute political tweaks, the Pan-European Personal Pension Product (PEPP) has the potential to do for pensions what UCITS has done for long-term investment. agreed an online panel assembled by Luxembourg For Finance. But patience is required.

Few doubt the pandemic has changed for good the lives of the near half of the Luxembourg workforce who are able to work from home. The financial services regulator has clarified rules on governance, substance and security requirements for remote working.

That a global minimum corporate tax rate is being perused by the Biden administration is a revolution. Yet it raises questions about whether this desire can be translated into effective policy. Moreover, it is unclear what would be the impact on the attractiveness of places like Luxembourg as a hub for multinationals.

Some predict technology will undermine the rationale behind the investment fund. Others see it driving greater sophistication, and a narrowing of the gap between the asset manager and the wealth manager. Yet the message is clear: although Luxembourg can congratulate itself on recording €5trn assets, it must be sufficiently agile to adapt.

Any faint optimism that a memorandum of understanding between financial services regulators might fill in gaps in the Brexit Trade and Cooperation Agreement were dashed this week when the text was leaked. In the fund sector, attention now turns to the extent to which UK and EU decision makers will use product and marketing rules to further their political-economy agendas.

Luxembourg’s third-party management companies (ManCos) are increasingly positioning themselves as regulatory problem solvers for all types of asset manager. This appears to be a burgeoning niche for the Luxembourg fund and asset servicing industry.

The AIFMD may not be perfect but it is pretty good, so please don’t reform it after the current on-going review by the Commmission. This was the uniform message from a discussion at the ALFI European Asset Management conference on 16 March.

The Grand Duchy hosts few portfolio management operations, despite being a world leader for cross-border asset and fund servicing. Banque de Luxembourg Investments (BLI) is an exception. According to managing director Guy Wagner: “We are a small boutique asset manager with private banking DNA.”

With less than a week until the SFDR reporting deadline, client advisers and asset managers in Luxembourg and internationally are gently testing the water. From how to classify different funds and what to report to investors, the financial industry is progressing with caution.

EU-UK relations regarding financial sector regulation are liable to be fraught and driven by political considerations over the medium term. A Luxembourg For Finance (LFF) seminar on 23 February explained why equivalence measures cannot replicate the access and predictability of a full financial services passport.