Stephen Evans

There appears to be a fundamental difference of opinion between EU financial sector regulators and the Commission about the controversial Priips regulation’s key information document (KID).

Signs of how the EU will seek to remould its relationship with the UK on financial services are starting to emerge, Yet it’s unclear to what extent this will be a technocratic, economics centred approach or a more political vision. The industry also wants clarity on how regulation-setting will change post Brexit.

Mobilising long term private sector funding for ambitions such as the green industrial revolution is the stuff of policy makers’ dreams. Retail investors too want options which will give solid long-term returns. The ELTIF was the EU’s effort to give retail investors access to alternative funds, but it has failed to take off. Institutions need to drive reform and uptake.

Personal data transfers in general, and in the financial sector in particular, are one of the many gaps in the Brexit trade and cooperation agreement (TCA). There is a transition period, but once it lapses later this year financial institutions may no longer be allowed to transfer client data between the UK and the EU. 

Despite the looming EU deadline on ESG reporting, around a third of boards of UCITS funds and nearly half for alternative funds report had not reviewed the implications of the sustainable finance disclosure regulation (SFDR).

Substantial governance-reform targets have been set for banks and investment firms by the CSSF. Some quick changes are required, but otherwise the regulator’s circular letter 20/759 seeks to drive long-term culture change on boards of directors regarding risk, diversity, and sustainability.

Despite there being a deal now, Brexit will never be done. Even if the end of the transition period can be navigated with minimal disruption, the lack of an institutional underpinning to the UK-EU relationship points towards decades of negotiation over dozens of policy areas, including financial services. Welcome to long Brexit.

‘Taxes are poison for companies hit by the crisis,’ Xavier Bettel told a Luxembourg for Finance online panel on Thursday. He added that when seeking to restore balance to state finances ‘we want to avoid any tax rise.’ Instead ‘maybe we’ll have to cut or delay some projects.’

That said he had no regrets about the government’s aggressive support measures for the Luxembourg economy. ‘This money has been some of best investment we could do,’ he said.

The price of an average house in Luxembourg has now risen well above €1m, making the Grand Duchy Europe’s second-most expensive housing market after Monaco. The regulators have just announced plans to impose tough minimum deposit requirements on new housing loans. Are these signs of speculative exuberance and is there a risk to the banking sector? Should investors be worried?

A separate UK ESG investing taxonomy and a couple of foreign-fund access regimes that replicate EU rules are some of the ways the London government is considering using its post-Brexit powers. Meanwhile in Luxembourg, the CSSF is working to reduce complexity for market players regarding the implementation of EU sustainability rules.