Raymond Frenken

Apex Group plans to hire more than 500 new fund services experts in Johannesburg this year in order to better service its growing global client base. Asked if this hiring plan was related to the much-discussed industry challenge of attracting new staff in Luxembourg, an Apex spokesperson said South Africa was seen as an “onshore” hiring opportunity following the acquisitions of Sanne and Maitland in 2022.

Geopolitical uncertainty, rising interest rates, more stringent sustainability requirements, modernisation of the regulatory environment, democratisation of private equity, and pressure on costs and margins are expected to shape the next twelve months in the grand duchy’s financial system. Camille Thommes, Nicolas Mackel, Jerry Grbic, Stephane Pesch, Nicoletta Centofanti and others told IO what they expect in the new year.

Individual autocrats in Russia and China as well as at a number of top global technology firms pose a severe risk to geopolitical and economic stability in our world this year, the Eurasia Group says in its report on top risks for 2023. This global context will lead to volatility in emerging markets this year.

Luxembourg’s financial supervisors are preparing for tough scrutiny of the annual reports that firms will produce in the coming months. The 2022 reports are required to elaborate in detail on the impact of climate change, on the financial fallout from the Ukraine war and on the effects of inflation and rising interest rates.

Luxembourg branches of investment firms and financial institutions headquartered elsewhere in the European Union from this year onwards will have to ask their auditors to produce an independent report on measures taken to prevent money laundering and the financing of terrorism.

Perhaps the most contentious development in Luxembourg’s fund management ecosystem this year was the order to management firms, issued by supervisor CSSF, to report back on the costs of investment funds and look at becoming more efficient.

Investment fund managers of Ucits funds in Luxembourg, home to about a third of all such funds in Europe, were ordered to review, and if necessary correct, the way they calculate the costs and fees of their investment funds and report back to the CSSF before April 1 next year.

Luxembourg’s international status as a hub for alternative investments and private equity this year was reinforced as institutional investors sought stability as global equity and bond markets were taking a beating by surging inflation and rising interest rates.

The EU Packaged Retail Investment and Insurance Products (Priips) regulation is set to take effect across the EU from January, requiring the production of a paper-based Key Investor Document (KID) for all products sold to European retail investors. The UK, meanwhile, has started to explore a new digital retail disclosure system.

Apex Group in January will bring all its different management company sub-brands under a single brand. Now that the major takeovers of Sanne and Maitland are closed, country head Pierre Weimerskirch told Investment Officer more acquisitions can be expected, although not directly in Luxembourg. “There are some markets where we are still not at the level where we want to be.”

After completing a similar transition last year for the supervision of investment fund managers, Luxembourg’s financial supervisors, in close cooperation with bank sector representatives, now have adopted a major modernisation of its banking supervision by overhauling what is known as the Long Form Report. Both banks and supervisors see the new approach as a major step forward.