Raymond Frenken

Although there is some room for improvement, liquidity risks in corporate debt and real estate investment funds do not pose any substantial risk for financial stability, the EU’s top financial securities markets regulator said on Wednesday.

Luxembourg has frozen some 2.5 billion euro in Russian assets, mostly held in shares, bonds and bank accounts, as part of the international sanctions against Russia, its finance minister told a parliamentary committee on Tuesday.

The frozen funds relate to sanctions that have been imposed since Russia’s invasion of Ukraine on 24 February and do not consider sanctions that existed beforehand, the minister said. 

Deutsche Börse Group is taking over Luxembourg-based fund data specialist Kneip Communication S.A. for an undisclosed amount in order to expand its offerings in the data services space and to develop an international fund data hub based in the Grand Duchy.

This partnership forms the basis for creating a leading fund data hub based in Luxembourg, the companies said in a joint statement.

Corinne Lamesch, chair of the board at the Association of the Luxembourg Fund Industry (Alfi), speaks to InvestmentOfficer.lu for a podcast about current challenges facing the asset management industry, specifically in dealing with investment funds exposed to Russian assets and the implementation of sanctions against Russia, and in sustainable finance and ESG.

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 head of Luxembourg’s top financial regulator on Tuesday called on the country’s asset management industry to step up its efforts and make sure that Russian oligarchs don’t evade sanctions by hiding their money in European investment funds.

M&G Investments is preparing to transform its Luxembourg hub for further growth in Europe with the objective of generating half of total group revenue within the next few years, its managing director Micaela Forelli told Investment Officer Luxembourg.

Fund managers across Europe can opt for a label to certify their investment product does what it says it does. The Luxembourg Finance Labelling Agency, also known as Luxflag, has certified some 365 funds, mostly with an ESG label. Luxflag chair Denise Voss spoke to InvestmentOfficer.lu for a podcast.

“A label is about certifying or giving clarity to investors, that what they invest in, is what it says on the tin. We’re actually not saying you must invest in this or that,” said Voss. 

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.