CSSF

Riccardo Lamanna has recently become the Luxembourg Country Head for State Street. He entered the position after spending more than 30 years in the business, having worked in Milan, London and Paris at various institutions, including JP Morgan, Paribas, the Intesa Sanpaolo Group and over the past 11 years, at State Street.

The CSSF was pleased with how Luxembourg’s fund sector withstood the acute phase of the Covid crisis, declaring itself positive about the sector’s performance on risk and liquidity, but drawing attention to some potential weak spots, in its recently published 2020 annual report.

“Risks in real estate markets were on the rise” in 2020 according to the recently-published annual report by the CSSF financial regulator. A range of indicators point to the increased level of debt across the Luxembourg economy and with it, the risks to local lenders. This has driven the CSSF to act to reduce vulnerabilities. 

Financial services firms have paid attention as a variety of mostly-American-owned digital companies have gained increasing market share, a trend that has increased notably during the Covid-19 pandemic.

Since Amazon is one of the best-known of these firms, those who want to emulate its success have dubbed the process “Amazonisation”, a concept explored in more detail by a Luxembourg for Finance session held earlier this year.

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.

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.

Assets invested in funds domiciled in Luxemburg have exceeded the €5 trillion mark for the first time. At the end of January, asset reached a record €5050 billion according to figures published by the CSSF.

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.

LFP 1 SICAV has filed a civil claim against the CSSF for gross negligence. The directors of the fund claim the regulator turned a blind eye to blatant fraud with the fund between 2014 and 2019, and can therefore be held responsible for the losses in the fund.

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.