CSSF recognises first equivalent third countries and clarifies when an investment service is rendered in Luxembourg.
On 2 July 2020, the CSSF published two important documents in relation to the provision of cross-border services by third-country firms:
- CSSF Regulation 20-02 which lists the first third countries with equivalent supervision regimes for MiFID II services performed to per se professional clients or eligible counterparties in Luxembourg; and
- CSSF Circular 20/743 which amends an existing circular (Circular 19/716) on the regime applicable to third-country firms wishing to provide investment services to clients in Luxembourg in accordance with Article 32-1 of the Financial Sector Law, which transposed the third-country regime of MiFID II Directive and MiFIR.
The clarifications in the CSSF Circular 20/743 are particularly relevant for investment funds and their managers.
They imply that:
- the provision of investment management services to Luxembourg UCITS and AIFs by an investment manager established outside the EU/EEA (in the typical scenario where a UCITS management company or an AIFM delegates investment management to an investment manager established outside the EU/EEA) should not be deemed to be a provision of services "in Luxembourg" for the purpose of the Financial Sector Law (as long as the third-country manager is not established in Luxembourg or does not otherwise provide its services in Luxembourg);
- MiFID II rules do not apply to such provision of services. Application of Article 32-1 of the Financial Sector Law (and related CSSF authorisation process) is therefore not triggered. Only the investment management delegation rules set forth in the UCITS Law1 and the AIFM Law2 apply in that case.
For more information on CSSF Regulation 20-02 and CSSF Circular 20/743, see the Newsflash on our website.
1. "UCITS Law" refers to the Law of 17 December 2010 on undertakings for collective investment, as amended.
2. "AIFM Law" refers to the Law of 12 July 2013 on alternative investment fund managers, as amended.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.