On 12 February 2025, Draft Law No. 8498 ("Draft Law") was submitted to the Luxembourg Parliament (Chambre des Députés). The Draft Law aims to implement Regulation (EU) 2024/791 (the "MiFIR Amending Regulation") and transpose into Luxembourg law:
- Directive (EU) 2024/790 (the "MiFID II Amending Directive") which, together with the MiFIR Amending Regulation, aim (through amendments to MiFID II and MiFIR respectively) to establish an EU-wide consolidated tape for EU financial markets and make changes to their market structure to increase their transparency and competitiveness.
- Directive (EU) 2024/2811 (the “Listing Act Directive") which further amended MiFID II to make public capital markets within the EU more attractive for companies and to facilitate access to capital for small and medium-sized enterprises (SMEs).
- Directive (EU) 2023/2864 (the "ESAP Directive") amending various directives as regards the establishment and functioning of the European single access point (“ESAP”).
The MiFIR Amending Regulation introduces new measures to enhance and implement the consolidated tape system that will provide a real-time, comprehensive view of the prices and trading volumes of financial instruments across the EU trading venues; it also prohibits receiving payments for forwarding client orders for execution (known as "payment for order flows” or “PFOF").
The MiFID II Amending Directive clarifies the definition of ‘systematic internaliser’, an investment firm which, on an organised, frequent and systematic basis, deals on own account in equity instruments by executing client orders outside a regulated market, a multilateral trading facility (MTF) or an organised trading facility (OTF), without operating a multilateral system, or which opts in to the status of systematic internaliser. It also establishes the framework for the consolidated tape system; reinforces the obligation to execute orders on the most favourable terms to the clients; and introduces transparency obligations for trading venues that trade commodity derivatives and emission allowance derivatives, requiring them to implement position management controls and to publish daily or weekly position reports.
The Listing Act Directive is a key part of the broader Listing Act package which we have discussed in more detail in our July 2024 and January 2025 newsletters. The Listing Act Directive addresses the shortage of investment research for SMEs by a change in the previously required bundling of research payments, decreases free float requirements for listings on regulated markets to 10% and allows segments of MTF to apply to become SME growth markets.
Regulation (EU)2023/2859 (the "ESAP Regulation") provided for the establishment and operation of a European Single Access Point (ESAP) by ESMA in order to establish a centralised electronic access to information relevant to financial services, capital markets and sustainable finance; the ESAP Directive assists in achieving that aim, by amending various other directives, particularly as regards the collection of information to be made available to ESAP.
The Draft Law shall amend the Luxembourg law of 5 April 1993 on financial sector (the "Financial Sector Law"), the Luxembourg law of 11 January 2008 on transparency requirements for issuers (the "Transparency Law") and the Luxembourg law of 30 May 2018 on markets in financial instruments (the "MiFID Law").
Amendments to the Financial Sector Law
The Draft Law proposes to make various amendments to the Financial Sector Law to transpose certain provisions of the MiFID II Amending Directive and the Listing Act Directive and to implement the MiFIR Amending Regulation.
Notably regarding the MiFID II Amending Directive and the MiFIR Amending Regulation, key changes to the Financial Sector Law include removing the obligation to be authorised for persons dealing on own account with direct electronic access to a trading venue; adapting the provisions relating to obligation to execute orders on the most favourable terms to enhance data transparency and facilitate the establishment of the consolidated tape system; and banning payment for order flows. The trading venue operators dealing with commodity derivatives or derivatives on emission allowances will be required to implement controls for position management and provide reports on positions.
As regards the transposition of the Listing Act Directive, the Financial Sector Law shall be amended in particular with respect to adjusting the research unbundling rules to give investment firms more flexibility on how they choose to organise payments for execution services and research; this shall, include the removal of market capitalisation thresholds for companies for which the re-bundling of payments is possible and ensuring that issuer-sponsored research is produced in compliance with an EU code of conduct. The CSSF supervisory and investigative powers shall also be extended and the sanctions which the CSSF may impose are listed, in order to reflect the new provisions relating to research.
Amendments to the Transparency Law
The Draft Law proposes to amend the Transparency Law to transpose the ESAP Directive. In particular, new provisions shall be introduced into the Transparency Law with respect to regulated information: when making regulated information public, the issuer or the person who has applied for admission to trading on a regulated market without the issuer's consent, and for which Luxembourg is the home Member State, shall communicate such regulated information to the CSSF in its role as collecting body with a view to making it available on ESAP. Thus, all regulated information within the meaning of the Luxembourg Transparency Law and which must be published after from 10 July 2026 shall be made available to, and accessible on, ESAP.
Amendments to the MiFID Law
The Draft Law proposes to amend the MiFID Law to transpose various provisions of MiFID III and implement MiFIR II. The most notable amendments to the MiFID Law are updates to the definition and obligations of "systematic internalisers" and a requirement for regulated markets to take all necessary measures to meet data quality standards for the consolidated tape system.
The Draft Law also amends the definition of "SME growth market" to allow a segment of a multilateral trading facility ("a segment of an MTF") to apply to become an SME growth market, provided that this segment is clearly separated from the rest of the MTF. The Draft Law allows for a segment of an MTF to be registered with the CSSF.
The Draft Law introduces a requirement for regulated markets to ensure that any company applying to have its shares admitted to trading must have a foreseeable market capitalisation of at least EUR 1,000,000 (or an equivalent amount in another currency). If the market capitalisation cannot be determined, the company’s capital and reserves, including its profit and loss account, will be taken into consideration instead. The minimum free float requirement has been reduced to 10%. However, regulated markets may still apply other criteria at the time of admission to ensure that a sufficient number of shares have been made available to the public.
Expected Entry into Force
The Draft Law proposes that the amendments to the Transparency Law will enter into force on 10 July 2025, with the various amendments to the Financial Sector Law and the MiFID Law entering into force on either 29 September 2025 or 6 June 2026, depending on the respective deadlines set in MiFID Amending Directive and the Listing Act Directive.
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