Digital markets, funding and payment services
The following laws and regulations apply to collective investment schemes:
- the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment, as amended;
- the Luxembourg Law of 13 February 2007 relating to specialised investment funds as amended;
- the Luxembourg Law of 15 June 2004 relating to the Investment company in risk capital as amended;
- the Luxembourg Law of 12 July 2013 on alternative investment fund managers, as amended;
- the Luxembourg Law of 23 July 2016 on reserved alternative investment funds;
- Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse; and
- Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.
Crowdfunding can be regulated, depending on the platform, but there is no specific licence provided under Luxembourg law.
Whether crowd-lending is permitted depends on how it is structured. If the platform or fintech collects the money before distributing it to borrowers, a licence may be required. Peer-to-peer lending between individuals, however, is not specifically regulated. The role of the platform would then need to be assessed to understand what it actually does. If it is essentially a credit broker that is not linked to a specific credit institution, there is no particular regulation other than the potential need to have a business licence.
With regard to consumer lending regulations, the Consumer Code applies.
The legal restrictions on peer-to-peer lending depend on the terms of the loans, among other items.
For restrictions on trading such loans or financings on a secondary market, see the above text regarding lending professionals.i Forms of debt securitisation
In specific circumstances, the structures in which the securitisation undertaking itself expressly grants loans instead of acquiring them on the secondary market may be regarded as securitisation, provided that the securitisation undertaking does not allocate the funds raised from the public to a credit activity on own account, and that the documentation relating to the issue either clearly defines the assets on which the service and the repayment of the loans granted by the securitisation undertaking will depend, or clearly describes (1) the borrower or borrowers; or (2) the criteria according to which the borrowers will be selected, so that the investors are adequately informed of the risks, including the credit risks and the profitability of their investment at the time securities are issued. In both cases, information on the characteristics of the loans granted must be included in the issue documents. The CSSF will assess compliance with these conditions on a case-by-case basis. Moreover, the participants are responsible for ensuring that any other applicable legal provisions are complied with.ii Impact of the Alternative Investment Fund Managers Law
Pursuant to the CSSF FAQ on Securitisation, according to the clarifications provided by the European Central Bank in its 'Guidance note on the definitions of “financial vehicle corporation” and “securitisation” under the European Central Bank (ECB) Regulation ECB/2008/30', point 4.1, page 3, a securitisation vehicle issuing 'collateralised loan obligations' would meet the definition of the ECB Regulation, so that these vehicles do not qualify as alternative investment funds.
According to the same Guidance note (points 4.1 and 4.3, pages 3 and 4), securitisation undertakings whose core business is the securitisation of loans that they grant themselves (securitisation undertakings acting as 'first lender') do not meet the definition of the ECB Regulation, and thus cannot benefit from the exclusion. The same applies to securitisation undertakings that issue structured products that primarily offer a synthetic exposure to assets other than loans (non-credit-related assets) and where the credit risk transfer is only ancillary.
Payment services require a licence (see Section II.i.2009 Law).
Pursuant to the Payment Services Directive (PSD) II 'principle of non-discriminatory access to payment systems', credit institutions are required to open up access to account data to third parties at the request of customers and to support both account information and payment initiation services provided by the third-party payment service providers (TPPs).