The Luxembourg Third-Country Regimes for Banks, 'Investment Firms' and 'Other PFS'

Post-Brexit, third-country firms are increasingly interested to provide banking services/activities and investment services/activities in Luxembourg. The provision of both investment and banking services/activities by third-country firms is largely subject to national law. <br><br>Directive 2014/65/EU, as amended (“MiFID II”) and Regulation (EU) 600/2014, as amended (“MiFIR”) were designed to provide some uniformity to the requirements in the investment services/activities domain. Full harmonization is, however, not possible as some of the provisions, namely those relating to the establishment of a branch under MiFID II, are optional. As a consequence, Luxembourg law provisions that have implemented MiFID II remain relevant as to third-country firms that intend to provide investment services/activities in Luxembourg. The MiFIR requirements relating to the provision of cross-border services are not optional and are, therefore, directly applicable.<br><br>Similarly, under the provisions of Directive 2013/36/EU, as amended (“CRD V”), Luxembourg law governs the ability of credit institutions from third countries to establish a branch or to provide cross-border services in Luxembourg.<br><br>This contribution aims to analyze the Luxembourg third-country regimes that are applicable to non-EU banks and “third-country firms” under the Law of 5 April 1993 on the financial sector, as amended (the “LSF”), that are providing such services in Luxembourg. To that end, this contribution discusses in Section 2 the applicable regulatory framework on the basis of which credit institutions and professionals of the financial sector (“PFS”) other than investment firms from third countries (i.e. specialized PFS, support PFS, and data communication service providers within the meaning of the LFS) may perform banking activities/services in Luxembourg. Section 3 then discusses the recently amended (Luxembourg) third-country regime that is applicable to “third-country firms”, which are “firms that would be a credit institution providing investment services or performing investment activities or an investment firm if its head office or registered office were located within the Union”. Section 4 continues to discuss the legal framework applicable to third-country groups and EU intermediary holding companies under CRD V and Directive (EU) 2019/2034 (“IFD”), and Section 5 concludes.<br>