Loyens & Loeff

Meet the New Professional Segments of the Luxembourg Stock Exchange

Overview

The Luxembourg Stock Exchange (LuxSE) has recently established a professional segment for each of the two markets operated by it, namely the regulated market “Bourse de Luxembourg” and the Euro MTF (the Professional Segments). The Professional Segments are specifically designed for issuers targeting professional clients within the meaning of Directive 2014/65/EU (MiFID II). Securities admitted to the Professional Segments are not accessible to retail investors and trading members may not accept orders involving securities trading on such segments from persons that are not qualified investors.

The launch of the Professional Segments aims at ensuring that the LuxSE remains a market leader in the listing of securities by enabling issuers to enjoy the largest spectrum of listing options possible, tailored to the issuers’ specific needs and addressing those in the most cost-efficient and time-efficient manner.

Key benefits of Professional Segments admissions to trading

Enjoying the Prospectus Regulation Alleviated Regime

The new prospectus regime set forth in Regulation EU 2017/1129 (the Prospectus Regulation) provides for a specific alleviated regime for non-equity securities that are admitted to trading on a regulated market (or a specific segment thereof) that (i) are only accessible to professional investors; or (ii) have a denomination of at least EUR 100,000 per unit.

In those circumstances, the said regime entails the following advantageous features:

              (a) less onerous information requirements to be included in the prospectus;
              (b) no requirement to include a summary in the prospectus; and
              (c) increased flexibility in terms of language requirements.

Simplifying MiFID II Product Governance Requirements & PRIIPS Disclosure Requirements

According to product governance requirements under MiFID II, issuers are obliged to identify (and periodically review) the target market for their products and the strategy of distribution. Issuers who are not targeting retail investors may be inclined to opt for an admission to trading on a Professional Segment in order to demonstrate their intention not to target retail investors, and thereby also simplifying their periodic review and update of the targeted market and distribution strategy.
Similarly, by admitting to trading “packaged products” (including structured products) on a Professional Segment only, issuers will be in a position to easily establish that their securities are not intended for retail clients and that consequently no key information document (KID) needs to be drawn up in accordance with Regulation (EU) No 1286/2014 (PRIIPS).

Toolbox

The customary listing application forms have been slightly updated by the LuxSE to give issuers the possibility to apply for an admission to trading on one of the two new Professional Segments specifically and the Rules and Regulations of the LuxSE have also been amended to reflect the launch of those new segments. The application process, conditions and scope of documentation required for the purpose of the admission to trading of securities remain otherwise generally unchanged including for the purpose of admissions of securities on the Professional Segments.