Luxembourg Law transposing MiFID III, the new Listing Directive and the European Single Access Point Directive is now officially adopted

Who is affected?

The provisions of the new Law will have an impact (notably) on any entity providing investment services or performing investment activities in the EU, including:

• investment firms;
• credit institutions providing investment services or performing investment activities in Luxembourg; and
• third-country firms providing investment services or performing investment activities in Luxembourg by way of a branch

(together, the MiFID In-Scope Entities).

In addition, the new Law introduces additional organisational requirements for regulated markets and multilateral trading facilities (MTFs), as well as transparency obligations for issuers of securities admitted to trading on EU regulated markets.

Key amendments to the Law on the Financial Sector

Third-party execution and research services

The Law establishes new criteria according to which the provision of execution and investment research services by third-party providers to MiFID In-Scope Entities performing portfolio management or other investment / ancillary services to clients shall be deemed as being provided honestly, fairly, professionally and in the best interests of clients. This is the case where:

• an agreement has been concluded between the MiFID In-Scope Entity and the third-party provider setting out a methodology for remuneration (including how research costs are accounted for in the total investment services costs);
• the MiFID In-Scope Entity discloses to its clients its policy on payments for execution services and research, its chosen payment method (i.e., either jointly or separately for execution services and research), as well as its procedures for mitigating conflicts of interest in case of a joint payment method (if relevant);
• the quality, usability and value of research used and the contribution of such research to better investment decisions for clients are assessed annually by the MiFID In-Scope Entity;
• in case of separate payment of execution services and research, payment for third-party research is done either directly by the MiFID In-Scope entity out of its own resources or via a separate research payment account controlled by the MiFID In-Scope entity.

If the third-party provider of research does not also perform execution services and is not part of a group including an entity performing execution or brokerage services, then the MiFID In-Scope Entity shall only be required to comply with the above requirement to perform an annual quality assessment of the research received.

For this purpose, the Law clarifies that trading commentary and bespoke trade advisory services intrinsically linked to the execution of an investment transaction in financial instruments do not qualify as “research services”.

MiFID In-Scope Entities shall keep a record of the total costs of third-party research and shall make such information available to clients on an annual basis (upon request). They shall also ensure that any research used by or transmitted to MiFID In-Scope Entities and (potential) clients is fair, clear, not misleading, clearly identifiable as such and fully compliant with the existing research requirements set out under the MiFID II Level 2 Act (Commission Delegated Regulation (EU) 2017/565, as amended).

Finally, specific rules are introduced in relation to issuer-sponsored research:

• MiFID In-Scope Entities shall ensure that “issuer-sponsored research” (i.e., research paid for in full or in part by an issuer) made available to (potential) clients is only labelled as such if the research is produced in accordance with the EU code of conduct for issuer-sponsored research (to be developed by ESMA pursuant to Directive (EU) 2024/2811);
• MiFID In-Scope Entities producing or distributing issuer-sponsored research shall implement appropriate organizational arrangements to ensure that any such research complies with the EU code of conduct and the provisions of the Law on the Financial Sector;
• research labelled as “issuer-sponsored research” must clearly indicate that it has been developed in compliance with the EU code of conduct. Any research materials financed in full or in part by an issuer but not developed in compliance with the EU code of conduct shall be labelled as advertisement.

The amended Law on the Financial Sector will also allow issuers may make sponsored research available via the European Single Access Point (ESAP).

Additional supervisory powers have been granted to the Luxembourg financial sector regulatory authority (Commission de Surveillance du Secteur Financier (CSSF)) to ensure compliance with these new requirements.

Abolishment of the obligation to disclose top execution venues

The former obligation for MiFID In-Scope Entities to publish on an annual basis the top five execution venues in terms trading volume where they executed client orders in the preceding year and information on the quality of execution will no longer apply upon entry into force of the amendments.

Key amendments to the Transparency Law

From 10 July 2026, Luxembourg issuers and entities requesting admission to trading on a regulated market without the issuer’s consent must submit regulated information to the ESAP collection entity at the same time as complying with the existing threefold disclosure obligations.

Regulated information to be submitted must be in a data extractable or machine-readable format as defined under the ESAP Regulation (Regulation (EU) 2023/2859) and be accompanied by the following metadata:

• issuer name(s),
• Legal Entity Identifier (LEI) code,
• issuer size category,
• industrial sector classification,
• the type of information concerned, and
• an indication of whether personal data is included.

Those issuers which have not obtained their LEI code, must obtain it to be able to comply with the referred metadata requirements.

The new Law also introduces the obligation for the CSSF to transmit information to the ESAP on published sanctions relating to breaches of the Transparency Law. Issuers should thus anticipate broader visibility of enforcement actions and ensure that their compliance and reputational risk frameworks are adjusted accordingly.

This way, the CSSF’s disclosure obligations expand from national publication to EU-level accessibility, being the CSSF designated as the "collection body" under the ESAP Regulation, responsible for transmitting the required information to the ESAP.

The intended change reinforces the EU aim of centralising financial and regulatory information to enhance transparency, accessibility, and investor protection using the capabilities of the ESAP. The use of the ESAP allows investors to rely on a single information center to define their investment strategy and to avoid informational fragmentation from becoming an obstacle to the intended investments.

Key amendments to the MiFID Law

Simplified definition of systematic internaliser

The new Law introduces a simplified definition of systematic internalisers (credit institutions or investment firms dealing on own account in equity instruments, on an organised, frequent and systematic basis, by executing client orders outside a regulated market, an MTF or an organised trading facility (OTF), without operating a multilateral system, or opting in to the status of systematic internaliser).

Additional organisational and disclosure requirements for regulated markets

Under the new Law, regulated markets are subject to additional organisational requirements, including:

• the obligation to implement arrangements ensuring compliance with the MiFIR data quality standards when reporting to consolidated tape providers (CTPs); and
• the obligation to have at least three materially active members or users, each having the opportunity to interact with all the others in respect of price formation.

MiFID In-Scope Entities as well as operators of MTFs or OTFs should also ensure compliance with the above MiFIR data quality standards.

In addition, regulated markets will be required to publicly disclose on their website information about the circumstances leading to the halting or constraining of trading and on the principles for establishing the main technical parameters used to do so.

Finally, the CSSF shall be able to take appropriate measures to re-establish the normal functioning of markets where a regulated market has not halted or constrained trading in the event of disorderly trading conditions caused by a significant price movement in traded securities.

The new Law also provides clarifications regarding the tick size that may be used by a Luxembourg regulated market for shares with a non-EEA International Securities Identification Number (ISIN) or shares with an EEA ISIN traded on a third-country trading venue in local currency or in a non-EEA currency.

Specific conditions for the admission of shares to trading on a regulated market

Under the new Law, regulated markets must verify that the company applying for the admission of its shares to trading satisfies at least one of the following conditions:

• the foreseeable market capitalisation of the issuing company is at least EUR 1,000,000; or
• where market capitalisation is not assessable, the company’s capital and reserves, including the profit and loss account for the latest financial year, meet the same minimum threshold.

The above conditions exist already under the Grand-Ducal Regulation of 13 July 2007 relating to the keeping of the official listing for financial instruments (GDR) in case of admission to trading of shares on the regulated market or the Euro MTF market of the Luxembourg Stock Exchange (LuxSE). Said obligation shall however not apply to cases where the shares that are subject to the listing application are fungible with shares already admitted to trading.

According to the new Law regulated markets shall also require that at least 10% of the subscribed share capital represented by the same class of shares for which admission is sought are held by the public at the time of the admission, ensuring a minimum market free float.

It is important to highlight that to ensure a minimum free float under the new Law, where admission to trading on a regulated market is sought for shares that are fungible with shares already admitted to trading, regulated markets will be required to assess whether a sufficient number of shares has been distributed to the public in relation to the total number of shares issued, and not only in relation to the shares that are fungible with shares already admitted to trading.

Alternatively, regulated markets are permitted to deviate from the strict obligation of minimum 10% free float by requiring that one of the following conditions are met:

• a sufficient number of shares is held by the public;
• the issuer has a sufficient number of shareholders; or
• there is a sufficient market value of the publicly held shares relative to the subscribed capital.

The changes triggered by the new Law aim mainly to emphasise the EU focus on ensuring an adequate level of market capitalisation, thereby encouraging issuers to comply with minimum free float requirements designed to address potential investor concerns regarding the issuer’s scale and the degree of control exercisable by majority shareholders, which can have a major impact in the investment decision.

We note that under the current framework established by the GDR, there are already provisions in place to ensure adequate public distribution when an admission to trading is sought on the regulated market or the Euro MTF market of the LuxSE. According to the legal presumption established by the GDR sufficient number of shares are deemed to have been distributed to the public when (i) the shares are in the hands of the public to the extent of at least 25% of the subscribed capital represented by the class of shares concerned, or (ii) when, in view of the large number of shares of the same class and the extent of their distribution to the public, the market will operate properly with a lower percentage. The new Law does not contain any modifying provisions to the GDR.

“SME growth market” MTF segment

The new Law adds specific provisions regarding the registration and ongoing compliance obligations of MTFs, or their distinct segments, as small and medium-sized enterprises (SME) growth markets under Luxembourg law. It also outlines how such registered markets interact with issuers and other trading venues.

Where only a segment of the MTF is registered as an SME growth market (rather than the entire MTF), the credit institution, investment firm or market operator must ensure compliance with both the general MTF requirements, and the segment-specific conditions:

• the SME segment must be clearly separated from other market segments of the MTF, in particular by a different name, different rules, a different marketing strategy and different advertising, as well as by the allocation to the registered SME growth market segment of a specific market identification code (MIC);
• transactions on the SME segment must be identifiably distinct from those on other segments of the MTF; and
• at the request of the CSSF, the MTF must provide a comprehensive list of instruments listed on the SME segment and any additional information concerning its functioning.

This ensures clarity, transparency, and regulatory traceability when only a portion of the MTF is designated as an SME growth market.

Additionally, a limitation is introduced on secondary trading, establishing that a financial instrument of an issuer admitted to trading on an SME growth market may only be traded on another trading venue in case the issuer (i) has been previously informed, and (ii) has not objected to such trading.

This way, where the other trading venue is another SME growth market or a segment thereof, the issuer cannot be subject to any corporate governance, initial, periodic, or specific disclosure requirements vis-à-vis that other SME market, while in case of another trading venue, the issuer shall be informed of any corporate governance or initial, periodic or specific disclosure requirements to which it will be subject.

These provisions protect issuers from duplicative regulatory burdens and maintain issuer control over where their instruments are traded, while facilitating cross-market visibility within the SME growth market ecosystem. Also, these changes introduce a layered compliance framework for SME growth markets, particularly where MTFs designate only part of their trading platform for SMEs.

Position management controls

The new Law extends the current MiFID position management controls applicable to commodity derivatives to also capture derivatives of emission allowances.

It also amends the reporting obligations to the CSSF and ESMA, of MiFID In-Scope Entities and operators of regulated markets, MTFs or OTFs where commodity derivatives and/or derivatives on emission allowances are traded, to include a weekly report including the aggregate positions held by the different categories of persons for the different commodity derivatives or derivatives of emission allowances traded, specifying the number of long and short positions by such categories, the percentage of the total open interest represented by each category, and the number of persons holding a position in each category and flagging any changes to such information since the previously submitted report. If options are also traded on the relevant regulated market, MTF, or OTF, then two weekly reports shall be made publicly available (and shall be submitted to the CSSF and ESMA) including the above data, one of which shall exclude options.

Next steps

The new Law provides for different effective dates regarding the amendments introduced to the aforementioned laws, as detailed in the table below:

We recommend our clients and all MiFID In-Scope Entities to familiarise themselves with the revisions introduced by the Law and perform a preliminary gap analysis against their current organisational and governance arrangements to assess any relevant changes that should be made (notably, to their internal procedures regarding and research services, as well as regarding compliance with MiFIR data quality standards).

Finally, operators of regulated markets, MTFs or OTFs shall also consider the new reporting obligations imposed under the new Law and make their market participants aware of the most relevant changes.