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Aki Corsoni-Husain
Aki Corsoni-Husain
  • Aki Corsoni-Husain

  • Partner
  • Cyprus
George Apostolou
George Apostolou
  • George Apostolou

  • Partner
  • Cyprus
Chiara Deceglie
Chiara Deceglie
  • Chiara Deceglie

  • Partner
  • Luxembourg
Massimiliano della Zonca
Massimiliano della Zonca
  • Massimiliano della Zonca

  • Senior Associate
  • Luxembourg
Philip Graham
Philip Graham
  • Philip Graham

  • Partner
  • British Virgin Islands
Ayana Hull
Ayana Hull
  • Ayana Hull

  • Counsel
  • British Virgin Islands
Katerina Katsiami
Katerina Katsiami
  • Katerina Katsiami

  • Associate
  • Cyprus
Petros Kiteos
Petros Kiteos
  • Petros Kiteos

  • Associate
  • Cyprus
Andrew Knight
Andrew Knight
  • Andrew Knight

  • Partner
  • Luxembourg
Joshua Mangeot
Joshua Mangeot
  • Joshua Mangeot

  • Counsel
  • British Virgin Islands
Mirza Manraj
Mirza Manraj
  • Mirza Manraj

  • Counsel
  • Hong Kong
Elina Mantrali
Mirza Manraj
  • Elina Mantrali

  • Associate
  • Cyprus
Vanessa Molloy
Vanessa Molloy
  • Vanessa Molloy

  • Partner
  • Luxembourg
Andrea Moundi Savvides
Andrea Moundi Savvides
  • Andrea Moundi Savvides

  • Consultant
  • Cyprus
Marina Stavrou
Marina Stavrou
  • Marina Stavrou

  • Associate
  • Cyprus
Matt Taber
Matt Taber
  • Matt Taber

  • Partner
  • Cayman Islands
Carolynn Vivian
Carolynn Vivian
  • Carolynn Vivian

  • Senior Associate
  • Cayman Islands

CSSF clarification on what constitutes providing services “in Luxembourg”

On 1 July 2020, the Commission de Surveillance du Secteur Financier (CSSF) published Circular 20/743 (the Circular) which amends the CSSF Circular 19/716 on the provision of investment services or performance of investment activities and ancillary services, in Luxembourg, in accordance with Article 32-1 of the law of 5 April 1993 of the financial sector, as amended (the LFS). The Circular was addressed to all third-country firms that provide or wish to provide investment services, perform or wish to perform investment activities and that propose or wish to propose ancillary services in Luxembourg.

The purpose of the amendments to the Circulari is to clarify the concept of services provided “in Luxembourg” in relation to the investment services or the performance of investment activities and ancillary services in accordance with Article 32-1 of the LFS.

The CSSF clarifies that Article 32-1 of the LFS applies to investment services provided “in Luxembourg”, ie within the territory of Luxembourg.

Investment services are presumed to be provided “in Luxembourg” where one of the following conditions are fulfilled:

  • The third-country firm has an establishment (eg a branch) in Luxembourg
  • The third-country firm provides investment service to a retail client established or situated in Luxembourg
  • The place at which the “characteristic service” is supplied, ie the essential service for which payment is due, is Luxembourg

Thus, there are particular situations where, although the third-country firm provides investment services to a client other than a retail client, established or situated in Luxembourg, the service can be considered as not being provided “in Luxembourg”.

The Circular clarifies “reverse solicitation” by including a definition of the term: “a situation where a client established or situated in Luxembourg initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm”. Therefore, regardless of the type of client (retail, per se and on request professional clients, or eligible counterparty) the territoriality principle is not triggered requiring either the establishment of a branch or applying for authorisation under the LFS, where reverse solicitation is relied upon.   

The CSSF Circular 19/716 as amended by the Circular clarifies that the possibility of relying on reverse solicitation must be assessed by the third country firm for every service on a continuous basis, taking into account the ESMA Q&A on MiFID II and MiFIR investor protection and intermediaries topics.

As a reminder, third countries providing investment services in Luxemburg on a cross border basis can provide such services without establishing a branch if they fall under an equivalent supervision regime as provided for under Regulation 20-02 (but this does not provide a European passport). The countries include: Canada, USA, Singapore, Switzerland, Japan and Hong Kong.    

The Circular can be found here.

Regulation 20-02 can be found here.

The ESMA Q&A on MiFID II and MiFIR investor protection and intermediaries topics can be found here.