On 8 July 2025, the law of 3 July 2025 (the "Law") was published in the Official Journal of Luxembourg. The Law aims at implementing MiFID and MiFIR review (i.e. Directive (EU) 2024/790 and Regulation (EU) 2024/791), Directive (EU) 2024/2811 aiming at making public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises (the so-called "Listing Directive") and Directive (UE) 2023/2864 on the establishment and functioning of the European single access point into Luxembourg law. Consequently, several Luxembourg laws, such as law of 5 April 1993 on the financial sector and law of 30 May 2018 on markets in financial instruments are further amended.
Part of the review relates to the conduct of business rules when providing investment services to clients. In particular, the provision of research by third parties to credit institutions or investment firms (the "Financial Entities") providing portfolio management or other investment or ancillary services to clients shall be subject to an agreement between them. This agreement shall determine a method of remuneration, specifically mentioning the total cost of research. The Financial Entities inform their clients of their choice to remunerate, jointly or separately, the provision of execution and research services (the "Services") and provide their clients with their policy on (i) payments for the Services and (ii) prevention/management of conflicts of interest. The Financial Entities annually assess the quality, usability, and value of the research used, as well as the ability of the research used to contribute to improving investment decisions. The Law specifies that comments on trading activities and other customized transaction advice services that are intrinsically linked to the execution of a transaction in financial instruments are not considered as research. The Financial Entities keep a register of the total costs attributable to research provided by a third party on their behalf and make it available to their clients.
Furthermore, the Financial Entities, which produce or disseminate research funded by the issuer, establish organisational arrangements to ensure that such research is produced in accordance with the Union code of conduct to be established on the basis of regulatory technical standards drafted by ESMA.
The prohibition against the Financial Entities receiving any remuneration, discount or non-monetary benefit for routing client orders to a particular venue or execution venue which would infringe the requirements on conflicts of interest or inducements is removed, as well as the requirements of summary and publication (on an annual basis and for each class of financial instruments) of (i) the top five execution venues in terms of trading volumes where they executed client orders in the preceding year and (ii) information on the quality of execution obtained.
Regarding regulated markets, the Financial Entities must (i) take steps to ensure compliance with data quality standards, (ii) have at least three significantly active members or users, each of whom has the ability to interact with all others in the formation of prices, (iii) publish information on the situations that led to the suspension or restriction of trading on its website and (iv) consider specific conditions for the admission of shares to trading.
Depending on its provisions, the Law sets out different dates of application, either 10 July 2025, 29 September 2025, or 6 June 2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
