LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
9. Regtech 9.1 Regulation of Regtech Providers
7.4 Regulation of Programmers and Programming
Programmers who develop and create trading algo - rithms are not directly regulated; however, the invest - ment firm using such trading algorithms or other elec - tronic trading tools must ensure that the trading tools it uses comply with the regulatory requirements (see 7.1 Creation and Usage Regulations ). An investment firm that outsources or procures software or hardware used in algorithmic trading activities remains fully responsible for its legal obligations relating to algo - rithmic trading. Insurance underwriting is a licensed activity in Lux - embourg, governed by the Law of 7 December 2015 on the insurance sector, as amended, and insurance companies located in Luxembourg are supervised by the CAA. In particular, insurance contracts are sub - ject to the specific regulatory requirements laid out in the Law of 27 July 1997 on insurance contracts, as amended, which requires, for example, providing cer - tain pre-contractual information to customers. Con - sumer and data protection requirements must also be taken into consideration, as applicable to the specific underwriting processes. 8. Insurtech 8.1 Underwriting Processes 8.2 Treatment of Different Types of Insurance The main types of insurance in Luxembourg are life insurance and non-life insurance, which are governed by separate legal provisions as outlined in the Law of 7 December 2015 on the insurance sector, as amend - ed. Life insurance contracts under the Luxembourg legal framework provide an important part of Luxem - bourg’s wealth management offering. In addition, the Consumer Code applies to insurance contracts con - cluded with consumers, unless specific provisions of the Law of 27 July 1997 on the insurance contract, as amended, state otherwise.
Regtech providers are not directly regulated in Lux - embourg. However, they might fall within the scope of the existing financial services regulation depend - ing on their activities. If regtech companies provide services for regulated financial service entities, they may need to be licensed as a support Professional of the Financial Sector (PFS) in accordance with the Financial Sector Law. Relevant support PFS licences that may be required for regtech providers include authorisation to act as client communication agent, administrative agent, primary IT systems operator or secondary IT systems and communication networks operator. Regtech entities providing merely techni - cal solutions would not typically be subject to these licence requirements. 9.2 Contractual Terms to Ensure Performance and Accuracy There are no specific contractual terms dictated by regulation that financial service firms would need to impose on regtech service providers. In addition to terms following general industry practice, if the service provided falls under the scope of outsourcing, specific contractual requirements apply (see 2.8 Outsourcing of Regulated Functions ). 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Blockchain-based products and solutions are increas - ingly used by traditional players of the financial ser - vices industry in Luxembourg. For example, the European Investment Bank has continued to develop the digitalisation of capital markets by issuing digi - tal bonds on private and public blockchains. In 2024, the CSSF authorised the launch of the first tokenised UCITS fund in its kind in Luxembourg by using a blockchain-enabled transfer agency platform. Fur - thermore, in 2025, Luxembourg issued its first digital treasury certificates using DLT through HSBC’s Orion platform, further strengthening the financial centre’s leadership in digital finance.
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