LUXEMBOURG Law and Practice Contributed by: Vassiliyan Zanev and Natalja Taillefer, Loyens & Loeff Luxembourg S.à r.l.
covered, and may therefore be subject to EMIR obligations (notably clearing and reporting obli - gations). EMIR has been implemented in Luxembourg by the Law of 15 March 2016 on OTC derivatives, central counterparties and trade repositories, in respect of the sanctioning powers granted to the CSSF to guarantee the correct application of rules and requirements deriving from EMIR. 4.8 Investor Protection The Securitisation Regulation and the Secu - ritisation Law ensure a high degree of investor protection. Aside from the stringent disclosure and report - ing requirements (see 4.1 Specific Disclosure Laws or Regulations ), the Securitisation Regula - tion imposes a wide array of other requirements aiming to ensure adequate investor protection. • The risk-retention rules (see 4.3 Credit Risk Retention ) aim to eliminate a potential conflict of interest by aligning the incentives of the originator with the incentives of an SSPE (and, ultimately, the investors). • The credit-granting requirements imposed on the originators, sponsors and original lenders aim to ensure the quality of the securitised assets. • Institutional investors are subject to rigorous due diligence requirements. In particular, the investors must, among others: (a) verify the credit-granting criteria of the originator or original lender and their inter - nal processes and systems, where such originator or lender is not a credit institu - tion or an investment firm established in the European Union; (b) verify that the originator, sponsor or origi - nal lender complies with the risk-retention
and transparency requirements; (c) carry out a due diligence assessment of the risk characteristics of the individual securitisation position and of the underly - ing exposures, etc; and (d) have written procedures in place in order to monitor compliance with the above obligations and the performance of the investment and underlying exposures, and perform regular stress tests, etc. In Luxembourg, the Securitisation Law ensures the bankruptcy remoteness of a securitisation undertaking and legal certainty with regard to the standard contractual tools used in securitisation deals, such as non-petition, limited recourse and subordination provisions (see 6.2 SPEs and 6.5 Bankruptcy-Remote SPE ). Please see 4.4 Periodic Reporting and 4.2 Gen- eral Disclosure Laws or Regulations in relation to additional reporting and disclosure rules in Luxembourg. The Securitisation Regulation aims to protect retail investors by including certain restrictions with regard to the sale of securitised positions to retail clients, including a requirement to perform a suitability test in accordance with Article 25(2) of MiFID II. Additionally, in the case of offerings made to retail investors, a key information docu - ment may need to be prepared, in accordance with Regulation (EU) No 1286/2014 on key infor - mation documents for packaged retail and insur - ance-based investment products. Finally, MiFID II contains a number of requirements aiming to protect investors, including product governance, information and record-keeping. 4.9 Banks Securitising Financial Assets See 4.6 Treatment of Securitisation in Financial Entities .
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