LUXEMBOURG Trends and Developments Contributed by: Andreas Heinzmann, Manuel Fernandez, Valerio Scollo and Katharina Schramm, GSK Stockmann SA
via digital ledger technology such as blockchain qualifies as a security and satisfies the criteria of being a transferable and negotiable instru - ment. Similarly to securities cleared via clearing systems, the Blockchain Law I recognises that transfers of securities are perfected by registra - tion in the relevant account held on a blockchain. The Luxembourg Law of 22 January 2021 (the “Blockchain Law II”) brings additional improve - ments to the fintech legal framework in Luxem - bourg and bridges a gap regarding the regulation of dematerialised securities in Luxembourg. The Blockchain Law II allows investment firms and credit institutions to hold and manage securities issuance accounts via secured electronic regis - tration systems – eg, DLT and databases. In addition, with Regulation (EU) 2022/858 (the “EU DLT Pilot Regime”), a new pilot regime has been created on a European level to allow the development of DLT market infrastructures, applicable from 23 March 2023. The Luxem - bourg law of 15 March 2023 (the “Blockchain III Law”) supplements the EU DLT Pilot Regime in Luxembourg and, amongst others, explicitly rec - ognises the possibility of using DLT instruments for financial collateral arrangements. On 19 December 2024, the Luxembourg par - liament passed a new law (the “Blockchain IV Law”), introducing, amongst others, the pos - sibility of using a monitoring agent for securi - ties issuance. Such monitoring agent will fully employ DLT technology to perform its tasks, which include managing the issuance account, overseeing the chain of title for securities, and reconciling issued securities. With these legislative initiatives, Luxembourg contributes to enabling financial market partici - pants to take full advantage of the opportunities
offered by new technologies and at the same time provides for legal certainty in this evolving sector. Latest Amendments to the Securitisation Law The amendments to the Securitisation Law in February 2022 broaden the means of financ - ing securitisation transactions, including also the possibility to finance through loans on an exclusive basis or to issue financial instruments (covering, unlike the previously used term “secu - rities”, amongst others, a broader field of instru - ments). In practice, more and more securitisation transactions are now financed via the provision of loans by investors to the securitisation vehi - cles. Further, the Securitisation Law now explicitly allows active management of the securitised assets in certain types of transactions, as long as the transactions are not financed by way of offering financial instruments to the public. Lux - embourg securitisation vehicles may now secu - ritise a pool of risks consisting of debt securities, financial debt instruments or receivables which are actively managed, either by the undertak - ing itself, or by a third party. In practice, the amended legal framework allows for securitisa - tion of actively managed CDOs (Collateralised Debt Obligations) and CLOs (Collateralised Loan Obligations) in private placements. Unlike the old legal framework which limited the possibility of a securitisation vehicle to provide collateral to other parties to securing the claims of direct creditors and investors, the Securitisa - tion Law has now also a widened scope of pos - sible collateral arrangements by allowing a secu - ritisation vehicle to grant collateral in favour of all parties involved in a securitisation transaction.
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