On 06 June 2018, the Luxembourgish legislator issued a new law to locally implement the European Securities Financing Transactions Regulation (SFTR). This document, the SFT Law, shall give appropriate competence to the Commission de Surveillance du Secteur Financier (CSSF) and Commissariat Aux Assurances (CAA) for the supervision of compliance with SFTR in the Grand Duchy of Luxembourg. The SFT law offers the competent authorities a broad range of sanctions in case of non-compliance. In addition to those listed below, most notably, they may temporary prohibit a person accountable for a violation to exercise managerial functions.Transparency towards investors:

For violations of the transparency obligations within pre-contractual documents as well as within periodical reports, UCITS Investment- and Management Companies may be fined a maximum of EUR 5 million or 10% of the total annual turnover. AIFMs may be charged up to EUR 250 000. For this purposes, the AIFM Law and the UCI Law were amended.

Transparency of Reuse of Collateral:

For violations of the obligation of transparency in case of reuse of financial instruments received under a collateral arrangement, any counterparty may be fined up to EUR 15 million (or 10% of the total annual turnover).

Reporting obligation:

For violations of the obligation to report SFTs to a licensed Trade Repository, any counterparty may be fined up to EUR 5 million (or 10% of the total annual turnover).

The level and type of sanctions and other administrative measures take into account the following circumstances:

  • The gravity and duration of the violation;
  • The degree of responsibility of the person responsible for the violation;
  • The financial situation of the person responsible for the violation, taking into account factors such as total annual turnover in the case of a legal person or annual income in the case of a natural person;
  • The amount of gains or losses avoided by the person responsible of the violation;
  • The degree of cooperation that the person responsible for the violation has shown towards the competent authority;
  • Past violations committed by the person responsible for the violation.

The SFT Law entered into force on 12 June 2018. The full text of the SFT Law can be found in the following link.

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.