On 10 April 2019, the CSSF issued Circular 19/716 ("Circular") laying out the regimes applying to third-country firms wishing to provide investment services in Luxembourg or perform investment activities and ancillary services in accordance with Article 32-1 of the Law of 5 April 1993 on the financial sector ("Law"), which was introduced further to the implementation of MiFID II1 and MiFIR2.

At the outset, it is important to note that the Circular confirms that the analysis set out in the CSSF's Circular 11/515, which indicates the conditions under which financial services provided by a third-country firm can be considered not to be performed on the Luxembourg territory, no longer applies to the provision of investment services. Article 32-1 of the Law thus provides for an exhaustive regime regarding the provision of investment services by third-country firms in Luxembourg.

The Circular distinguishes between the situation of investment services provided to retail clients or to professional clients on request, on the one hand, and investment services provided to per se professional clients and eligible counterparties, on the other hand.

As far as investment services to retail clients or to professional clients on request are concerned, the CSSF merely recalls that the Law imposes the establishment of a branch in Luxembourg.

Regarding investment services provided to per se professional clients and eligible counterparties, they can be provided through a branch in Luxembourg or on a cross-border basis. The Circular clarifies the procedure with which third-country firms must comply in order to benefit from the regime in Article 32-1(1), second subparagraph of the Law allowing for the provision of investment services to per se professional clients or to eligible counterparties in Luxembourg on a cross-border basis without establishing a branch. They can do so on the grounds of either (i) an equivalence decision of the European Commission and registration with the European Securities and Markets Authority ("European regime")3, or (ii) a decision by the CSSF ("national regime")4 in the event the Commission has not yet taken a decision or the third-country firm chooses to benefit from the three-year transitional period provided by Article 54(1) of MiFIR.

To benefit from the national regime, a formal CSSF authorisation will have to be obtained on a case-by-case basis. The CSSF will verify that (i) the firm is subject, in the third country, to supervision and authorisation rules deemed equivalent to those of the Law in terms of provision of investment services5, (ii) cooperation between the CSSF and the supervisory authority(ies) of the third country is ensured (generally, through the signature of a new MoU or an addendum to an existing MoU), and (iii) the third-country firm is authorised in the third country to provide the investment services it wishes to provide in Luxembourg. Written applications to benefit from the national regime (which shall include the form in Annex II of the Circular) must be submitted to the CSSF.

The Circular also draws attention to the fact that third-country firms authorised under the national regime or the European regime are required to disclose to their clients (i) that they are only allowed to provide services to eligible counterparties and per se professional clients, (ii) that they are not subject to supervision in the EU, and (iii) the name and address of their supervisory authority in the third country in writing and in a prominent way.

Finally, the Circular recalls that third-country firms providing investment services at the client's own exclusive initiative (reverse solicitation) do not have to apply for authorisation in Luxembourg or to establish a branch regardless of the client's category (retail, professional client on request, per se professional client or eligible counterparty). Such situations must be assessed on a case-by-case and continuous basis.


1 Directive 2014/65/EU of 15 May 2014 on markets in financial instruments.

2 Regulation (EU) 600/2014 of 15 May 2014 on markets in financial instruments.

3 which gives access to the whole EU market in the same way as a European passport.

4 providing access to the Luxembourg market only.

5 The CSSF will publish and update a list of countries considered as equivalent based on the requests submitted by third-country firms.

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.