Top regulatory trends in Spain and Luxembourg

While the entire world continues to face great challenges derived from the COVID-19 pandemic, the supervisory financial authorities put efforts in keeping their agendas busy and addressing critical objectives for the rest of the year 2021 and next 2022.

Both the Comisión Nacional del Mercado de Valores (the “CNMV”) and the Commission de Surveillance du Secteur Financier (the “CSSF”) have developed a set of priorities to be implemented, in order to ensure that their activities match the trends that the new political realities and markets are demanding. Amongst others, their most important priorities which are aligned in the two countries are the following: 

1. Sustainable finance: a global increasing priority 

In the context of the United Nations Agenda (2030) for Sustainable Development, the CSSF has in its Circular CSSF 21/773 flagged that one of the key themes which is prioritised is the financial institutions’ awareness on the need to consider climate-related and environmental risks in order to approve policies to mitigate them. 

In addition, on 7 December 2020 the CSSF published a major update to its Circular 12/552 on central administration, internal governance, and risk management, making for the first time a reference to a ‘sustainable’ business model for banks, requiring them to take into account all material risks, including environmental, social and governance risks to ensure its viability.

Finally, following the implementation of the procedures derived from the European Regulation relating to ESG disclosure  (“SFDR”), and in particular in relation to UCITS and AIFs’ prospectuses, the CSSF put in place the SFDR fast track procedure, making it easier and more efficient to submit updated prospectus/issuing documents where the changes resulted directly from the SFDR requirements.


A regulatory framework is being launched with the aim to promote transparency and the dissemination of non-financial information by issuers and listed companies, the commonly-known sustainability related disclosures. The CNMV has integrated the new obligations as established in SFDR and has already published certain rules and guidelines which are pending to be developed by the relevant European technical standards. It is clear that these new regulations which require financial service providers and owners of financial products to assess and disclose environmental, social, and governance – ESG – considerations publicly will keep busy both, supervisory authorities and entities, the latest dedicating great efforts to comply with all ESG relevant requirements in due time and manner.

2. Financial innovation: technology-based innovation in financial services and markets

Financial innovation is reshaping the way all financial sector activities are executed and how the public is approaching and interacting with the actors of the financial markets. In this context, the CSSF has set-up an innovation hub allowing any persons to present their views and suggestions regarding the development of the FinTech industry. The CSSF is also adapting itself to the new technological reality by, amongst other things, updating its website and improving online applications for applications and contact with them.

Furthermore, the Luxembourg supervisory financial authority is prioritizing the creation of an effective framework for the financial activities involving virtual assets (including virtual currencies, cryptocurrencies or tokens), artificial intelligence and robo-advice.  The final objective of the CSSF in this sphere is to correctly understand how the financial markets are evolving due to technological innovations and in particular to understand the risks derived from them. 


Financial innovation is also another quite strategical aspect and where the CNMV is adding emphasis for the year 2021 is the impact of technological developments in the financial sector and the far-reaching application of new digital technologies in the financial services industry. New financial products are being designed on the financial market. Crypto-assets are canvassing investors and, consequently, the CNMV is paying careful attention to it, having already established that all advertising activities related to crypto-assets will be supervised by the CNMV. Additionally, the CNMV will focus on other phenomena such as robo-advisors or data storage and their impact towards investors and the securities market in general. We do expect that harmonisation at an EU level on these aspects is completed at any stage so that lack of regulation and derived uncertainty has critical impact on the investor side, especially when it concerns retail investors.

3. National Equivalence Regime: adaption to Brexit 

In the context of the adaption of the Luxembourg financial markets to the post-Brexit reality, and after doing an extensive analysis of the legislation applicable to financial activities in different jurisdictions, Luxembourg was the first to introduce its National Equivalence Regime (the “NER”).

The NER applies to Canada, Hong Kong, Japan, Singapore, Switzerland, the US and the UK which are all considered to be equivalent jurisdictions. This means that third-country firms can provide MiFID investment services or activities as well as ancillary services to eligible counterparties and per se professional clients in Luxembourg, without having to set up a branch in Luxembourg or have any additional or other licences or approvals. This does not allow the provision of investment services to retail clients.


Attention should be paid to the recent criteria published by the CNMV, which finally allow UK entities, now falling under the category of third country firms, to be able to obtain authorisation to provide investment services in Spain on a cross border basis and without the need of setting up a branch in the territory, upon compliance of reciprocity principles. The above will be subject to certain conditions that entities are trying to meet, which are: limiting investment services to (i) eligible counterparties, or (ii) to professional clients per se, but with a maximum of 20, or income from the provision of these services under two million euros. In this regard, it is our expectation that UK entities will not refrain from including Spain in their expansion business plans and that activity in Spain coming from the Anglo-Saxon country will continue.


María Tomillo

Partner at Simmons & Simmons

Berta Satrústegui

Associate at Simmons & Simmons 

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