On August 5th 2015, the Luxembourg government introduced before the Parliament the draft law N° 6846 on OTC derivatives, central counterparties and trade repositories and modifying certain laws of the financial sector (“Draft Law”).
The main aim of the Draft Law is to give to the relevant authorities the powers required for the accomplishment of their mission under regulation (EU) No 648/2012 of the European Parliament and of the Council of July 4th 2012 on OTC derivatives, central counterparties and trade repositories (“EMIR”). In this regard the Draft Law appoints the Commission de Surveillance du Secteur Financier (“CSSF”) as the authority in charge of supervising the correct application of EMIR and it empowers the latter to exchange information and cooperate with the competent authorities of other EU Member States and with the relevant European authorities for the purposes of and within the limits set forth by EMIR.
The above appointment is done without prejudice to the powers of the Central Bank of Luxembourg and to the legal powers that have been given to the Commissariat aux Assurances in respect of the entities that fall under its supervision.
The Draft Law grants to the CSSF and the Commissariat aux Assurances the power to sanction the non-respect of EMIR by entities subject to their supervision.
In addition the Draft Law foresees amendments to the law of December 17th 2010 on undertakings for collective investment (“2010 Law”) and the law of July 12th 2013 on alternative investment fund managers (“AIFM Law”), aimed at reducing the excessive dependence of financial institutions on credit ratings.
These amendments aim at preventing the systematic recourse to credit agency ratings by management companies, AIFMs and investment companies established in Luxembourg, when assessing the risks associated with the portfolio composition. The Draft Law also indicates that the investment policies of UCITS and AIFs, with references to ratings, will be closely supervised by the CSSF who shall try to reduce the mechanical and systematic recourse to credit rating agency ratings where possible.
The Draft Law further amends several Luxembourg laws of the financial sector in order to transpose and apply in Luxembourg different European texts.