Canada    FinTech Guide    Chapter 3    Luxembourg


3. Consulting and Broking Services / Robo-Advisory / Auto-Trading
Luxembourg  Luxembourg

Socially and politically there is no reservation but instead a very positive and business friendly environment.



Legal Affairs


According to the LSF, an authorisation for any professional activity in the financial sector precluding / involving the applicant in the management of funds for third parties shall be conditional on the production of evidence showing the existence of a “subscribed and” fully paid-up share capital amounting to not less than EUR 50,000 to EUR 125,000 depending on the professional activity (Art. 20 (1) and (2) LSF). Regarding the broker in financial instruments, the authorization is conditional of evidence of:

  1. The share capital minimum not less than 50,000 EUR.
  2. Directors and shareholding requirements
  3. Administrative substance in Luxembourg
  4. 3-year business plan
  5. Costs for getting a license : EUR 15,000 to be paid to the CSSF
  6. Annual license : EUR 20,000 minimum to be paid to the CSSF

At European Union level; no specific regulation of robo-advice exists yet. In Luxembourg, digital financial advice services are subject to the regulatory requirements of the CSSF.

The type of licensing required by a robo-advisor to perform its activities depends on the operating model chosen including the services provided, the contractual arrangements and the structure of the platform.

Robo-advisors need to register as investment advisor (art. 24 of the LSF) or as portfolio manager (art.24-3 of the LSF) or as brokers in financial instruments (art.24-1 of the LSF) or as commission advisors (art.24-2 of the LSF). In any of these cases, robo-advisors have additionally to be compliant with the MIFID/MIFIR framework.



Economic Conditions


There is no information publicly available.



Miscellaneous


Outsourcing of cloud computing is now regulated in Circular CSSF 17/654 dated 17 May 2017 modified by the Circular CSSF 19/714 of 27 March 2019.



Contributing Authors

Felten & Associes

Bernard Felten
Luxembourg

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 August 2019