"I still hear many people who are concerned about the asset management industry and the prospects of the Luxembourg operating model," said Serge Weyland, CEO of the Association of the Luxembourg Fund Industry (Alfi).

Responding to Weyland's concerns, Claude Marx, director general of the CSSF, argued that predictions of Luxembourg's decline have repeatedly proven unfounded. "Ever since I started working in this business, I have encountered pessimistic views about the future of the industry, including predictions about the decline of the banking sector."

They were speaking during a fireside chat at Alfi’s general assembly meeting, held on 8 June 2026 in Luxembourg.

Luxembourg defies global headwinds

Luxembourg's financial sector continues to demonstrate resilience despite global economic uncertainty. According to Marx, the industry oversees approximately €8.3trn in assets, including €6.4trn within the regulated sector. Assets increased by 14.6% year-on-year, driven by both market performance and strong net inflows.

Luxembourg continues to dominate specific niches, capturing 30% of net new inflows in the ETF space and maintaining a 53% share of the European Long-Term Investment Fund (Eltif) market with 161 funds out of a total of 300 funds in Europe.

Margin squeeze intensifies demand for regulatory simplification

A primary concern for the industry is the increasing pressure on margins, exacerbated by a shift from active equity funds to lower-margin passive products and fixed income. In response, Weyland suggested that there is a burgeoning call for simplification at the EU level to reduce administrative burdens.

Marx described the simplification agenda as remaining largely in the announcement phase rather than becoming a reality. Of the European Commission's ten proposed omnibus simplification packages, only one focuses on financial services, specifically addressing the EU's Corporate Sustainability Due Diligence Directive (CSDDD) and the Sustainable Finance Disclosure Regulation (SFDR).

Industry calls for smarter regulation

Regulators and industry bodies are urged to identify specific areas where regulation is contradictory or excessive, such as Key Investor Documents KID) or green finance. A notable point of contention is the Anti-Money Laundering (AML) framework; while the prevention of financial crime is vital, the current requirement for over 5,000 pages of regulatory technical standards (RTS) and guidelines is viewed as excessive. Industry participants argue that the volume of technical guidance increases compliance costs without necessarily improving outcomes.

The CSSF advocated for a shift towards “a principle-based, proportionate, and risk-based approach,” utilising technology to detect money laundering in real-time while respecting privacy laws such as the General Data Protection Regulation (GDPR).

European integration and supervisory convergence

The progress of the Capital Markets Union (CMU)—now often referred to as the Savings and Investment Union (SIU)—remains a priority. There is strong support for removing national barriers that contravene fundamental EU laws, such as divergent national administrative practices.

Marx noted that the industry favours the formation of coordination colleges of National Competent Authorities (NCAs) and the European Securities and Markets Authority (Esma) as a flexible way to enhance convergence without creating duplicative central structures.

A significant “nuisance” for cross-border asset managers is the lack of harmonisation in data reporting. Esma's current efforts to standardise reporting content, frequency and technical standards are viewed by industry participants as "low-hanging fruit" that could significantly improve efficiency without requiring complex new legislation.

Risk management: private credit and liquidity

Within the alternative assets space, private credit has become a focal point for the CSSF following redemption issues in the US. Luxembourg hosts approximately 1,300 sub-funds with assets exceeding €300bn in this category. "It is not small, but it is not huge either, and we do not have serious issues," Marx said.

Unlike the US market, Marx stressed that Luxembourg’s exposure is less concentrated in technology and AI firms, and the majority of these instruments are closed-ended funds. He argued that the industry's Liquidity Management Tools (LMTs), including redemption caps for semi-liquid structures, have proved effective during previous crises, such as the 2020 liquidity squeeze during the covid pandemic.

Cyber resilience becomes strategic priority

Operational resilience is a critical priority, particularly in the face of “hybrid warfare” and state-sponsored cyber-attacks. The Digital Operational Resilience Act (Dora) is regarded as a vital framework for ensuring firms have adequate policies and penetration testing in place.

“The regulation forces companies to have adequate policies, systems in place for doing penetration testing and reporting incidents,” stated Marx. Last year alone, Luxembourg recorded 250 serious IT incidents, a number that has risen each quarter. “Consider also that not all incidents that should be notified are notified.”

Tokenisation and AI drive next growth wave

On the opportunity side, tokenisation is expected to transform existing fund units into digital assets. Luxembourg’s pioneering legal framework, including four blockchain laws with a fifth in development, has positioned the Grand Duchy as a global leader in this space. This is a feature that has been recognised by the chairman of “a large online shop” at last year Singapore Fintech Festival.

Marx encouraged industry participants to engage with the CSSF's innovation hub, stressing that its role is to provide guidance, organise workshops and offer support where needed.

Looking ahead, Marx said firms must prepare for a future shaped by AI and, eventually, quantum computing. Integrating AI capabilities into core operating systems is becoming increasingly important, not only to improve competitiveness but also to defend against increasingly sophisticated cyber threats. As he put it: "If you don't use AI, it's still ok, but not for long."