A statement made to Paperjam, Delano’s sister website, indicated that the finance ministry “has the issue on our radar”, and that “the European Commission has written a series of measures in the text on which we were not consulted.” The words “delegation, outsourcing or prospectus” did not even figure in the consultation process, which was conducted in the spring.

The DP minister, Pierre Gramegna, called on parliament to “see to what extent it wants to intervene in the procedure as set out in article 3 of the protocol 1 in the Lisbon Treaty on the role of national parliaments in the European Union (control of the subsidiarity principle).”

Gramegna can count in any case on the CSV, the biggest party in the Chamber of Deputies, as Claude Wiseler, the MP who is the party’s lead candidate in next election, has asked for explanations on the issue.

The finance ministry wrote in its statement that the proposals from Brussels aim to resolve “problems which don’t exist” and which would make mechanisms more complex which currently work well. The ministry does not just see Luxembourg financial centre under threat, but considers that the commission proposals imply “an increase of costs which is detrimental to the capital markets of the European Union.”

According to the ministry, the proposals concerning fund management delegation agreements put into question a “model which has made especially Ucits successful across the world.” If the authorisation mechanisms became more complex, this could lead fund managers to consider taking their structures to financial centres situated outside the EU”, where “clearer and quicker” authorisation mechanisms continue to be applied.

Esma and CSSF

There is less worry about the direct supervision by the European Securities and Markets Authority, as the commission proposals only target Euveca (venture capital), Eusef (social entrepreneurship) and Eltif (long-term company investment) type vehicles. These funds only represent 0.002% of total assets of funds under management in Luxembourg.

The ministry of finance, however, has doubts on certain proposals, which include reinforcing the role of Esma. The impact study by the European Commission stated that, after the UK leaves the EU, Luxembourg’s CSSF regulator might face a disproportionate amount of work and responsibility of approving prospectuses of third countries. In other words, the commission may be worried that the CSSF could be overwhelmed by the work it could face after Brexit.

The director general of the CSSF, Claude Marx, said it should not be overdramatised. Xavier Bettel, the DP prime minister, has said he would raise the point at the next European Council.