Luxembourg: A Capital Markets Overview

Partners Karl Pardaens and Thierry Kauffman together with Senior Professional Support Lawyer Karolina Szpinda contributed to the Luxembourg chapter of the Chambers Capital Markets Overview. Their input offers a snapshot of Luxembourg’s position as a frontrunner in the Capital Markets sector, thereby further cementing Luxembourg's position as a pioneer and leading cross-border financial centre.

The article was originally published on the Chambers and Partners Global Overview website.

The Grand Duchy of Luxembourg stands as the European Union’s second largest financial centre and its most internationally connected market. As a pivotal gateway for companies seeking to access international capital, Luxembourg’s robust capital markets infrastructure, flexible company law and deep expertise attract a wide range of issuers and investors.

The country’s forward-thinking approach is evident in its leadership in digital and sustainable finance, with Luxembourg ranking among the world’s top centres for green finance and hosting the Luxembourg Green Exchange (LGX) of the Luxembourg Stock Exchange (LuxSE), which lists a substantial share of the world’s green bonds, and recently also of its transition bonds. Luxembourg’s capital markets ecosystem is further strengthened by innovative legal frameworks, including progressive laws on blockchain, and a streamlined regulatory environment shaped by recent EU legislative initiatives.

Together, these strengths position Luxembourg as a leader in shaping the future of European and global capital markets, as it continues to drive growth, innovation and sustainability across the financial landscape.

Equity Markets 2026 Outlook

The momentum for European initial public offerings (IPOs) in 2026 remains robust, with an increasing number of companies preparing to go public. It remains to be seen whether greater flexibility in structuring shareholder rights, innovative technologies and reduced costs and administrative burdens will encourage more companies to access public markets.

Structure of Voting Rights

Issuers’ flexibility in determining how to distribute voting rights within their company may influence their decision to access public markets. Luxembourg company law permits the creation of different classes of shares, with or without voting rights. To further enhance flexibility, Directive (EU) 2024/2810 on multiple-vote share structures for companies seeking admission to trading of their shares on a multilateral trading facility was published on 14 November 2024. Multiple-vote share structures are control-enhancing mechanisms that allow controlling shareholders to raise capital from the public while retaining decision-making power in the company by holding shares of a class carrying more votes per share than other classes. Currently, most EU member states, including Luxembourg, do not permit multiple-vote share structures. The Directive’s scope is limited to initial admission to trading of shares on multilateral trading facilities (MTFs) as defined in Directive (EU) 2014/65 (MiFID II), such as the Euro MTF market of LuxSE. The Directive must be transposed into national laws by 5 December 2026. It is anticipated that implementing this Directive will further increase the number of IPOs in the EU. Additionally, it will be interesting to see whether the Luxembourg legislature will use this opportunity to extend multiple-vote share structures to certain types of companies that do not seek admission to trading on an MTF.

Tokenisation and Luxembourg Blockchain Laws

Tokenisation of securities via blockchain technology offers significant advantages to both issuers and investors. By enabling the automation of various processes through smart contracts, it streamlines the issuance and post-trade lifecycle of securities, reduces operational costs and facilitates broader investor participation, thereby opening up new sources of capital. Luxembourg has progressively integrated blockchain into its financial market framework. The initial “Blockchain I” law permitted securities accounts to be maintained, registered and transferred using blockchain technology. Subsequently, the “Blockchain II” law enabled the issuance of securities using blockchain technology. The “Blockchain III” law, which transposed elements of the EU DLT Pilot Regime, clarified that securities issued on a blockchain qualify as “financial instruments” and may serve as financial collateral under the Luxembourg Law of 5 August 2005 on financial collateral arrangements, as amended. Most recently, the “Blockchain IV” law, adopted in December 2024, established comprehensive rules for the issuance, holding and transfer of securities using secure electronic registration mechanisms, including distributed ledger technology (DLT). This evolving legal framework has provided much-needed certainty, encouraging financial market participants to launch and develop tokenised securities initiatives in Luxembourg.

Access to the EU’s Regulated Markets

As part of the same package of measures as the Directive on multiple-vote share structures, Regulation (EU) 2024/2809 amending the Prospectus Regulation and the Market Abuse Regulation (the “Listing Act”) was also published on 14 November 2024. The Listing Act aims to facilitate access to EU regulated markets by reducing the costs of preparing prospectuses and clarifying ongoing post-issuance obligations. Key changes introduced by the Listing Act include:

• broadening the scope of exemptions from the obligation to publish a prospectus for secondary issuances, applicable from 4 December 2024;
• the introduction of a new standardised EU Follow-on Prospectus for secondary issuances, applicable from 5 March 2026; and
• the removal of the obligation for issuers to disclose inside information relating to the intermediate steps of a transaction, applicable from 5 June 2026.

Luxembourg is aligning its national regime with the Listing Act with a recent bill of law submitted on 15 May 2026 amending in particular the national prospectus regime for public offers and admissions to trading outside the Prospectus Regulation. A key feature is alignment with the exemptions and simplifications introduced by the Listing Act.

Luxembourg Stock Exchange

LuxSE has an extensive international footprint, serving issuers across the globe. LuxSE has also significantly streamlined its admission process, through FastLane, which caters to non-European sovereign, sub-sovereign and agency issuers, as well as corporate issuers with shares listed on an EU regulated market or one of seven equivalent markets: Abu Dhabi Securities Exchange (ADX); Brasil, Bolsa, Balcão (B3); Hong Kong Stock Exchange (HKEX); Korea Exchange (KRX); London Stock Exchange (LSE); Nasdaq US Stock Market; and New York Stock Exchange (NYSE). These issuers benefit from an exemption from the formal approval of their prospectus for admission of debt securities on the Euro MTF, facilitating a smoother path to market participation. Luxembourg is also fully committed to sustainable finance and is structurally prepared to welcome investors seeking sustainable and, more recently, transition products. LuxSE’s Luxembourg Green Exchange (LGX) is the world’s largest platform exclusively dedicated to sustainable and transition bonds, with over EUR1.3 trillion issued through more than 3,400 listed securities. Additionally, in the context of the development of LuxSE’s digitalisation initiatives, blockchain-based fixed income instruments have been listed on LuxSE.

Luxembourg offers a dynamic and forward-looking environment for issuers seeking to access international capital markets and investors prioritising security and innovation. Its advanced legal frameworks, innovative approach to digital and sustainable finance, and streamlined listing processes make it a premier destination for companies aiming to raise capital and expand their global reach.