The Draft Law No. 8627 (the "Draft Law"), was presented to the Luxembourg Parliament on 2 October 2025, aiming to transpose:
- the Capital Requirements Directive VI : Directive (EU) 2024/1619 of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks (Directive 2013/36/EU) ("CRD VI"),
- the EMIR 3 Directive: Directive (EU) 2024/2994 of 27 November 2024 amending Directives 2009/65/EC, 2013/36/EU and (EU) 2019/2034 as regards the treatment of concentration risk arising from exposures towards central counterparties and of counterparty risk in centrally cleared derivative transactions ("EMIR 3 Directive");
and to implement:
- the EMIR 3 Regulation, Regulation (EU) 2024/2987 of 27 November 2024 amending Regulations (EU) No 648/2012, (EU) No 575/2013 and (EU) 2017/1131 as regards measures to mitigate excessive exposures to third-country central counterparties and improve the efficiency of Union clearing markets ("EMIR 3 Regulation", and together with the EMIR 3 Directive, "EMIR 3 Package").
Finally, the Draft Law introduces targeted amendments to several laws, such as, the amended law of 5 April 1993 on the financial sector and the amended law of 18 December 2015 relating to the failure of credit institutions and certain investment firms.
Third-country regime – core aspect of the CRD VI transposition
The main objective of the Draft Law is to transpose CRD VI, in particular the framework set out under Article 21c, into Luxembourg law. This provision, previously discussed in an earlier article (see July 2024 Newsletter), establishes that third-country firms providing cross-border core banking services into the EU - without operating through a subsidiary or a branch - will be required to establish a branch in a Member State, and obtain authorisation. The authorisation will become a condition for conducting banking activities within Luxembourg, subject to certain exemptions. The Draft Law provides some background on the scope of application of this rule.
EMIR 3 Package applicable in Luxembourg law
Furthermore, the Draft Law incorporates aspects of the EMIR 3 Directive and implement the EMIR 3 Regulation into Luxembourg’s legal framework. It addresses, inter alia, issues concerning concentration risks arising from exposures to systemically important third-country central counterparties and it establishes a framework to monitor and reduce these risks. Banks are required to prepare plans, which will be reviewed by the CSSF. The CSSF may also mandate risk mitigation measures if the identified concentrations raise prudential concerns.
Next steps
The Draft Law is currently under consideration by the Luxembourg Parliament and must normally be passed by 10 January 2026.
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