Regulation and innovation
According to Marco Zwick, Director of the CSSF, a regulator’s first priority must be to protect investors, while actively contributing to value creation, particularly through technological innovation.
What are your short- and medium-term objectives?
One of my objectives is to ensure market integrity and the protection of investors and consumers. My role is to monitor investment funds and specialised PFS. However, as Luxembourg is a global centre for investment funds, my role also involves protecting its reputation. Achieving these objectives requires sound risk management of investment funds and PFS, in terms of finance, liquidity and reputation. In this regard, compliance with the requirements of Circular CSSF 18/698 in relation to the authorisation and organisation of investment fund managers governed by Luxembourg law and the specific provisions relating to the fight against money laundering and terrorist financing are particularly important to me. The digitisation process to make it easier for us to work quickly and efficiently, which has already begun, has made it easier to exchange data with supervised entities. This includes processing applications for approval, reporting and operational supervisory tasks . We want to achieve full transparency between the CSSF and the entities it supervises: the latter will soon be able to know in real time whether their file has been reviewed, whether any elements are missing and whether the CSSF has any questions. We will provide statistics to enable everyone to accurately monitor our performance and our experts will be able to focus on high value-added reviews, with machine assistance. In general, the entire process depends on the quality of the file we’re given! I have become aware of some uninformed comments: for example, Brexit cases take a little longer because the CSSF presents them to the Supervisory Convergence Network (SCN) at ESMA, which only meets once a month. The good news is that all the applications submitted – more than 30 in total – have been accepted.
Given your experience in asset management, how would you define the impact of regulation on corporate business?
The term “regulatory tsunami” has been used often in recent years. I am fully aware that rules and regulations are becoming increasingly complex and constraining to such an extent that regulated entities must take into account the additional costs involved in their business models. However, we must not forget that European investment fund regulations make it possible to establish a “level playing field”, while guaranteeing the quality of financial products issued under these rules. The large number of regulated Luxembourg investment funds within and outside the European Union is proof of this. There is an intrinsic correlation between Luxembourg's success in the investment fund sector and the existence of such regulatory uniformity. Markets have limited flexibility when it comes to considering national specificities, but these interpretations must comply strictly with investor protection.
How do you see regulations developing in the short and medium term?
I hope that the pace of new regulations will slow down, but that’s outside my control. More specifically, regulations relating to UCITS and alternative investment funds create the basis for better governance of products and the stakeholders responsible for their management. In the future, we can expect adjustments to some regulations to govern areas which have not been governed (or have been poorly governed) by previous rules. Legislation to combat money laundering and terrorist financing with the AMLD Directives 4, 5 and 6 is a striking example of this.
How do you measure the impact of public opinion on your work as a regulator?
Regulators rely on laws and regulations and check their application; they don’t write them. That being said, regulators must be in regular contact with market players to be able to supervise them properly. When we identify a trend, such as the ESG, there is nothing to prevent us from making suggestions to legislators. And when public opinion influences politicians to produce new regulations, we are called upon to offer our advice, ensuring that new regulations are as effective as possible. If necessary, we can even issue CSSF circulars or regulations. Our team is made up of highly qualified and international experts; we are one of the few public-sector organisations with half of the employees originating from other EU countries, which helps us to operate effectively in a very international environment.
Facts & Figures
Birthday: 1 February 1969
Birth place : Pétange
Nationality : Luxembourg
Number of children: 1
Languages: Luxembourgish, English, French, German
Hobbies: Music, Running
Position : Director, CSSF
Other Positions: E.G. Member of the board of the Economist CLub Luxembourg