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CSSF issues many small fines for breaking financial market rules

CSSF issues many small fines for breaking financial market rules

21.07.2021 From our online archive
Failures to comply with MIFID II meant €66,000 in fines for Luxembourg firms
The CSSF building in Luxembourg City
The CSSF building in Luxembourg City
Photo credit: Anouk Antony

By Julie Edde and Emery P. Dalesio

Luxembourg's financial regulator is one of Europe's most prolific when sanctioning financial firms that fail to follow market rules, but it penalised violators a puny €66,000 in fines last year, the EU's financial supervisor said.

Luxembourg's Commission de Surveillance du Secteur Financier (CSSF) ranked second after Bulgaria out of 30 countries for issuing sanctions, the report published this week by the European Securities and Markets Authority (ESMA) found. The CSSF found 108 times last year that companies failed to comply with rules developed after the 2008 global financial crisis and in place since 2018 to protect consumers and improve competitiveness for financial services, the authority's annual report said.

But of the 23 countries where regulators imposed sanctions totalling €8.4 million, Luxembourg was 14th with only €66,000 in fines imposed for MiFID II breaches, the report found. That was well behind the €800,000 that Belgium assessed for 103 sanctions or the €210,000 in fines issued for two sanctions in Germany, according to Paris-based ESMA.

CSSF did not respond on Wednesday to requests to explain the reasons behind the gap. 

Some of the discrepancies between countries could be explained by "the differences between the requirements of the MiFID II framework and national legislation on sanctions", ESMA said.

The CSSF's performance comes at a time that European countries are increasing enforcement of MiFID II violations. In 2018, regulators in 12 countries imposed 117 sanctions carrying fines of € 1.3 million, ESMA said. In 2019, 15 countries found 371 sanctions that resulted in €1.8 million in fines.

The MiFID II rules apply to credit institutions, investment firms, trading venues like stock markets, data reporting service providers and also unregulated entities trading commodity derivatives and emission allowances, CSSF said on its website.

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