Luxembourg Stock Exchange: Euro MTF specialist securities segment

The purpose of EM3S 

The purpose of EM3S is to provide for certain issuers of specialised financial instruments, including asset-backed securities, high-yield instruments, structured investment products and collateralised loan obligations, more confidentiality and simplicity when listing complex securities to professional investors. 

The benefits of EM3S 

a) Confidentiality 

EM3S offers issuers to list and admit their securities to trading on the Euro MTF with limited initial disclosure requirements¹. Confidential and commercially sensitive information is better protected since issuers are required to disclose such information only to professional investors, and not to the public. For this segment the issuers will focus on investors with sufficient knowledge of the risks in relation to complex securities. 

b) Simplicity 

EM3S further offers a simplified admission process to the Euro MTF. It removed the prior prospectus approval requirement for issuers who therefore benefit from reduced costs and quicker admission time. An issuer wishing to list its securities on EM3S is only required to submit to the LuxSE a letter of undertaking and an application form containing the relevant trading information, including information relating to the identity and activities of the issuer and details of the securities to be admitted to trading. Although no prospectus will be required, the issuer will have to provide, among others, its constitutional and KYC documents and annual reports². Once listed on EM3S, the securities are admitted to trading on the Euro MTF. However, the LuxSE reserves the right to reject an application for admission for any relevant reason including the suitability of the securities in question for their admission on another of LuxSE’s market or segments. 

Procedure

Issuers have to fill out an application form for the type of security intended to be listed on EM3S. The form must state an issuer’s contact point in order for investors and potential investors to be able to request the terms and conditions of the securities to be admitted to trading. The issuer should also confirm its compliance with applicable legal frameworks by either filling out the declaration section of the application form or by submitting a separate declaration form. The terms and conditions of the securities indented to be listed shall be submitted to the LuxSE together with the application form and relevant documents. The application form has a searchable electronic format and should be submitted to the LuxSE within three business days before the listing date.³ 

A securities card including an issuer’s contact point will be created and displayed on the LuxSE’s website. Upon a request by an investor, the issuer shall provide such investor with the terms and conditions within reasonable time. The issuer therefore remains responsible to provide such information to its investors and failing to do so, investors can submit their request directly to the LuxSE. 

Conclusion 

EM3S provides issuers with an opportunity to benefit from the access to the Euro MTF with a limited scope of disclosure obligations, therefore protecting issuers’ investment strategies and other sensitive commercial information from the general public. Furthermore, the listing process significantly reduces the administrative burden and provides for a simplified, more flexible admission to the Euro MTF. 

Authored by Ariane Mehrshahi Marks, Martina Benackova, and Mathis Biard.

Hogan Lovells (Luxembourg) LLP is registered with the Luxembourg bar.