Luxembourg Introduces New Bill to Further Modernise its Securitisation Framework
On 8 June 2026, the Luxembourg Government submitted Bill of Law No. 8761 to Parliament, proposing targeted amendments to the Law of 22 March 2004 on securitisation. The proposed reform builds on the significant changes introduced in 2022 and aims to further enhance Luxembourg’s attractiveness as a leading securitisation jurisdiction by increasing structuring flexibility and legal certainty.
The Bill introduces several practical improvements, including:
Greater financing flexibility – Securitisation vehicles would be able to raise funding through any type of financing arrangement or financial commitment, rather than being limited to debt securities or loans. This change is intended to accommodate a wider range of market practices and financing structures.
Expanded scope for active management – Active management would no longer be restricted to portfolios of debt instruments. Instead, securitisation vehicles could actively manage portfolios comprising any type of assets, provided that the issued financial instruments are not offered to the public.
Cross-compartment investments – The Bill expressly authorises a compartment of a securitisation vehicle to invest in another compartment of the same vehicle, offering greater flexibility for complex or multi-strategy structures while maintaining the statutory segregation of compartments.
Improved legal certainty – The proposed amendments clarify several aspects of the existing framework, including the rules governing security interests and guarantees, the statutory subordination of claims, and the operation of compartment segregation.
Enhanced insolvency protection – The Bill confirms that the assets of a securitisation fund remain bankruptcy remote from the insolvency estate of its management company and updates the legislation to reflect Luxembourg’s modern insolvency law.
When adopted, the Bill will provide sponsors, originators, arrangers and investors with greater flexibility when structuring Luxembourg securitisation transactions while reinforcing the legal certainty that has long been one of the jurisdiction’s principal strengths. The proposed amendments also demonstrate Luxembourg’s continued commitment to adapting its legal framework to evolving market practices and maintaining its position as one of Europe’s leading securitisation centres.
Photo – A. Grange
