The Luxembourg Stock Exchange has announced the launch of a new segment on its Euro MTF market, called EM3S, which stands for Euro MTF Specialist Securities Segment. This new segment may be an interesting option for issuers looking for a trading venue for financial instruments aimed at a limited circle of professional investors and requiring confidentiality.
While EM3S is open to a broad range of financial instruments, it could be particularly relevant for issuers who prefer that specific terms of their securities and highly sensitive information—such as bespoke payout formulas, unique structures, or investment strategies included in the listing document—not be disclosed to the public at large.
Therefore, EM3S should be on the radar for alternative investment funds, collateralised loan obligations, asset-backed securities, private placements, high-yield instruments, and structured investment products.
What is new?
With EM3S, it is now possible to strike a balance between investors' need for transparency and issuers' need for confidentiality around specific financial instruments, such as those relying on intellectual property or investment strategy. EM3S provides a well-balanced solution to keep confidential information on financial instruments aimed at professional investors, which was not an option available on the LuxSE until today. The key advantages that EM3S offers include:
- No documents of initial disclosure will be made public by the LuxSE.
- Issuer and security card displayed on the LuxSE website will only contain the fields mandatory for MiFID reporting.
- Admission to EM3S does not require prospectus approval and benefits from limited disclosure.
- EM3S is a professional segment and is ringfenced from retail transactions.
- The issuer commits to disclose the information to eligible investors on demand through a contact point displayed on the LuxSE website.
All securities on EM3S are admitted to trading and the EM3S keeps all other advantages pertaining to EuroMTF, in particular the same ongoing obligations apply as for Euro MTF. The standard Euro MTF fee schedule will also apply.
How does EM3S work in practice?
To apply for admission on EM3S, the issuer needs to fill in one of the three new admission forms, depending on the type of security that the issuer intends to list – shares and GDR, debt securities or UCI. Admission to EM3S does not require a prospectus and information on the securities and the issuer can be provided directly in the admission form. The admission form should be at least accompanied by the terms and conditions of the EM3S Securities for which admission to trading on EM3S is sought. Lastly, requests for admission on EM3S need to include a reason for choosing this segment and the issuer must elect one contact point for investors. This can be either the email address of the issuer (e.g. investor relations), the email address of the mandated agent or the LuxSE may also perform this role. Further details are provided in Chapter 4, Part 2 of the LuxSE Rules and Regulations.
The issuer will also need to sign a letter of undertaking specific to ES3S and send it together with the admission form and any additional documents (if applicable) to bolide@luxse.com. The AML/KYC process remains mandatory. The review and document handling time are the same as for the usual Euro MTF process (2-3 days). Once the securities are admitted on EM3S, they will be displayed on the LuxSE's website with only the information required for MiFID reporting, as well as the contact point for investors. The issuer will be responsible for disclosing any information to eligible investors on demand, in accordance with the letter of undertaking.
This new segment is set to offer more flexibility in listing and trading specialist securities.
To consult the dedicated EMS3 website of the LuxSE, please click here.
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