Facilitating structured finance through innovative listing solutions: Insights from A&O Shearman
A&O Shearman is a global law firm with a strong presence in international capital markets, advising issuers on complex structured finance and private debt transactions across multiple jurisdictions. As these transactions evolve, the need for flexible and innovative listing solutions has grown.
To stay ahead of market trends, the Luxembourg Stock Exchange (LuxSE) works closely with legal advisers to assess how new financial structures influence listing practices. In this context, we spoke with Paul Péporté, Partner at A&O Shearman, to explore current dynamics in structured finance and debt capital markets, the growing relevance of bespoke listing solutions such as the Euro MTF Specialist Securities Segment (EM3S) and the practical considerations relating to Central Securities Depository (CSD) registration.
1. A&O Shearman advises issuers globally across the full spectrum of capital markets. In this context, what do you consider to be the main strengths of Luxembourg’s primary markets?
Since their inception, Luxembourg’s debt capital markets have clearly been internationally oriented, thanks to the long‑standing and credible listing venue that is LuxSE. This historic positioning has permitted Luxembourg’s primary markets to attract a wide range of international issuers and market participants over time. In turn, a strong ecosystem around this offering emerged in Luxembourg, which has continuously grown over the last decades.
What has also grown over recent years is the competition among major financial centres and listing hubs to attract more and more market participants and issuers. Insofar as Luxembourg listings are concerned, this competition from other listing venues is perceptible both from outside Europe and from listing venues in other European countries. It is thus of paramount importance to maintain market competitiveness, to expand in new areas and to innovate. Luxembourg, both as a country and through its stock exchange, has fostered innovation and better market positioning in many regards. This is illustrated, for instance, by Luxembourg’s legislative framework recognising the use of distributed ledger technology, as well as the successful solutions developed by LuxSE around sustainable finance.
It is fair to say that Luxembourg listens to the market and distinguishes itself through a strong capacity for market‑driven innovation. LuxSE’s regular introduction of new segments and service features, such as EM3S, demonstrates a clear willingness to respond to evolving market needs, offering issuers regulatory credibility, flexibility and efficiency without imposing unnecessary constraints.
2. LuxSE has developed bespoke listing solutions for sophisticated instruments and professional investors, including EM3S. More recently, book-entry registration options have been introduced. From your perspective, how do these developments benefit issuers and investors in the current market environment?
There is indeed significant and growing market demand for these more bespoke solutions. We are seeing more and more transactions where only a “technical listing” is required, for instance for investor eligibility purposes or to ensure that the transaction structure has access to specific double tax treaties. In these cases, no trading on-venue is expected to develop during the life cycle of the security. A traditional admission to trading supported by standard clearing and settlement arrangements is often seen as too time‑consuming to set up, sometimes impracticable or simply too costly while only a simple structure is needed, for example, where the entire issuance is held by a single party and there is no intention to transfer the securities.
This creates demand for a simpler and more proportionate solution, combining market recognition and legal certainty without unnecessary operational infrastructure. This is precisely what EM3S, together with a flexible approach to CSD registration, is designed to offer, by allowing issuers and professional investors to achieve listing and admission objectives while avoiding post-trade mechanisms that are not required in practice.
The fact that EM3S provides some level of confidentiality is also a key advantage as no prospectus is required and hence published by LuxSE. This is particularly relevant for these bespoke transactions, where there is often concern that investment strategies or any other commercially sensitive information could be disclosed to competitors through publicly available documentation.
3. Based on your conversations with different clients, which types of issuers and instruments would you say these options are particularly relevant for and why?
Based on our conversations with clients, these options are particularly relevant for issuers active in the wholesale and structured debt markets, notably alternative investment funds, securitisation vehicles and other types of special purpose entities. These issuers typically require a listing or admission status for technical, regulatory, tax or investor‑eligibility reasons, rather than to create secondary market liquidity or gain access to retail investors.
In terms of product relevance, we see this solution well adapted to securitisation warehouse transactions, bespoke CLO and ABS structures, as well as ad-hoc private placements. We also see relevance of this solution in a credit fund context where often the underlying assets of the fund are held through special purpose entities that are issuing listed debt instruments to the fund which in turn issues units to third party investors. In these cases, the securities are held by a limited circle of professional investors and sometimes even a single investor. There is usually no intention to transfer the instruments during their life cycle, making full clearing and settlement infrastructure arrangements unnecessary.
In this context, EM3S is particularly well‑suited as a professional‑only, ring‑fenced segment offering limited disclosure, no prospectus approval requirements and confidentiality over sensitive transaction terms, with only MiFID‑mandatory information made public. Combined with the new flexible approach to CSD registration, these solutions provide issuers and investors with market recognition and legal certainty, avoiding the cost and complexity of frameworks designed for liquid, actively traded instruments.
4. What trends or changes do you expect to see in the structured finance and securitisation sphere over the next 2-3 years?
European private credit has grown over recent years at twice the speed of the US private credit market, and we understand that the market’s expectations are that there will be further growth in this segment in Europe. Hence, we should expect more and more alternative and private market players to increasingly rely on securitisation and broader debt capital markets tools as part of their funding and investment strategies. As traditional bank balance sheets remain constrained, these actors are likely to continue turning to structured finance techniques to access institutional capital in a flexible and efficient manner.
As a consequence, we anticipate an increased demand for bespoke, proportionate solutions capable of accommodating private, often hold‑to‑maturity structures that are not designed for liquidity or retail distribution. In this environment, it will be particularly valuable to leverage LuxSE’s new solutions, such as EM3S, which are well aligned with these evolving needs and provide market recognition without excessive operational complexity.
5. Finally, as a LuxSE Partner, how do you leverage this partnership to support issuers navigating the listing landscape and process in Luxembourg?
In this partnership we value the strong connection with LuxSE’s teams. This close relationship allows us to work in a more interactive and efficient manner throughout the listing process, which in the end is of value to our mutual clients.
