Transforming capital markets from Luxembourg
In November, the International Association of Young Lawyers' (AIJA) held its half-year conference in Luxembourg and invited young lawyers from across Europe to immerse themselves in Luxembourg’s financial centre.
On the back of the conference, we sat down with Julie Becker, a trained lawyer and CEO of the Luxembourg Stock Exchange (LuxSE), to hear her thoughts about how Luxembourg has shaped international capital markets and the crucial role of law firms in this success story.
Many are aware of Luxembourg’s standing as the largest fund centre in Europe and the second largest fund centre in the world after the United States. Despite the country’s small size, Luxembourg-based investment funds accounts for EUR 5.6 trillion in assets under management.
However, what people are less aware of is the role that Luxembourg played in establishing truly international capital markets more than 60 years ago, and the role it continues to play in shaping the future of these markets.
1963 marked a pivotal year for Luxembourg’s financial centre as the first-ever Eurobond was listed in Luxembourg and this marked a new course for international capital markets. Eurobonds are international debt instruments which are issued in another currency than the one prevailing in the country of the issuer and therefore add a truly international dimension to bond markets.
Up until 1963, capital markets in Europe were largely domestic, and operated in silos. The inaugural Eurobond led to many others, and Eurobonds have shaped international capital markets ever since. The Eurobond market opened a whole new level of global cooperation, and it all started right here in Luxembourg and at the Luxembourg Stock Exchange.
Luxembourg – together with LuxSE – has by the way transformed capital markets in another important way more recently, as a pioneer in sustainable finance.
In 2007, the European Investment Bank issued and listed the world’s first green bond at LuxSE. So again, Luxembourg became the place where another important area of modern international capital markets was born - after the first Eurobond, we listed the first green bond.
I have to mention here the Luxembourg Green Exchange, or LGX, the world’s leading platform for sustainable finance which we established in 2016. Today, LGX is the world’s reference platform for sustainable bonds. In total, the 2,100 outstanding sustainable bonds on LGX have raised EUR 1.2 trillion for investment projects with green and social benefits around the world.
One of the bonds on LGX is the sustainability bond issued by the State of Luxembourg in 2020 – a bond that saw the Grand Duchy become the first European country to issue a sustainability bond. This is another example of how Luxembourg is a frontrunner and helps drive the transformation of European and international capital markets.
But this bond also financed social housing, and the social dimension has come to the fore over the last few years. Today, issuers of sustainable bonds increasingly include both green and social objectives in their sustainable bond frameworks.
There is one social objective in particular that has made its way to the top of the agenda in Luxembourg’s financial centre, namely gender finance.
Gender finance has a dual objective – on the one hand, it is about mobilising financing for women’s empowerment and advancing gender-lens investing, meaning investment which supports gender equality goals. This is something we, at LuxSE, play an important role in by highlighting gender-focused bonds on LGX and through numerous other gender finance initiatives, such as market studies and dedicated training sessions.
On the other hand, it is about bringing more women into the financial sector and increasing the proportion of women at all levels of financial institutions. These two goals are interlinked, of course, and it is difficult to make progress on one front without advancing on the other.
Luxembourg has taken a pioneering role in gender finance. It has a stated goal of becoming a centre of excellence in gender finance as part of its 10-point action plan for sustainable finance, which was announced by Luxembourg’s Minister of Finance Gilles Roth this spring. I am hopeful that this national focus on gender finance will drive meaningful change in Luxembourg and beyond.
Lawyers played a crucial role in the initiative that catapulted Luxembourg into international capital markets in 1963. Looking back, it is quite impressive that they managed to put in place all the necessary requirements to bring the first Eurobond to little Luxembourg.
One thing is certain, given the increasing level of regulation across sectors, and the constantly changing regulatory landscape, legal expertise, attention to detail and analytical skills are extremely important.
And even if artificial intelligence will certainly also transform some parts of the law profession, I am convinced that the unique set of skills and competences that lawyers bring to the table will continue to grow in importance as the world becomes increasingly complex.
This is why we established a new status this year, which is especially tailored to law firms and professional services firms that support issuers through the complex issuance and listing process. We call this initiative LuxSE Partners, and the name says it all. Law firms are among our closest partners and our allies when it comes transforming international capital markets from Luxembourg and play a crucial part in facilitating the listing process for issuers.
Moreover, the current government has defined an ambitious agenda for how to make Luxembourg even more competitive and attractive as a place to do business.
As we prepare to enter a new year, just like we have done for the last 60 years, LuxSE will continue to work as an integral part of Luxembourg’s contribution to the international capital markets sphere.
Luxembourg has become a success story because of the courage, agility, business acumen, diplomacy, and the innovative mindset of a diverse community of people that bring their expertise to the table each day. We must continue with these traits in 2025 and beyond as this is what makes Luxembourg a global leader despite its geographical size. It is what has solidified the country’s position in the history of international capital markets and will continue to do so well into the future!
On the back of the conference, we sat down with Julie Becker, a trained lawyer and CEO of the Luxembourg Stock Exchange (LuxSE), to hear her thoughts about how Luxembourg has shaped international capital markets and the crucial role of law firms in this success story.
How did Luxembourg become such an important player in international capital markets?
As a country and as a financial centre, Luxembourg has always been agile. According to the latest Global Financial Centres Index, which was published earlier this year, Luxembourg ranks third among the leading financial centres in the EU.Many are aware of Luxembourg’s standing as the largest fund centre in Europe and the second largest fund centre in the world after the United States. Despite the country’s small size, Luxembourg-based investment funds accounts for EUR 5.6 trillion in assets under management.
However, what people are less aware of is the role that Luxembourg played in establishing truly international capital markets more than 60 years ago, and the role it continues to play in shaping the future of these markets.
1963 marked a pivotal year for Luxembourg’s financial centre as the first-ever Eurobond was listed in Luxembourg and this marked a new course for international capital markets. Eurobonds are international debt instruments which are issued in another currency than the one prevailing in the country of the issuer and therefore add a truly international dimension to bond markets.
Up until 1963, capital markets in Europe were largely domestic, and operated in silos. The inaugural Eurobond led to many others, and Eurobonds have shaped international capital markets ever since. The Eurobond market opened a whole new level of global cooperation, and it all started right here in Luxembourg and at the Luxembourg Stock Exchange.
More than 60 years after the first Eurobond was listed here, do you think Luxembourg still has that thirst for transformation?
Absolutely! Luxembourg has proven time and time again that it can rethink and adapt when a situation calls for transformative change, and it has done so successfully.Luxembourg – together with LuxSE – has by the way transformed capital markets in another important way more recently, as a pioneer in sustainable finance.
In 2007, the European Investment Bank issued and listed the world’s first green bond at LuxSE. So again, Luxembourg became the place where another important area of modern international capital markets was born - after the first Eurobond, we listed the first green bond.
I have to mention here the Luxembourg Green Exchange, or LGX, the world’s leading platform for sustainable finance which we established in 2016. Today, LGX is the world’s reference platform for sustainable bonds. In total, the 2,100 outstanding sustainable bonds on LGX have raised EUR 1.2 trillion for investment projects with green and social benefits around the world.
One of the bonds on LGX is the sustainability bond issued by the State of Luxembourg in 2020 – a bond that saw the Grand Duchy become the first European country to issue a sustainability bond. This is another example of how Luxembourg is a frontrunner and helps drive the transformation of European and international capital markets.
Creating a more low-carbon world is a top priority when it comes to meeting the global 2030 goals but what about the social dimension?
Indeed, sustainable finance is not just about making the world a greener place and protecting biodiversity. Take Luxembourg’s sustainability bond that I just mentioned. This bond has financed Luxembourg’s national tram system, which many of us use to move around in Luxembourg city on a daily basis.But this bond also financed social housing, and the social dimension has come to the fore over the last few years. Today, issuers of sustainable bonds increasingly include both green and social objectives in their sustainable bond frameworks.
There is one social objective in particular that has made its way to the top of the agenda in Luxembourg’s financial centre, namely gender finance.
Gender finance has a dual objective – on the one hand, it is about mobilising financing for women’s empowerment and advancing gender-lens investing, meaning investment which supports gender equality goals. This is something we, at LuxSE, play an important role in by highlighting gender-focused bonds on LGX and through numerous other gender finance initiatives, such as market studies and dedicated training sessions.
On the other hand, it is about bringing more women into the financial sector and increasing the proportion of women at all levels of financial institutions. These two goals are interlinked, of course, and it is difficult to make progress on one front without advancing on the other.
Luxembourg has taken a pioneering role in gender finance. It has a stated goal of becoming a centre of excellence in gender finance as part of its 10-point action plan for sustainable finance, which was announced by Luxembourg’s Minister of Finance Gilles Roth this spring. I am hopeful that this national focus on gender finance will drive meaningful change in Luxembourg and beyond.
What role do law firms play in the overall transformation of Luxembourg’s financial centre?
Good lawyers and regulatory experts are absolutely essential to the success of any financial centre —especially when we are talking about a financial centre with such a clear and ambitious international focus as Luxembourg.Lawyers played a crucial role in the initiative that catapulted Luxembourg into international capital markets in 1963. Looking back, it is quite impressive that they managed to put in place all the necessary requirements to bring the first Eurobond to little Luxembourg.
One thing is certain, given the increasing level of regulation across sectors, and the constantly changing regulatory landscape, legal expertise, attention to detail and analytical skills are extremely important.
And even if artificial intelligence will certainly also transform some parts of the law profession, I am convinced that the unique set of skills and competences that lawyers bring to the table will continue to grow in importance as the world becomes increasingly complex.
What is LuxSE doing to ensure it supports law firms as important stakeholders in international capital markets?
Law firms play such a crucial part in primary capital markets activities that we recently established a new status at LuxSE to formalise and recognise their role. As our traditional membership statuses are limited to credit institutions, they are not available to law firms.This is why we established a new status this year, which is especially tailored to law firms and professional services firms that support issuers through the complex issuance and listing process. We call this initiative LuxSE Partners, and the name says it all. Law firms are among our closest partners and our allies when it comes transforming international capital markets from Luxembourg and play a crucial part in facilitating the listing process for issuers.
There are indeed many important initiatives already in place and certainly more will come to ensure Luxembourg continues to transform its financial centre. Any final thoughts?
Luxembourg is a well-known success story in finance, and if there is one country that is constantly working to respond to new developments, it is Luxembourg. With its AAA rating, Luxembourg has turned stability and predictability into an artform, and this makes it an exceptionally business-oriented country.Moreover, the current government has defined an ambitious agenda for how to make Luxembourg even more competitive and attractive as a place to do business.
As we prepare to enter a new year, just like we have done for the last 60 years, LuxSE will continue to work as an integral part of Luxembourg’s contribution to the international capital markets sphere.
Luxembourg has become a success story because of the courage, agility, business acumen, diplomacy, and the innovative mindset of a diverse community of people that bring their expertise to the table each day. We must continue with these traits in 2025 and beyond as this is what makes Luxembourg a global leader despite its geographical size. It is what has solidified the country’s position in the history of international capital markets and will continue to do so well into the future!
