Agefi Luxembourg - janvier 2026

Janvier 2026 27 AGEFI Luxembourg Fonds d’investissement ByAlainRUTTIENS, NEURONsarl, Luxembourg I nvestors andportfoliomanagers know that investing in a bond is a priori safer, althoughgenerally less rewarding, than investing in an equity. Butwhat if the bond is defaultingbefore itsmaturity? This issue is more crucialwhen investing inbondswith a poorer rating (sub-investment grade), such as highyield (HY) bonds. Beforegoing todefault, abondpricewill declinepro- gressively: the cumulated daily changes of prices, or returns, are becoming increasingly negative, with an increasing lowprobabilityof occurrence, fortunately, the default risk is a rare event. Researchers have tried to quantify the default risk, based on a probabilistic distributionofreturns,butsinceverynegativereturns arerare,thesampleofdatatheymayuseisinsufficient toperformcalculationwith enoughprecision, said in otherwords, with a toowide confidence interval. A priori, it would suffice to extent the data base of pastbondpricesonincreasinglongtimeseriesofdata, but as everybodyknows, financialmarkets belong to human science, not to physics, and the market behaviour is constantly evolving over time – statisti- cians say that the distribution of past returns is “non- stationary”. This explains why probabilistic models of a bond default risk are unsatisfactory. Apart from this approach, several methods are commercialized at highcost,basedonlargesetsofvariousdata,handled in a sophisticated way. The validity of their output remains questionable, however. Practicallyspeaking,thebestwaytoreasonablyassess a bond default risk results from the judgment of the bondsportfoliomanager,basedonhisexperienceand his knowledge of the bond issuer, together with an analysis of its related economic/ financial environ- ment.Sothat,facingthesituationofabondpricedete- riorating severely, the decision to either keep the invested position or to close it rests solely with the portfoliomanager. Fortheportfoliomanager,thissituationleadstothree possible outcomes: - facing the observation that his bondprice ismoving down in a worrisome way, after his analysis of the situationtheinvestorwilldecidetoneverthelesskeep the positionuntil further notice, - or he is enough convinced to close it, -…or he is tornbetweenbothdecisions. Thisiswherewecomein.Wehavedevelopedabond default index metric, ranging from 0 (no risk) to 100 (full default risk), whichdoes not claimto replace the portfolio manager’s or investor’s opinion, but rather to assist him, in the specific case he is unsure about what to do. The underlying process leading to the index will be presented here below. Under such cir- cumstancesofindecision,dependingonwhetherour default index is (very) low – going towards 0 – or (very) high – going towards 100 – it will tip the deci- sionof keeping or closing the position. In case the index level is around 50, the undecided portfoliomanagermay postpone his decision until the default index further deviates in one direction or the other. Furthermore, the portfolio manager may also have closed a too risky position and reopen it later, helped in his decision by the obser- vation that the default index is clearly moving down. It is important to note that our index is based on a parameter basically different from the ones analysed by the portfoliomanager, its output is therefore not redundant with the one of any financial/economic analysis, so that, combining both information leads to a more grounded deci- sion. On the contrary to, for example, leading the portfolio manager to comfort his judgment with colleagues, working in a similar way to him. The proposed default risk index is not at all based on statistics of past returns, we have showed that this road is a dead end. It is rather based on the evo- lution of bond prices, day after day, more precisely on the dynamics of the bond prices evolution. Of course, this dynamic is not measured through sim- plistic tools such as moving averages or trends or prices regressions. We consider that an increasing default risk results in an acceleration of downwards moves of price, that we quantify accordingly. Themethodologyhas been built,calibratedandtestedondozensofbondsincrit- ical situation of default risk. For understandable rea- sons, theuseof this indicator is restricted tocorporate bonds: as regards government bonds, the issue of a dramatic situation can be affected by political deci- sions, keep in mind for example the case of Greek government bonds, a fewyears ago. Finally,thereexistnoinfalliblemethodologyofcourse, and in the present case one must keep in mind that the output of our risk indicator is not systematically confirmed by the facts. However, its success rate is good enough to be used by portfolio managers, in particular investing significantly in sub-investment grade orHYbonds. How to assess the risk of a bond defaulting ©Freepik By Georges BOCK (portrait), CEO & Founder and SachaMARCOLINI,HeadofLegal&Compliance, InveSTRe S.A. F or those following developments in tokenisation and digital fi- nance, recent news from the Uni- ted States are striking. On December 11, 2025 the U.S. Se- curities and Exchange Com- mission (“SEC”) has issued a no-action letter to the Depo- sitory Trust & Clearing Corporation (“DTCC”) – the functional equivalent, in many respects, of Euro- pean infrastructures such as Clearstream – inviting DTCC to move forward to im- plement and operate a tokenised capital market infrastructure for amongst other Bonds, Equities, ETFs and treasury bills. In practical terms, this provides regulatory comfort for the deployment of tokenisation at scale across clearing, settlement, collateral management and fund structures, and gives banks and asset man- agers confidence to participate. Recent develop- ments illustrate a rapid acceleration of tokenised capital market – infrastructure and signal the U.S. intention to set new standards for capital markets by combining tokenised securities, digitally native processes and, ultimately, digital money. TheU.S. approachcombines regulatory forbearance with targeted legislative reform. Instruments such as SEC no-action letters provide immediate opera- tional flexibility, while broader initiatives – such as the GENIUS Act – are progressively reshaping the legal framework itself. The result is not a pilot regime, but a step-by-step transformation of how securities, cash and compliance can be natively in- tegrated on digital rails. Looking ahead, according to DTC plans, digitally native securities could be issued and processed di- rectly on DLT-based market infrastructure in the U.S. as early as the second half of 2026. This would fundamentally reshapemarket operations byalign- ing three core layers within a single integrated process: (i) the accounting of securities, (ii) the ac- counting of cash, and (iii) compliance and controls. Taken together, this convergencewill transformcap- ital-markets operations at a systemic level. WhatAbout Europe - andLuxembourg? By contrast, Europe has adopted a more cautious, pilot-based approach through theDLTPilot Regime. While this frameworkprovides legal certainty, it also limits scale and speed. When it comes to large scale use of the digital EURO, the so-called EURO stable coin, the European legislator drags hopelessly behind. As U.S. infrastructure movestowardindustrialdeployment,Euro- peanregulatorsandmarketparticipantsface increasingpressuretomovefromexperimen- tation to permanent, scalable solutions, if they donotwant to be left behind. In this context, Luxembourg is widely regardedas a frontrun- ner. It has progressively amended its securities framework – notably through the 2013 demate- rialisedsecurities lawand Blockchain Laws I–IV – to explicitly recognise DLT-based issuance, registers and settle- ment, while embed- ding thesemechanismswith- in existing financial-market law. This legal clarity has enabled real, production-grade use cases for tokenised funds, bonds and shares, including the recent emergence of native tokenized share classes within Luxembourg fund structures. Tokenisation cases inPractice inLuxembourg In practice, when speaking about tokenisation three cases can currently be observed and categorised in Luxembourg: (i) theDigital TransferAgent; (ii) the ControlAgent; and (iii) the Tokenised Safekeeping andDistribution . Thesecasesshouldbeunderstoodasreferenceframe- works rather than rigid categories. Our objective is rathertoillustratethemostcommonusedcaseswhen referenceismadetotokenisation.Theyprovideause- ful guide for understanding current Luxembourg market practice and, to some extent, developments elsewhere inEurope. Case 1: TheDigital TransferAgent Under this case, tokenised registered ( nominative ) shares areadministeredbya transfer agent. The fund continues to issue registered shares in the traditional manner, with the legal share register maintained by the transfer agent in accordance with applicable law andCSSF guidance. Atokenmaybeissuedonablockchainsolelyasadig- italrepresentationoraccesslayerlinkedtoaregistered share. The shares are not dematerialized, and legal ownership is determined exclusively by the official register, which remains the ultimate source of truth. Therecordofownershipistransferreddownthechain ofallintermediariesbyaseriesofmirroredaccounting records constantly reconciledandaudited. The token doesnotconstituteamovablesecurity;itmainlyfunc- tions as a digital interface supporting investor access, reporting andoperational efficiencywithout altering the legal nature of the underlying security. This approach has been adopted in Luxembourg by funds seeking to explore tokenisationwithoutmodi- fying their core legal or operational setup.Whilewell suitedtoregulatedenvironments,thecaseremainsin- herentlylimited.Transfers,distributionandcorporate actions continue to require off-chain intervention by thetransferagent,smartcontractsareusedonlymar- ginally for internal process support, and secondary- market potential remainsminimal. Case2:TheControlAgent–NativeOn-ChainSecurities Themost advancedcase removes theduplicationbe- tween off-chain registers and on-chain representa- tions. Enabled by Blockchain Law IV and the introduction of the control agent role, this approach allows shares to be issued natively in dematerialised formon a blockchain. In this context, the market has welcomed the verbal CSSF’sconfirmationthat,underthisregime,afundis not required to appoint a transfer agent tomaintaina parallelregisteralongsidethecontrolagent.Suchdu- plication would run counter to the very purpose of Blockchain Law IV and an efficient functioning of capitalmarkets in the interest of the consumers. In this configuration, the token constitutes the secu- rity itself. Transfers occur directly on-chain under the supervision of the control agent and have im- mediate legal effect, without parallel reconciliation bya transfer agent. This enables atomic, peer-to-peer transfers, improves interoperabilitywithdigital cus- tody, settlement and collateral infrastructures, and creates the conditions formore efficient andcheaper primarymarket operations and thepotential of sec- ondary-market activitywith instant automated set- tlement processes. Case 3: The Tokenised Safekeeping andDistribution An extended approach has emerged that can be ap- plied to both the Digital TransferAgent case and the fully native control agent case. Under the Digital Transfer Agent, the registered shares remain legally issued in nominative form, with the transfer agent continuing to maintain the official share register but are also tokenised for safekeeping and distribution purposes.Investorsmayaccessandmanagetheirpo- sitionsviadigitalwalletsoperatedwithinacontrolled, intermediary-based framework (usually through a dedicatedplatform)ratherthanthroughself-custody. Unlikethe“initial”DigitalTransferAgentcase,tokeni- sationextends beyond internal processes to thehold- ing and distribution layer, enabling structured interactionbetweeninvestors,distributors,thetransfer agent and other service providers. This case stream- lines onboarding and distribution, facilitates integra- tionwithdigitalplatforms,andenablesmoreefficient handling of corporate actions and reporting. Smart contracts are usedmore extensively to automate op- erationalworkflows, improving efficiency and inter- operability while leaving legal ownership off-chain and fullyunder the transfer agent control. Under the ControlAgent case, distribution and safe- keepingare,bydesign,performedon-chain.Thesafe- keepingfunctionmaybecarriedoutbythesamelegal entityasthecontrolagent,forexampleasanancillary service under its MiFID license, or may alternatively be delegated to a third-party safekeeper holding the appropriate regulatory authorization. APragmatic, Step-by-StepTransition The Luxembourg approach to tokenisation is neither abrupt nordisruptive; it is andshouldbedeliberately incremental. Rather than imposing exclusive choice for asset managers for either the transfer agent or the control agent case, a step-by-step adoption allowing to develop in current fund set ups the transfer agent and control agent cases to co-exist will enable a flexi- ble, low risk and efficient rhythm of adoption in the interest of the EuropeanUnion fund industry and its consumers.Thisenablesmarketparticipantstoadopt tokenisation progressively, in line with their opera- tionalmaturity, investor baseandriskappetite,while preserving investor protection and regulatory over- sight at each stage. ArapidlegislativecadencebytheLuxembourgGov- ernment,combinedwithanactiveandpragmaticreg- ulator, has been a keydriver of Luxembourg’s ability to support this transition. A clear illustration is the speed with which the CSSF appropriated the BlockchainLawIV framework and clarified its inter- action with existing supervisory expectations – see Case2:TheControlAgent above.Thecontrolagentcase is designed to reduce unnecessary layers of interme- diation, allowregulatedentities tocombine functions traditionallysplitacrossmultipleactors,andleverage MiFID-regulated infrastructures to ensure investor protection, transparency andoperational resilience. Inthemeantime,marketparticipantsareactivelycon- sidering and structuring potential hybrid configura- tionsthroughcontractualarrangementstailoredtothe needsofeachfundanditsinvestors.Thesediscussions include,forexample,scenarioswhereatransferagent foranumbrellafundwouldcontinuetoservicecertain compartments or share classes while a control agent wouldmaintain the records for dedicated demateri- alised compartments or share classes.While legal ex- perts have positive opinions on such scenarios, the market is looking for clear further official guidance and confirmations. This momentum should be maintained. In the same way that recent developments in theUnitedStates il- lustrate how regulatory clarity can accelerate infra- structure-level adoption, Luxembourg’s ability to combine rapid legal adaptationwithapragmatic, so- lutions-oriented supervisory approach positions it to continue shaping tokenisationmarket practice – first domestically, and increasingly across Europe. Tokenisation 2026 market outlook The US capital market rushes into tokenisation, Luxembourg leads the way in Europe