“Over the recent years, the total number of PSF has varied little, but 2014 and 2013 saw multiple entries and exits of PSF entities. This shows that the PSF sector is a dynamic sector able to adapt to a changing environment. The new PSF entities result from the creation of companies but also from the conversion of existing entities into PSF,“ explains Stéphane Césari, Partner Audit and PSF Leader at Deloitte Luxembourg.

Professionals of the Financial Sector are defined as regulated entities offering financial services apart from the receipt of deposits from the public. The industry covers a broad range of financial and even non-financial services, and is supervised by the Commission de Surveillance du Secteur Financier (CSSF).

A dynamic economic player

At the end of 2014, there were 315 PSF entities in Luxembourg, comprising the three PSF categories; investment firms (112), specialized PSF (123) and support PSF (80). The aggregated net profit of PSF at the end of 2014 represented €560 million, an increase of 36 percent from the year before. According to CSSF data, PSF are expected to generate €708 million in net revenue for 2015, which would represent an increase of almost 26 percent compared to 2014.

The PSF industry has seen a substantial growth over the last ten years and is becoming an increasingly important employer in Luxembourg. Today, the PSF industry employs around 15,000 people while banks employ 25,000.

“Employment in the PSF industry has increased by 15 percent since 2008, whereas employment in banks has declined by around 5 percent over the same period. This trend confirms the importance of the PSF industry as a consistent and steady employer in Luxembourg,” comments Raphael Charlier, Partner Audit at Deloitte Luxembourg.

Market challenges

At the conference, Carlo Thelen, Director General of the Chamber of Commerce, shared his analysis of the Luxembourg economy and of the role the PSF sector plays in it. Other key topics covered at the conference were the challenges related to the implementation of Common Reporting Standards (CRS) as of January 2017 and to Base Erosion Profit Sharing (BEPS).

As regulated entities, PSF represent a quality label.There is a growing number of financial and non-financial services for which approved PSF status is mandatory. Two new licenses were created in 2015 related to dematerialization and digital document conservation services. The quest for cost reductions by pooling resources and the growth of the financial marketplace are likely to lead to further growth in the PSF industry.

Read the full Deloitte PSF whitepapers here http://www2.deloitte.com/lu/en/pages/psf/topics/psf.html