New regulatory requirements
Regulatory developments affecting the PSF sector are numerous, on the eve of the entry into force of MiFID II, players in the sector must adapt to many changes. These include the entry into force of the European data protection regulation “GDPR”, discussions underway regarding the Article 41 of Bill 7024 in relation to IT outsourcing, which establishes the limits of professional secrecy.

“Competitiveness is inherent in all markets. In a constantly evolving regulatory and technological environment, it is important to focus the company on its core business and adapt to the needs and challenges of tomorrow. We are noticing an adaptation of some organizations’ licenses, which reflects a better understanding of licensing requirements according to the services provided”, comments Stéphane Césari, Partner and PSF Leader at Deloitte Luxembourg.

Strong players operating in a shifting environment
Among the three existing PSF categories, the main category of PSF in 2016 remains specialized PSF, accounting for nearly 39 percent of PSF overall. Despite steady growth between 2007 and 2013, the number of these PSF saw a slight downturn in 2016 (-1 percent) after a slight increase in 2015 (1 percent).

“Specialized PSF must adapt their range of services, in particular to meet the new needs of their national and international customers, who are themselves exposed to new regulatory requirements such as BEPS (Base Erosion Profit Shifting) or GDPR (General Data Protection Regulation)," explains Raphaël Charlier, Partner at Deloitte Luxembourg.“ Investment firms and specialised PSF do not bypass the automation and digitalization we see across other sectors. This evolution appears essential for the players to gain competitive edge and for the PSF sector as a whole to remain attractive,” adds Stéphane Césari.

In 2016, investment firms accounted for 36 percent of PSF. In the majority until 2009, their progress has been slowed by the financial crisis. After experiencing a downturn in 2012, their numbers have started to stabilize.

Support PSF have displayed dynamic growth since their creation (+40 percent since 2007). The number has nonetheless been stabilizing since 2012 and as at 31 December 2016, they accounted for 25 percent of the PSF population. Overall, there is a slight decrease in the number of PSF, with 298 players on 14 July 2017, down from 304 on 31 December 2016.

The white paper “Outlook and future of a strong and changing sector - Professionals of the Financial Sector (PSF) in Luxembourg” was presented at Deloitte’s eighth annual conference dedicated to PSF at Mudam on Tuesday 14 November 2017, bringing together over 100 participants. Integrating the latest PSF figures along with explanations, this brochure analyses changes in PSF and demonstrates their dynamic nature. It is enhanced by interviews with key players in the marketplace and articles on topical issues, written by industry experts.

The full version of the white paper is available in English on Deloitte Luxembourg's website at: www.deloitte.com/lu/psf