The Euro MTF Specialist Securities Segment (EM3S): A New Opportunity for Issuers of Sophisticated Securities

A Strategic Solution for Specialist Securities

The Euro MTF Specialist Securities Segment (EM3S) launched by the Luxembourg Stock Exchange (LuxSE) offers a dedicated platform for listing and trading specialised financial instruments, including complex and tailored products.

While EM3S supports a wide variety of instruments, it is particularly well-suited for alternative investment funds, collateralised loan obligations, asset-backed securities, private placements, high-yield instruments, and structured products due to their unique characteristics and sensitive nature.

Designed with issuers and professional investors’ needs in mind, EM3S offers a flexible framework that balances transparency with the complexities of these instruments. The segment's tailored disclosure rules allow issuers to limit public disclosure while ensuring that professional investors receive the necessary information.

EM3S Advantages

The EM3S segment is designed to meet the information needs of professional investors while allowing issuers to protect their sensitive financial arrangements and commercially sensitive information about their distinctive financial instruments. The key benefits of this segment are:

1. Simplified Admission Process
   One of the main advantages of the EM3S segment is its simplified admission process. Unlike regulated markets that require a prospectus approval, EM3S offers a more streamlined procedure, reducing costs and administrative time. No prospectus is required, and all relevant information can be provided through the application form. The LuxSE does not issue a formal approval as part of the listing process.
2. Limited Disclosure
   The EM3S allows issuers to access a recognised market (i.e., the Euro MTF) without the complexity of strict admission process. With limited disclosure, issuers can benefit from an admission on the Euro MTF while following more flexible admission rules, ensuring that information is shared only with professional investors and not made public.
3. Exclusivity for Professional Investors
   Securities listed on this segment are exclusively available to professional investors. This allows issuers to target experienced investors who are sufficiently knowledgeable and manage the risks of complex financial instruments, contributing to a more stable and informed market. Additionally, it enables issuers to protect commercially sensitive information by limiting public disclosure while still meeting investor needs.
4. Admitted to trading
   All securities listed on EM3S are admitted to trading on the Euro MTF, offering issuers the benefits of a recognised and reputable market. This facilitates enhanced visibility and liquidity, attracting professional investors, while allowing issuers to maintain their competitive edge. With more flexible disclosure requirements, issuers can protect sensitive information, ensuring their strategic advantage remains intact.

The less stringent publication rules allow issuers to keep more information private, while still benefiting from a recognised market like the Euro MTF. This creates an efficient and flexible framework for capital raising, attracting investment, and reducing administrative burdens. The EM3S segment offers issuers a streamlined admission process, reduced regulatory requirements enhanced flexibility, exclusively towards targeted professional investors, making it an ideal platform for listing complex financial instruments while ensuring confidentiality and investor protection.

For further assistance, the Banking and Capital Markets team at PwC Legal Luxembourg is available to provide expert guidance. Further details regarding our services can be found here. Additionally, for more information on the EM3S segment, please visit the Luxembourg Stock Exchange website.