Luxembourg finance finally getting its ‘market utility’ moment

In the Luxembourg financial sector’s ‘long-discussed-but-slow-to-develop’ file, there is a lengthy section on mutualisation, or creating and using a common shared resource across the industry.

Mutualisation initiatives are sometimes called market utilities, referring to the fact that these schemes should serve as infrastructure that everyone can plug in to, like electricity and water networks. The aim is for companies to save time and money and not have to recreate the wheel for tasks that everyone in their sector approaches in more or less the same way. Your correspondent has been hearing sources in Luxembourg talk about mutualisation for more than a decade.

In a very loose sense, at least from my point of view, the schemes started to make more sense in Luxembourg with the rise of management companies, or mancos, which carry out certain administrative, operational and compliance functions for investment funds and were authorised under EU rules that took effect in 2013.

Mancos can be standalone firms or a separate subsidiary within a corporate group. They support several different fund firms at the same time, proving the concept of shared expertise works, but mancos fundamentally are service providers for specific clients, not utilities. But the model proved that certain core obligations could be met externally.

In a little less loose sense, the first functional utility here was I-hub, which carries out required background checks on customers for financial firms and started operations in 2019. I-hub is a privately held consortium owned by Post Luxembourg and four local banks and has struggled financially.

Chatter around a community-based approach to mutualisation really took off in 2022, and in 2023 a Luxembourg House of Financial Technology (Lhoft) working group took up the challenge.

The working group’s first initiative, now called Keystone, is a data and document sharing platform that will be available to all authorised financial service providers in the Grand Duchy and conceivably at some point across Europe. A technology vendor was selected in July 2025 and the working group is currently seeking participants for a pilot project that is expected to start in the first half of 2026.

“This is a market utility built by the market for the market,” Alan Dundon, who sits on the steering committee, said during a 15 December demo webinar. “This has never been done before.”

The programme is being backed by six big Luxembourg trade associations and the Grand Duchy’s financial regulator and finance ministry are involved in its development.

Given the visible nature of the initiative, “expectations are sky high” for Keystone to deliver, Sinan Sar, another committee member, said on the same webinar.

After years of resultless talk, my own expectations are starting to rise again. I will be watching the project keenly in 2026.