Luxembourg Might Have Lost its Edge over the CBI 24-hour ELTIF Approval

UCITS created the blueprint for cross-border retail distribution in Europe. Now, ELTIFs is emerging as the next big brand in retail regulated product distribution.

The latest EFAMA report offers a clear signal that ELTIF II is finally working. The reform has triggered renewed interest both for managers and investors, with a growing volume of ELTIFs being launched and offered to retail investors across European borders. Where early critics predicted the demise of the Capital Markets Union, this recent data suggests quite the opposite. 

There is renewed momentum in the European long term investment space. And with momentum comes competition. Particularly between the traditional heavyweights of European fund domiciliation, like Ireland and Luxembourg. 

A Tale of Two Fund Hubs 

Ireland and Luxembourg have always contended for the title of Europe’s most avant-garde fund domicile. In the early days of UCITS, both jurisdictions carved out their unique niches. The decision to domicile in either was rarely ideological and more often a question of investor audience geography. Luxembourg became the natural home state for UCITS with a continental European audience, while Ireland attracted managers with investor base in the Anglosphere and Northern Europe. Notably, Ireland was the first port of call for US managers seeking access to UCITS markets. Over time, Ireland’s reputation solidified further, becoming the global leader in UCITS ETFs. 

Conversely, Luxembourg built its dominance in the alternatives space. The state-of-the-art limited partnership regime, combined with regulatory adaptability, made it the jurisdiction of choice for private equity, real assets, and private credit strategies. Even American managers, despite linguistic and cultural preferences, found themselves launching strategies in Luxembourg to make the most out of the more favourable local regime. 

This divergence in identity worked well for both. Until ELTIF entered the frame.

ELTIF 1.0: A Cautious Start with Predictable Results 

The first iteration of the ELTIF Regulation launched with ambition but struggled with traction. That was due to a combination of factors, including a lack of understanding and taste in the retail investor space for long term investment strategies. Most ELTIFs launched under ELTIF 1.0 were confined to single markets, structured with domestic distribution in mind. France, Italy, and Spain each saw activity in this space. But for pan-European distribution Luxembourg remained the only option. 

With ELTIF II, the reform that few believed would work is proving to be transformative. The simplification of rules and the introduction of a dual retail/professional investor ELTIF model have attracted many more managers to the proposition. One year from the introduction of ELTIF II and Luxembourg continues to dominate in raw ELTIF numbers. It had the momentum and the reputation, in one with the fact that ELTIFs have always been much more fashionable with investors in continental and southern Europe.  

But Ireland is no longer idle. 

In a move that has raised eyebrows and expectations, the Central Bank of Ireland (CBI) introduced the CBI 24-hour ELTIF approval process for certain types of ELTIFs. Specifically, this fast-track procedure is now available to ELTIFs aimed at professional and qualified investors. 

This move is not trivial. It addresses speed of approval, which is one of Luxembourg’s known pain points. Industry professionals familiar with the Luxembourg approval processes know that approval timelines can stretch sometimes unpredictably. The CBI 24-hour ELTIF approval is a sharp contrast. It means managers can get a fund authorised and to market within a single business day assuming it meets the eligibility criteria. 

As Sun Tzu once wrote, Speed is the essence of war. In the competitive landscape of European fund distribution that principle applies. Ireland is playing offense and speed is its weapon of choice. 

Understanding the Scope of the CBI 24-Hour ELTIF Approval 

The CBI 24-hour ELTIF approval applies to ELTIFs targeted at professional and qualified investors. Whilst professional investors are as defined by MiFID Annex II, qualified investors is a specific Irish client category, not yet recognised under European regulation. Qualified investors are professional clients, person assessed by a regulated entity as having sufficient experience and understanding; or a person who certifies, in writing, to have knowledge and experience to evaluate the merits and risks of the investment; or a business involving acquisition or disposal of property similar to that held by the ELTIF. 

While ELTIFs for qualified investors must still comply with the more stringent retail ELTIF rules, including a PRIIPs KID and the provision of local facilities under the AIF Rulebook, they are nonetheless eligible for the CBI 24-hour ELTIF approval. 

Retail ELTIFs, by contrast, remain subject to a standard authorisation timeline, including at least one set of comments issued by the CBI before approval is granted. The posture adopted by the CBI preserves investor protection where needed, while unlocking agility where possible. 

CBI 24-Hour ELTIF Approval Puts Luxembourg’s Lead at Risk

It would be premature to declare Luxembourg’s decline on the front of the long-term investment funds. The jurisdiction still leads in absolute ELTIF volume. Its asset servicing ecosystem is unmatched in certain areas and it remains a stronghold for private capital. 

But the introduction of the CBI 24-hour ELTIF approval adds a variable Luxembourg can’t ignore. Particularly for managers aiming at private banks, wealth managers and semi-professional investors, thanks to the fast-track CBI 24-hour ELTIF Ireland becomes a compelling alternative. For them, professional ELTIFs offered via advisory platforms are strategic and that’s precisely where the CBI 24-hour ELTIF approval delivers the most value. 

Ireland’s bet is that speed, simplicity, and precision will increasingly matter, especially as the ELTIF brand evolves into something more UCITS-like in popularity and scale. 

The Battle Is Just Beginning 

It remains to be seen if Ireland’s adoption of the CBI 24-hour ELTIF approval process will be the defining move in this renewed competition. What’s clear is that the Central Bank of Ireland has taken a firm, confident stance. One that is not reactive, but strategic. 

The likely outcome isn’t an all-or-nothing shift. Rather, we may see a bifurcation where Luxembourg remains dominant for retail focussed ELTIFs and Ireland rises as the go-to for ELTIFs tailored to private wealth platforms and cross-border professional distribution, where time to market and forthcoming interaction with local regulators matter most. 

In this light, the CBI 24-hour ELTIF approval is more than a procedural change. It’s a signal to the industry that Ireland intends to reclaim a centre stage in the future of Europe’s long-term investment market.

About Veneziano and Partners

Veneziano and Partners is an international consulting boutique specialised in the European regulation of cross-border fund distribution. In catering to a selected group of investment managers, hedge fund managers and financial institution worldwide, the firm offers a custom-made service that is unique and allows its clients to gain competitive advantage in an ever increasingly regulated environment for global registration of UCITS and AIFMD funds.

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