There have been many developments in national and European financial markets regulation during the past month. Among other things, the implementation of the Market Abuse Regulation and the Market Abuse Directive is taking shape and the new levies for continuous supervision have been published. In this article we provide a brief overview of these and other developments.
Implementation of the MAR and MAD
The Market Abuse Regulation (MAR) and the Market Abuse Directive (MAD) has to be implemented no later than 3 July 2016. Market parties will also have to comply with the directly applicable requirements of the MAR from that date.
Not all European implementing regulation is available yet. An overview can be found on the website of the Commission. The following delegated regulations were published last month:
Bill implementing the MAR and the MAD
A bill implementing the MAR and the MAD was submitted to the Second Chamber of the Dutch Parliament in April. No plenary debate on this bill has been scheduled so far. It is therefore unlikely that the bill will enter into force on 3 July 2016. However, as already stated, market parties will have to comply with the requirements of the MAR as from that date. As a result, both the existing Dutch rules and the new MAR rules will apply as of 3 July 2016. In the course of June 2016, the Ministry of Finance and the AFM will publish more information on this situation.
The AFM has published two brochures (in Dutch) on the new regime. The first brochure contains general information on the new rules and explains what inside information is and in what situations publication can be delayed. The second brochure is intended for organisations in the public domain. Even though these organisations are not listed companies, they may publish information that has a significant effect on the prices of securities. Examples are the announcement of an interest rate rise by the ECB and a court decision in a dispute between a company and a listed company. The AFM explains how these organisations can avoid infringing the tipping prohibition, and makes recommendations for dealing with inside information.
The AFM has also published four interpretations (in Dutch) on market manipulation.
Finally, the AFM has published information on:
2016 levies for continuous supervision published
The Ministry of Finance has published the 2016 levies for continuous supervision (in Dutch). In general, the levies have increased, but for small and medium-sized entities the increase is less substantial.
Consultation on the amendment decree for the countercyclical capital buffer
The Ministry of Finance has published a consultation on the countercyclical capital buffer. Banks and certain investment firms are required to maintain a combined capital buffer. One of the components making up this buffer is the countercyclical capital buffer. Its purpose is to protect banks against risks ensuing from the financial cycle. The countercyclical buffer is created during boom phases and can be reduced during slumps. The components of the combined buffer will be phased in. This amendment decree shortens the transition phase for the countercyclical capital buffer. This enables DNB to better address the risks of high credit growth for banks and certain investment firms. The decree is intended to enter into force per 1 January 2017. From this moment on, DNB would be authorised to prescribe the maximum countercyclical buffer.
Evaluation of the Dutch fine system
The Minister of Finance has published an evaluation (in Dutch) of the Dutch fine system in the financial sector. His conclusions are that the Dutch Central Bank and the AFM often use their authority to consider the particular circumstances of a case and use their discretion to impose higher or lower fines. Also, the supervisors consider the benefits gained by the offender. In most cases, the imposed fines stand up in court.
According to the Minister of Finance, practice has shown that the fine system functions properly. It will, however, be revised on certain points when the bill implementing the MAR/MAD enters into force. In his letter to Parliament the Minister provides an overview of the proposed amendments.
AFM repeals its policy rule for the calculation of shares
Following the implementation of the Transparency Directive, the AFM has repealed its policy rule for the method of calculating shares to which financial instruments relate and the notification requirement for indices and baskets. From now on, shares will have to be calculated in the same manner as votes, i.e. as prescribed by Delegated Regulation (EU) 2015/761. The AFM will amend its guideline for shareholders accordingly.
Amendment of the rules for advertisements for complex financial products
The AFM has revised the rules (in Dutch) for advertisements for complex financial products. The amendments concern:
The amendments will take effect on 1 July 2016.
Euronext amends its Rule Book I
A revised version of Euronext’s Rule Book I entered into force on 6 June 2016. Euronext has made changes to the Retail Trading Facility and the related definition of Retail Order. Also, the provisions relating to Order Identification have been modified.
Agreement on one-year postponement of MiFID II; impact on MAR
Since the necessary new data collection infrastructure will not be in place by 3 January 2017, neither the competent authorities nor the market participants will be in a position to apply MiFID II on that date. Therefore, the deadline for the member states to transpose MiFID II into national legislation has been extended to 3 July 2017. The date of application of MiFID II and the MIFIR will be set for 3 January 2018.
Following the postponement of the MiFID, ESMA has issued a communication clarifying the reporting of reference data by market operators of regulated markets and by investment firms and market operators operating an MTF or an OTF under the Market Abuse Regulation. The requirements set under article 4(2) and (3) of the MAR will also apply from 3 January 2018.
Council agreement on prospectus rules
The Permanent Representatives Committee has reached agreement on new rules on prospectuses. The Council is expected to confirm Coreper’s agreement on 17 June 2016. Subsequently, talks with the European Parliament will start. The aim is to adopt the regulation at first reading.
Consultation on evaluation of the financial conglomerate directive
The European Commission has launched a consultation on the performance of the Financial Conglomerate Directive. The purpose is to assess whether the current framework is proportionate and fit for purpose. The consultation will run until 20 September 2016.
Consultation on improving the internal market for investment funds
The European Commission has launched a consultation on measures to remove barriers to the cross-border distribution of investments funds (UCITS, AIF, ELTIF, EUVECA and EUSEF). The consultation will run until 2 October 2016.
European and international supervisors
Questions and Answers on the application of the Market Abuse Regulation
ESMA has issued questions and answers on the implementation of the Market Abuse Directive. Currently, the document contains one question: does the obligation to detect and report market abuse under Article 16(2) of the MAR apply to investment firms under the MiFID only or do UCITS management companies, AIFMD managers or firms professionally engaged in trading on own account also fall within the scope of that obligation? ESMA considers that this obligation applies broadly. The document will be updated when new questions or issues arise.
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