In context

Financial markets in brief – new regulation and publications

February 9, 2015
In context

There have been many developments in national and European financial markets regulation during the past month. On 7 February, the new remuneration rules for financial undertakings took effect. As a result, these undertakings cannot award variable pay above 20% of the annual fixed remuneration.


In addition, supervisory authorities have published a large number of consultation documents, draft rules and other information since the last edition of In context.

Dutch regulation

Bill on remuneration rules for financial undertakings in effect: 20% cap on bonuses
On 7 February, a 20% cap on bonuses took effect. On that date the Bill on the remuneration rules for financial undertakings entered into force. The new bonus cap does not apply to contracts which have been concluded prior to 1 January 2015.


Also, the bill contains a transitional provision for banks and certain investment firms.  Under the Capital Requirements Directive, banks and certain investment firms have to apply a 100% or 200% bonus cap on identified staff. These rules, which have been implemented in section 3:17a Wft, will continue to apply to these persons until 1 January 2016. The bonus cap of 20% will apply to all other persons.


The bill also contains disclosure requirements, a limitation on severance payments and an increase in fines for infringement of the remuneration rules. For more on this subject see In context July 2014.


More senior officers to be subjected to screening
As of 1 January 2015, the group of individuals working at banks and insurance companies subject to suitability and integrity screening  expanded. This means that second-tier senior officers are also subject to screening procedures.


DNB explains on its website that the new target group includes officers who:

  • work under the responsibility of a bank having its registered office in the Netherlands;
  • work in a management position directly below the level of policymakers; and
  • are responsible for natural persons whose activities may have a material impact on the institution’s risk profile.


As the law does not provide for a transitional period, banks and insurers have until 1 April 2015 to assess the suitability of incumbent senior officers and to examine their integrity. 


Euronext – publications

  • Euronext has published a new version of its Rule Book II – General Rules for the Amsterdam Stock Market. It will take effect on 16 February.


European regulation


Work on Capital Markets Union started
The European Commission has started work on a Capital Markets Union. It aims to create a single capital market for all 28 Member States by removing barriers to cross-border investment and lowering costs of funding within the EU. The first step will be the publication of a green book. Priorities include reviving the markets for high quality securitisation and simplifying the Prospectus Directive. A detailed action plan is expected to be published in the third quarter of this year. 


Implementing regulations of the Capital Requirements Regulation
The European Commission has published the following regulations implementing the Capital Requirements Regulation:


Implementing regulations of the Single Resolution Mechanism
The following regulations implementing the Single Resolution Mechanism have been published:


European and international supervisors


Regulation concerning the powers of the ECB to impose sanctions
There are two regulations that entitle the ECB to impose penalties and sanctions on credit institutions. However, these regulations are not entirely consistent in the way they treat equally serious infringements. The Council of the European Union has, therefore, published a regulation intended to improve consistency. 


ECB informs banks on prudent dividend policy and review of variable remuneration
The ECB has given specific recommendations to the most significant banks on the payment of dividends in 2015 for the financial year 2014. The ECB has requested the national supervisors to implement the recommendations for the less significant banks, which they supervise directly.


The ECB has also notified banks that variable remuneration will be thoroughly reviewed in the coming months. 


Advice on implementation of new market abuse regime
ESMA’s has published technical advice on the implementation of the new market abuse regime. In this advice:

  • ESMA specifies the market manipulation indicators, by providing examples of practices that may constitute market manipulation as well as proposing “additional” indicators of market manipulation.
  • ESMA recommends setting minimum thresholds that exempt certain market participants in the emission allowance market from publicly disclosing inside information at six million tonnes of CO2eq per year and at 2,430 MW rated thermal input.
  • ESMA suggests how to determine which regulator to notify for delays in the disclosure of inside information.
  • ESMA provides clarifications on the enhanced disclosure of managers’ transactions.
  • ESMA proposes procedures and arrangements to ensure sound whistleblowing infrastructures. 


Other ESMA publications


Basel Committee on Banking Supervision – publications


IOSCO – publications

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