In context

Financial markets in brief – new regulation and publications

July 9, 2014
In context

There have been many developments in national and European financial markets regulation during the past month. Supervisory authorities have published a large number of consultation documents, draft rules and other information since the last edition of In context. We provide an overview of this news, signal important court decisions and also list relevant articles in international legal journals.

Dutch regulation 


Bill to amend the Act on funding of financial supervision
A bill amending the Act on funding of financial supervision has been submitted to parliament. The main element of the bill is that the government contribution to the financial markets supervision budget will be abolished. Instead, financial supervision costs will be funded by the financial institutions on a pay-as-you-go basis. Also, a part of the funds deriving from penalty payments and administrative fines will be allocated to the State The bill is expected to take effect on 1 January 2015.


The Council of State has expressed reservations about the proposed bill. One of its conclusions is that there are no grounds for abolishing the supervision budget. Although the explanatory memorandum refers to the “group benefit” as a justification for passing on the supervisory costs to the financial sector, the Council of State points out that financial supervision is primarily a matter of public interest. Therefore, it should be publicly funded.


Bill on the remuneration policy of financial institutions submitted to parliament
The Minister of Finance has submitted a bill on harmonising the remuneration policy. The main proposal is the introduction of a bonus cap for employees in the financial sector. For more on this subject see In context July 2014 . 


Act implementing the Capital Requirements Directive
The Act implementing the Capital Requirements Directive (CRD IV) into Dutch law has been published. This Act will take effect on a date to be determined by Royal decree.


The implementing Act prohibits distributions undermining the capital buffers, increases the maximum fine, and eases the obligation to obtain a statement of no objection for CET 1 capital reductions. It also extends the powers of the Dutch Central Bank (DNB) to take measures, and it changes the restrictions for significant banks and investment firms on the maximum number of positions that managing and supervisory directors may hold. In addition, the implementing Act imposes an obligation on DNB to draw up resolution plans for banks and certain investment firms. Banks and certain investment firms also have an obligation under CRD IV to draw up recovery plans, but this obligation will be laid down in the Prudential Rules Decree (see our Legal Alert].


The bill also introduces a bonus cap. This is intended to be a temporary measure, which will be repealed once the bonus cap in the Bill on the remuneration policy of financial institutions takes effect.


Finally, the rules for the publication of fines and penalties will be amended. The proposed new rules apply to all financial institutions.


Financial Markets Amendment Bill 2016
The Ministry of Finance is currently holding a consultation on the Financial Markets Amendment Bill 2016. Proposals covered by the draft bill include:

  • The AFM and the Dutch Central Bank will be granted power to suspend board members and supervisory board members if their suitability is in doubt.
  • Investors in derivatives will be protected against bankruptcy of their intermediary.
  • Intervention measures will be applicable to parent companies of insurance companies.
  • Claims from third parties on a distressed institution can be expropriated in case of intervention.
  • Provisions on the cross-border transport of valuables will be included in the Act on the prevention of money laundering and terrorism financing.
  • The AFM and DNB will be granted power to withdraw the licence of institutions that do not pay the levies for financial supervision.


Implementation of the FATCA Treaty
The Dutch Ministry of Finance has launched a consultation on a decree implementing the FATCA Treaty. The decree requires Dutch financial institutions to provide information about bank accounts of US tax subjects, and to report financial institutions that do not comply with their FATCA obligations.


The Netherlands and the United States entered into a treaty on the implementation of the FATCA Treaty in December 2013. A bill providing for the ratification of the treaty will be submitted to parliament shortly.


Dutch supervisors 


Levies for financial enterprises
The levies for ongoing supervision for most financial enterprises and other parties subject to supervision will be lower in 2014 than in 2013. The main reason for this is that the AFM spent less than was budgeted in 2013, chiefly due to lower employee expenses.


The AFM has published a brochure (in Dutch) in which the levies for ongoing supervision are explained in more detail.


DNB announces 2014 supervisory themes
The Dutch Central Bank will continue to pay extra attention to institutional conduct and culture this coming year. Business models and strategies will also be important themes.


DNB publishes good practices for fighting corruption
The Dutch Central Bank has published good practices to help banks and insurers fight corruption in the form of bribery or conflicts of interest. These good practices reflect the outcome of a theme-based examination, which showed that these sectors can do more to identify and effectively tackle corruption risks


European regulation 


New European regulation
The following directives and regulations in the area of the financial markets have entered into force in the last month:


Market abuse 

  • Directive 2014/57/EU on criminal sanctions for market abuse (market abuse directive). The directive must be implemented in national law by 3 July 2016.
  • Regulation (EU) No. 596/2014 on market abuse. The regulation will apply from 3 July 2016.



  • Directive 2014/65/EU on markets in financial instruments. This directive must be implemented in national law by 3 July 2016.
  • Regulation (EU) No 600/2014 on markets in financial instruments. The regulation will apply from 3 January 2017.


Recovery and resolution of credit institutions and investment schemes

  • Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms. This directive must be implemented in national law by 31 December 2014. Provisions adopted in order to comply with the bail-in provisions must be applied from 1 January 2016 at the latest.


Deposit guarantee schemes 

  • Directive 2014/49/EU on deposit guarantee schemes. The directive must be implemented in national law by 3 July 2015.


Capital requirements

  • Commission Delegated Regulation (EU) No. 625/2014 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council by way of regulatory technical standards specifying the requirements for investor, sponsor, original lenders and originator institutions relating to exposures to transferred credit risk. This regulation entered into force on 2 July 2014.
  • Commission Implementing Regulation (EU) No. 620/2014 laying down implementing technical standards with regard to information exchange between competent authorities of home and host Member States. This regulation entered into force on 2 July 2014. 


European and international supervisors


European Securities and Markets Authority – publications


European Banking Authority – publications


IOSCO – publications


Basel Committee on Banking Supervision – publications


International publications


Capital Markets Law Journal 

  • How and why credit rating agencies missed the Eurozone debt crisis / Norbert Gaillard – CMLJ 2014, vol. 9, no. 2
  • Is my money safe at European banks? Reflections on the “bail-in” provisions in recent EU legal texts / René Smits – CMLR 2014, vol. 9, no. 2
  • Sovereign bonds and national relativism: can New York law contracts safely cross the Atlantic? / Mathias Audit – CMLJ 2014, vol. 9, no. 2
  • Market failure or regulatory failure? The paradoxical position of credit rating agencies / Andrea Miglionico – CMLJ 2014, vol. 9, no. 2


Journal of International Banking Law & Regulation

  • The Future of Banking in the EU? / Edige Ligere LLB, LLM – J.I.B.L.R. 2014, issue 5
  • Basel III and the Case for Contingent Convertible Capital / Gabriel Adeoluwa Onagoruwa – J.I.B.L.R. 2014, issue 6
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