In context

Financial Markets in brief – new regulation and other developments

June 14, 2018
In context

There have been many developments in national and European financial markets regulation during the past month. We provide a brief overview of these developments, which include new rules to make it easier for smaller businesses to get financing through capital markets, the Council of the EU general approach on the EU Banking Reform package, the Second Chamber’s adoption of the Dutch bill on recovery and resolution of insurers, and the ECB’s updated Guide on fit and proper assessments.

Highlighted publications


New recovery and resolution tools and requirements adopted for Dutch insurers

On 12 June 2018, a legislative proposal to update, strengthen and expand the tools available to DNB for the recovery and resolution of failing insurers was adopted by the Second Chamber. The plans are similar to earlier proposals published by the European Insurance and Occupational Pensions Authority (EIOPA). These proposals follow the EU recovery and resolution framework for banks, which was implemented in 2015. In this booklet, De Brauw’s regulatory experts explain how the new rules impact insurer recovery and resolution, and how they differ from both the similar framework applicable to banks, and from the EIOPA proposal. These proposals will expand the crisis planning burdens on insurers and may require certain insurers, in particular larger and more complex groups, to make potentially significant changes to their activities, funding, and legal and operational structure.


Adapted rules for companies listed on SME Growth Markets

The European Commission has proposed new rules (click here and here) to make it easier for smaller businesses to get financing through capital markets. The main proposed changes are:

  • The current obligation to produce lists of permanent insiders will be limited for issuers on SME Growth Markets. Also, these issuers will have more time to declare managers’ transaction to the public.
  • The European Commission has introduced a transfer prospectus. This will allow issuers with at least three years of being listed on SME Growth Markets to produce a lighter prospectus when transferring to a regulated market.
  • It will be easier for trading venues specialised in bond issuance to register as SME Growth Markets.
  • The Commission intends to create a common set of rules on liquidity contracts for SME Growth Markets.


The proposal amends the Market Abuse Regulation, the Prospectus Regulation and a number of delegated acts under MiFID II.


EU Banking Reform Package – Council of the EU reaches an agreement on a General Approach

Following the financial crisis, ambitious reforms to the regulatory framework for the EU banking sector were implemented. These reforms aimed to bring back and safeguard financial stability and market confidence. In 2016, the European Commission published proposals to complete this reform agenda by implementing a number of outstanding elements resulting from international standards set by the Basel Committee and Financial Stability Board, and of a comprehensive review of existing EU banking regulation. On 25 May 2018, the Council of the EU agreed on a General Approach for the EU Banking Reform Package.


The General Approach relates to amendments of two regulations and two directives:

  • Bank capital requirements (amendments to the Capital Requirements Regulation and Capital Requirements Directive IV);
  • Recovery and resolution of banks (amendments to the Bank Recovery and Resolution Directive and the Single Resolution Mechanism Regulation).


The next step is for negotiations to start with the European Parliament.


Prospectus Regulation: exemption provisions applicable as of 21 July 2018

The Prospectus Regulation entered into force in July 2017. Most provisions will only come into effect 24 months after the regulation enters into force. However, two exemption provisions entered into effect in 2017, and two further offering exemptions will apply as of 21 July 2018. As of that date, no EU prospectus will be required for capital raisings and crowdfunding projects below EUR 1 million, which will be calculated over a period of 12 months. Member States will also be able to set higher thresholds for their domestic markets. The thresholds for the domestic markets will be raised from EUR 5 million to EUR 8 million. As a result, Member States are free to set out in their national law a threshold between EUR 1 million and EUR 8 million. However, such exempted offers of securities to the public do not benefit from the passporting regime under the regulation.


In anticipation of the Prospectus Regulation, the Dutch Ministry of Finance raised the exemption limit for offers to the public to EUR 5 million on 1 October 2017. Issuers using the exemption must inform the AFM and are subject to certain information requirements.


IORP II – Consultation launched on Decree

A consultation has been launched for the draft Decree implementing the IORP II Directive. The Decree covers (among other topics) risk management, written policies, key functions, remuneration policy, agreements with pension depositaries, and communication. Comments can be submitted until 6 July 2018.


Fit and proper assessments

ECB, the European bank supervisor, has published an updated Guide to fit and proper assessments, which is in line with the Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders.


Developments on the implementation of the Insurance Distribution Directive

The Decree implementing the Insurance Distribution Directive (IDD) was published in the Bulletin of Acts and Decrees, and the Ministerial Regulation implementing the IDD has been published in the Government Gazette. They enter into effect at the same time as the Act Implementing the IDD.


The Dutch Markets Supervisor has published seven new Factsheets on the IDD.


Payment Accounts Directive

The final list of the most representative services linked to a payment account, as referred to in the Payment Accounts Directive for the Netherlands was published in the Government Gazette. One of the objectives of the Payment Accounts Directive is to improve the comparability of fees related to payment accounts. Payment services providers will need to use standardised terminology (included in the list) in information documents for consumers.


Bill on security of network and information systems

The Second Chamber has adopted the bill on security of network and information systems (formerly named the Cybersecurity bill). An amended bill has also been published.


MiFID II – Suitability requirements

The ESMA has published its Final Report Guidelines on certain aspects of the suitability requirements under MiFID II. The suitability requirements were introduced under MiFID I to enhance investor protection by ensuring that firms which provide investment advice and portfolio management act in their clients’ best interests. These Guidelines build on the ESMA’s 2012 MiFID I Guidelines on suitability, which have been largely confirmed and broadened.


In addition, the European Commission has published legislative proposals on sustainable finance that, among other things, aim to ensure that sustainability preferences are integrated into suitability tests when advising investors, and that offered products meet their clients’ needs.


Critical functions – SRB publishes its policy

One of the resolution objectives in the Bank Recovery and Resolution Directive is to ensure the continuity of critical functions, essential for the smooth running of the economy in one or more Member States. The identification of these functions is an important element of resolution planning. The Single Resolution Board has published its approach to critical functions and intends to continue enhancing its guidance for institutions.


DNB launches consultation on the ORSA

DNB has launched a consultation on a Q&A regarding the question of whether insurers are permitted to proportionally execute the Own Risk and Solvency Assessment (ORSA). DNB has also published a factsheet on the applicability of proportionality. Comments can be submitted until 19 July 2018.


Other publications






Council of the EU










Official Journal EU











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