9 September 2015

Financial markets in brief – new regulation and publications

There have been many developments in national and European financial markets regulation during the past month. Among other things, the Ministry of Finance held a consultation on the implementation of market abuse legislation, to which De Brauw has reacted. 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


New legislation
During the past few months the Ministry of Finance has published the following decrees relating to financial markets supervision:

  • A decree setting out the distribution of tasks between the European Central Bank and the Dutch Central Bank, which took effect on 18 July.
  • The Decree on the Supervision of the Conduct of Financial Enterprises was amended on 18 July. As a result, insurers must inform unit-linked insurance policy holders that they have to make a decision on whether to extend their policies. The AFM can fine insurers who fail to do so.
  • The Decree implementing the Banking Act 1998 has been published and will take effect shortly. It sets out DNB’s powers to retrieve information from various institutions and private parties. Also, it lists the fines DNB can impose when its requests for information are not complied with.

De Brauw reacts to consultation on market abuse legislation
De Brauw has asked the Ministry of Finance not to adopt higher fines for infringing market abuse legislation as mandated by the Market Abuse Directive and Regulation. The current draft proposal, to which De Brauw has responded, allows for much higher fines for infringement of disclosure requirements other than those prescribed by European rules, among other things.

  • The Market Abuse Regulation prescribes that a maximum fine of at least EUR 2.5 million is imposed for infringement of its provisions. The draft implementation Bill therefore amends the current fine categories of the Financial Markets Supervision Act: the maximum fine in category 3 will be raised from EUR 4 million to EUR 5 million, or up to 10% of the total annual turnover of the offender. The increase applies to all infringements of the Financial Markets Supervision Act, not just to infringements of the market abuse legislation.
  • The draft Bill also introduces the option to raise the maximum fines listed in category 2 from EUR 1 million to EUR 2.5 million, in order to meet the requirements of the Regulation. Since this will avoid gold-plating, this seems to be the obvious thing to do. However, in the explanatory memorandum the government mentions that a fine from the third category will usually be imposed for infringement of the Regulation.
  • The proposed amendments suggest that the Netherlands will impose fines that are twice as high as required by the European legislation, g. for public disclosure of inside information (which is currently laid down in article 5:25i of the Financial Markets Supervision Act and will be incorporated in article 17 of the Regulation).

This is why De Brauw has asked the Ministry of Finance to avoid gold-plating by implementing the maximum fines of EUR 2.5 million for infringements of the Regulation. One way to do so is to raise the fines in category 2, by way of a decree.

The consultation is now closed for response. The European market abuse rules must be implemented no later than 3 July 2016.  For more on the impact of these rules, see In context of March 2014.


European regulation


Impact of bank capital requirements
The European Commission has launched a consultation on the impact of the new capital requirements on bank lending to small and medium enterprises and infrastructure projects. The consultation runs until 7 October.


European an international supervisors


ESMA – publications


EBA – publications

IOSCO – publications

Basel Committee on Banking Supervision – publications


International publications


Capital Markets Law Journal

  • Creditor protection in bank resolution: a case for international investment arbitration? / Michael Wolfgang Müller – CMLJ 2015, vol. 10, no. 3
  • A concept of the euro as a parallel currency – a gradual solution for the eurozone’s problems / Dirk Meyer – CMLJ 2015, vol. 10, no. 3
  • SEC rules, stakeholder interests, and cost benefit analysis / Yoon-Ho Alex Lee – CMLJ 2015, vol. 10, no. 3
  • Covenants in European investment-grade corporate bonds / Lars Hornuf, Markus Reps and Stefan Schäferling – CMLJ 2015, vol. 10, no. 3
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