14 November 2018

Financial Markets in brief – new regulation and other developments

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 developments on recovery and resolution of insurers, the implementation of the IORP II Directive, and potential measures aimed at tightening legislation on executive remuneration.

Highlighted publications

Bill on fixed remuneration

At the Dutch Minister of Finance’s request, the European banking supervisor ECB has issued an opinion on this bill. The bill proposes to tighten the definition of fixed remuneration and requires systemically relevant banks to obtain the Minister of Finance’s prior approval for setting or increasing the fixed remuneration of a managing director. According to the ECB, the powers that the bill will give to the Minister of Finance do not seem to conflict with the ECB’s task to ensure that credit institutions have robust governance arrangements in place.

Update on potential legal measures aimed at tightening legislation on remuneration and the bonus cap

The Minister of Finance has given an update about a consultation on potential legal measures to tighten remuneration rules, and a related roundtable discussion with stakeholders. The potential legal measures include:

  • a claw back for part of the fixed remuneration if state aid is given to a bank or insurer;
  • a legal requirement that shares, or similar instruments forming part of the fixed remuneration, have to be held by the recipient for several years; and
  • a legal requirement that the remuneration policy of financial undertakings prescribes how the remuneration relates to the institution’s social role.

Many stakeholders believe that the potential claw back measure may raise concerns from a European law perspective. The Minister will ask the Dutch Council of State to provide information on this issue and will take this into consideration, and will review the consultation responses for the other two measures. The Minister has also indicated that he is engaged in discussions with the financial sector on permitted deviations from the bonus cap. He intends to inform the Second Chamber of the Dutch parliament about the outcome of both the consultation and the discussions on the bonus cap, in December 2018.

Recovery and resolution of insurers

In October 2018, the First Chamber’s finance committee sent the Minister of Finance additional questions about the Dutch Bill on Recovery and Resolution of Insurers. In early November 2018, the Minister of Finance responded to these questions. According to the First Chamber’s website, the finance committee will discuss the Minister’s response on 13 November 2018.

In addition, Nicole Stolk, Executive Director of Resolution and Internal Operations at the Dutch Central Bank, has given a speech on recovery and resolution of insurers, elaborating on the bill and on the central bank’s role as envisioned in the bill.

Second Directive on Institutions for Occupational Retirement Provision

The Second Chamber has adopted a bill implementing the IORP II Directive. In addition, the Ministry of Social Affairs and Employment has published a consultation report on the draft Decree implementing the IORP Directive.

2018 Financial Markets Amendment Bill
The First Chamber has passed the 2018 Financial Markets Amendment Bill as a formality without a debate. The bill includes the following arrangements:

  • A statutory ban on seizing a financial undertaking’s deposits if these are held by the Dutch Central Bank.
  • The European Central Bank and the Dutch Central Bank must decide on banking licence applications within 26 weeks. Currently, this is 13 weeks.
  • It will be easier for the Netherlands Authority for the Financial Markets (AFM) to provide confidential data and information to the Dutch competition authority, the ACM.
  • The AFM and the Dutch Central Bank will be allowed to provide confidential information to the Ministry of Justice Agency for Scrutiny, Integrity and Screening.

Guidelines on Certain Aspects of the MiFID II Suitability Requirements

ESMA has published the official translations of the Guidelines on Certain Aspects of the MiFID II Suitability Requirements. Competent authorities must inform ESMA within two months (by 6 January 2019) whether they comply or intend to comply with the guidelines. The Guidelines apply as of 7 March 2019.

Other publications

 EC

EP

EBA

ESMA

 EIOPA

ECB

 Official Journal EU

 MinFin

MinSZW

 AFM

DNB

Other