20 June 2019

Financial Markets in brief – new regulations 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 a consultation on the amendment of the 2012 Suitability Policy Rule, the Minister of Finance’s announcement that the revision of the Dutch Financial Markets Supervision Act will not take place for the time being, and the adoption of the 2019 Financial Markets Amendment bill.

Highlighted publications

 Amendment 2012 Suitability Policy Rule

The Dutch Central Bank (DNB) and the Dutch markets supervisor (AFM) recently launched a consultation on the amendment of the 2012 Suitability Policy Rule. The amendments relate to, among other things, new rules and regulations, such as the ESAs Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector; the ESMA Guidelines on the Management Body of Market Operators and Data Reporting Services Providers; and the EBA/ESMA Guidelines for the Assessment of the Suitability of Members of the Management Body and Key Function Holders.

The amendments include:

  • clarification that the Suitability Policy Rule does not apply to persons who only apply for a qualifying holdings declaration of no objection if they do not also qualify as a policy maker. The applicant’s reputation will be assessed on the basis of the ESAs Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector;
  • a different, principle-based assessment framework will apply to payment institutions and electronic money institutions;
  • a requirement for policy makers to have independence of mind;
  • clarification on what “sufficient time commitment” means; and
  • significant and/or listed investment firms must have a sufficient number of policy makers that qualify as independent.

The consultation will run until 1 September 2019.

Revision of Dutch Financial Markets Supervision Act
In 2016, the Ministry of Finance announced that it was considering revising the Dutch Financial Markets Supervision Act (Wft) and initiated a consultation.

The Wft has been amended numerous times since entering into force in 2007, with many amendments relating to the implementation of European regulation. The Wft has consequently become voluminous and complex.

On 24 May 2019, the Minister of Finance informed the House of Representatives about the results of the consultation on the revision. Following discussions with stakeholders, the revision of the Wft will not take place at this point in time.

Draft 2019 Financial Markets Amendment Decree

Following a consultation, the Minister of Finance has now published the draft 2019 Financial Markets Amendment Decree. This draft Decree includes:

  • rules for banks and payment services providers during the product development process
  • small non-financial inducements received by investment firms
  • antecedents in relation to integrity tests
  • additional rules aimed at correctly implementing the Solvency II directive, MiFID II, and the UCITS directive

Prospectus Regulation

The new EU Prospectus Regulation applies as of 21 July. The Dutch act implementing the new rules has been published in the Bulletin of Acts and Decrees and will enter into effect at the same date as the regulation. The Dutch Authority for the Financial Markets (AFM) explains on its website that prospectuses that need to be approved after 21 July must comply with the new rules. Information on the new procedures and exemptions is available on the website of the AFM.

Click here for our In Context article highlighting the key changes to the prospectus rules.

Information security

DNB has published a Good Practice handbook on information security, providing financial institutions with guidance on the implementation of measures to comply with the requirements as regards integrity, continuous availability and security of automated data processing. This Good Practice addresses issues relating to governance, organisation, people, processes, technology, facilities, outsourcing, testing and the risk management cycle. DNB has also published a related Q&A.

Similarly the AFM has launched a consultation on the Principles for Information Security. This policy sets out the AFM’s expectations on information security as part of the controlled and sound operations of financial institutions and accounting firms. Comments must be submitted by 25 June 2019.

EMIR Refit

The regulation amending EMIR was published in the Official Journal that aims to improve the regulatory framework applying to the over-the-counter (OTC) derivative market. Three interesting changes to take note of are that a new category of “small financial counterparties” has been created that will be exempted from the obligation to clear through a central counterparty. Smaller non-financial counterparties will also have reduced clearing obligations. Pension scheme arrangements will benefit from a further extension of the temporary exemption from the clearing obligation.

2019 Financial Markets Amendment bill adopted

The 2019 Financial Markets Amendment bill was adopted by the House of Representatives on 6 June 2019. It includes the following amendments:

  • the Wft will be amended in relation to the correct implementation of the Solvency II Directive, MiFID II, the Insurance Distribution Directive and the Market Abuse Directive and Market Abuse Regulation;
  • in line with Solvency II, an exception will be included for companies that provide insurance on the basis of social security legislation;
  • in the event of non-compliance with the Sanctions Act, DNB and the AFM will be able to revoke an authorisation;
  • under certain circumstances, a mixed financial holding or an insurance holding will require a declaration of no objection for a redemption of capital or reserves of a dividend payment in the event such a payment or repayment would result in the group no longer complying with the solvency capital requirement (within twelve months);
  • the Act regulating the accountancy profession will be amended. Also, the Financial Supervision Office will be granted a limited power to provide the AFM with confidential information, with the objective of increasing the effectiveness of the AFM’s supervision of accounting firms.

EU Banking Reform Package

Following the adoption of the EU Banking Reform Package by the European Parliament and the Council of the EU, the package was published in the Official Journal of the EU on 7 June 2019. Click here for our booklet highlighting the key changes to the capital requirements and resolution framework, and specifically:

  • the regulation amending the Capital Requirements Regulation;
  • the directive amending the Capital Requirements Directive IV;
  • the directive amending the Bank Recovery and Resolution Directive; and
  • the regulation amending the Single Resolution Mechanism Regulation.

Other publications

 EC

 EP

 Council of the EU

 EBA

 ESMA

 EIOPA 

 ECB

 Official Journal of the EU

MinFin

 MinSZW

AFM

 DNB

 Other

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