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CAPITAL MARKETS

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Securities Markets News

Reliability testing of (candidate)(co-)policymakers by the AFM and the DCB (03-01-2014)

The Dutch Authority for the Financial Markets (“AFM”) and the Dutch Central Bank (“DCB”) have been given the statutory duty of safeguarding the integrity of the financial markets. For this reason, the AFM and the DCB test the reliability of (candidate)(co-)policymakers within an organization.

 

The AFM and the DCB shall establish whether the reliability of a person as referred to in Section 4:10(1) of the Act on Financial Supervison (“AFS”) is beyond doubt on the basis of this person’s intentions, acts and antecedents. In establishing a person’s reliability, the AFM and the DCB shall in any event consider the following antecedents:

  1. criminal antecedents;

  2. financial antecedents;

  3. supervision antecedents;

  4. fiscal antecedents under administrative; and

  5. other antecedents.

The antecedents listed above are inter alia set out in annex C of  the Decree on Conduct of Business Supervision of Financial Undertakings under the AFS (Besluit Gedragstoezicht financiële ondernemingen Wft).  The AFM has recently published an article (only available in Dutch) which specifically addresses what is meant by “other” antecedents. This article can be found via: meldplicht-betrouwbaarheid-jaarboek-compliance.pdf 

 

For applying for a license under the AFS or for applying for a declaration of no objection with the DCB, a (candidate)(co-)policymakers needs to be tested on reliability before the AFM or the DCB can grant them with a license or a declaration of no-objection. Therefore, we recommend to obtain advice on this topic to assure whether the reliability of  the (candidate)(co-)policymakers is beyond doubt.  

We can provide you with a detailed advice about this important matter if you or your the (candidate)(co-)policymakers need to be tested on reliability with the AFM and/or DCB.

 

 

Comparison of liability regimes in Member States in relation to the Prospectus Directive (10-06-2013)

The ESMA has published a report on the comparison of liability regimes in Member States in relation to the Prospectus Directive.

                                                                                                                                                              

This is the first report of its kind and provides a comparison of liability regimes covering the 27 EU Member States along with Iceland and Norway and is aimed at providing clarify for market participants about the different regimes in place. The report contains an overview of the different arrangements and frameworks in place in EEA Sates to address administrative, criminal, civil and governmental liability.

 

The report was compiled in response to the European Commission request of January 2011 for assistance in identifying and monitoring the different regimes in EEA states. The report does not cover how the regimes, or sanctions, are applied.

 

2013-619_report_liability_regimes_under_the_prospectus_directive_published_on_website.pdf

 

2013-619_ann_ii_report_liability_regimes_under_the_prospectus_directive_annex_ii_published_on_website.pdf

 

2013-619_ann_iii_report_liability_regimes_under_the_prospectus_directive_annex_iii_published_on_website.pdf

 

Source:

http://www.esma.europa.eu/content/Comparison-liability-regimes-Member-States-relation-Prospectus-Directive

 

 

ESMA publishes review on short selling regulation (03-06-2013)

The ESMA has published its Technical Advice 2013 evaluating the impact of the Regulation on short selling and certain aspects of credit default swaps (Regulation) on European financial markets.                                                                                                                                                                  

 

The ESMA has prepared this in response to a European Commission request for Technical Advice to inform its report to the European Parliament and Council on the impact of the Regulation, due by end of June 2013. The advice was requested only a short time after the implementation of the Regulation on 1 November 2012 and so there were limits to the market data available, and limited regulatory experience in supervising the Regulation’s requirements to draw on.  The report makes a number of recommendations that would help to improve how the Regulation works in practice, with the overall recommendation that the regime be re-assessed at a future date when more data and experience have been accumulated.

 

2013-649_press_release--esma_publishes_review_on_impact_of_short_selling_regulation.pdf

 

2013-614_final_report_on_ssr_evaluation.pdf

 

Source:

http://www.esma.europa.eu/news/Press-release%E2%80%94ESMA-publishes-review-impact-short-selling-regulation?t=326&o=home

 

AFM acknowledges ESMA guidelines for automated trading and announces policy rule (02-04-2012)

In a press release published on 2 April 2012, the Dutch AFM explicitly acknowledges the guidelines recently published by ESMA on automated trading and announces publication of an AFM policy rule in that connection.

Following publication by the European Securities and Markets Authority (“ESMA”) of guidelines on automated trading environment for trading platforms, investment firms and competent authorities, the Dutch Authority for the Financial Markets (“AFM”) has issued a press release stressing the importance of ESMA’s guidelines and announcing its intention to publish an AFM policy rule in that regard. ESMA’s guidelines contain organisational requirements for investment firms, regulated markets and multilateral trading facilities in connection with automated trading systems. The new guidelines will enter into force on 1 May 2012.

 

Bron: "ESMA" Guidelines; AFM Press release

 

Pre-trade transparency waivers under MiFID: ESMA publishes amended version of its waiver document (26-03-2012)

Pursuant to the MiFID rules, execution venues are required to make public the current bid and offer prices and the depth of their trading books in respect of listed shares. Competent authorities may waive this publication requirement. ESMA has published an amended waiver policy document in that regard.

Pursuant to (national regulations implementing) the Markets in Financial Instruments Directive (“MiFID”), European regulated markets (such as NYSE Euronext or London Stock Exchange) and multilateral trading facilities (such as NYSE Alternext) are required to publish in ‘real time’ the price of listed shares, as well as data concerning the depth of their trading books. Pursuant to the MiFID, certain exemptions from these requirements may apply. Furthermore, MiFID allows national competent authorities to waive these requirements upon request by markets operators, based on the ‘market model’ or the type and size of orders. The predecessor of the European Securities and Markets Authority (“ESMA”) had developed guidance for national competent authorities to deal with waiver requests in an attempt to build common supervisory approaches and practices.

 

On 26 March 2012, ESMA published updated guidance on MiFID pre-transparency waivers. ESMA makes a distinction between: (i) reference price waiver, (ii) negotiated trade waiver, (iii) order management facility waiver and (iv) large in scale waiver.

 

ESMA’s guidance document also provides information on the pre-trade transparency of trading systems already set up in Europe and the compliance of such systems with MiFID. In the table included in the document, ESMA sets out examples of waivers and the conditions to be complied with.

 

Final text of European regulation on short selling and CDs published in Official Journal (24-03-2012)

On 24 March 2012, the final text of the European regulation on short selling and certain aspects of credit default swaps was published in the Official Journal of the European Community.

The final text of the new EU regulation on short selling and certain aspects of credit default swaps (the “Regulation”) does not materially deviate from that of the European Commission’s proposal. The Regulation provides for a harmonised European framework governing short selling of certain listed instruments. Among others, the Regulation:

 

(a) prohibits the use of ‘uncovered’ Credit Default Swaps (“CDs”) in sovereign debt, i.e. transactions where no underlying long position exists in the relevant sovereign bond, are no longer permitted (Member States are however allowed to suspend the prohibition in their own jurisdiction in certain circumstances);
(b) imposes certain ‘certainty of settlement’-requirements in relation to uncovered short selling of shares and sovereign bonds;
(c) introduces an harmonised notification and reporting regime for shares, whereby holders of net short positions must notify these privately to the regulator when they exceed 0.2% of the issued share capital of the issuer company and must publicly disclose these (on a named basis) when they exceed 0.5%. In each case, further notification or reporting is required at each 0.1% above the initial threshold;
(d) provides national competent authorities and ESMA with additional powers to intervene in the markets in times of stress; and
(e) excludes sales under a repo agreement or futures contracts from the definition of short sales in shares and debt instruments.

 

Many provisions of the Regulation are to be further implemented by means of delegated acts and technical standards. ESMA has been requested to advise the European Commission in that regard. That process is already at an advanced stage. The Regulation will enter into force on 1 November 2012 and will be directly applicable in the Member States.

 

ECON publishes draft report on proposal for Market Abuse regulation (20-03-2012)

In a draft report published on 20 March 2012, the European Committee on Economic and Monetary Affairs proposes a number of amendments to the Commission’s draft for a new European market abuse framework.

Following its review of the current European framework on market abuse, the European Commission adopted in October 2011 proposals (collectively: the “Proposals”) for a new regulation and for an amended directive on market abuse. The Proposals seek to address gaps in the current market abuse framework, as well as regulators’ inability to effectively enforce the applicable rules. To that end, the Proposals oblige Member States to treat severe cases of market abuse as criminal offences, subject to criminal sanctions in their national law.

 

In its draft report on the Proposals, the European Committee on Economic and Monetary Affairs proposes a number of amendments to the Proposals. Key amendments are:

 

(a) scope clarification;
(b) amendment of the definition of “inside information”;
(c) introduction of an obligation on the operators of trading venues to have in place rules to avoid abusive order entry;
(d) introduction of the concept of a "trading window", prohibiting managers from conducting any transactions on their own account during certain periods;
(e) removal of the €20,000 threshold for reporting of managers' transactions, resulting in all transactions carried out by managers needing to be reported;
(f) for high frequency trading (“HFT”): (i) creation of an advisory committee to investigate the link of HFT with the risk of market abuse and (ii) incorporation of the knowledge gained in the market manipulation definition; and
(g) strengthening of the provisions for the protection of whistleblowers.

 

Once the new rules have been negotiated and adopted at a European level, Member States will have two years to transpose the amended directive into national law. As for the regulation, it is expected to enter into force at an earlier point.

 

ECON publishes draft report on MiFID II proposals (16-03-2012)

In a draft report published on 16 March 2012, the European Committee on Economic and Monetary Affairs expresses a broad support of the European Commission’s proposals extending the scope of MiFID and limiting the current MiFID exemptions

The Markets in Financial Instruments Directive and implementing measures (“MiFID”) hit the European markets in November 2007. MiFID further harmonised the regulatory framework for the provision of “investment services” in “financial instruments” and introduced new types of regulated trading platform (in addition to “regulated markets”), effectively putting an end to the “concentration rule”.

 

In October 2011, the European Commission published its proposals for an amended MiFID directive and a new markets in financial instruments regulation (together: “MiFID II”). On the one hand, MiFID II builds on the existing MiFID Directive, dealing with current and new authorisation requirements (such as that for “Organised Trading Facilities”), restricting the scope of the current MiFID exemptions, amending the organisational and conduct of business requirements for trading venues and investment firms and establishing new rules applicable to third-country firms operating via a branch in the European Economic Area. On the other hand, in a new regulation, MiFID II sets out the requirements in relation to the disclosure of trade transparency data to the public and transaction data to competent authorities, removing barriers to non-discriminatory access to clearing facilities, the mandatory trading of (standardised) derivatives on organised venues, specific supervisory actions regarding financial instruments and positions in derivatives, and the provision of services by third-country firms without a branch in the European Union.

 

In a draft report published on 16 March 2012, the European Committee on Economic and Monetary Affairs (“ECON”) expresses its broad support of the Commission’s proposals, but proposes certain material amendments. Notably, ECON proposes to limit the scope of “Organised Trading Facilities” to non-equities trading venues. ECON also proposes a less strict approach in relation to independent investment advisers (no ban on “inducements” and more neutral definition of “independent investment adviser”).

 

ESMA publishes second part of its final advice on possible delegated acts for the Prospectus Directive (01-03-2012)

The amended Prospectus Directive was adopted in 2010. In a second technical advice to the European Commission on possible delegated acts under the directive, ESMA deals with issuers’ prior consent to “retail cascade offerings” and provides its feedback following its review of the current Prospectus Regulation.

Under the provisions of the amended Prospectus Directive, the European Securities and Markets Authority (“ESMA”) was required to provide a technical advice to the European Commission on a number of topics for the purpose of adoption of delegated acts by the Commission. ESMA delivered its first advice to the Commission in that regard on 4 October 2011. ESMA’s first advice dealt with issues relating to, inter alia, the format, content and structure of prospectuses, summaries and supplements.

 

In this second part of its final advice on possible delegated acts for the Prospectus Directive, ESMA deals with issues in connection with “retail cascade offerings” by intermediaries (prior consent by issuer, additional prospectus disclosure, liability, etc.) and provides its feedback to the European Commission following its review of the provisions of the Prospectus Regulation. The document also contains ESMA’s “feedback statement” on the comments made by stakeholders following ESMA’s call for evidence.

 

The amended Prospectus Directive must be implemented by Member States by 1 July 2012. The Dutch legislative proposal to that effect was submitted to the Dutch Parliament on 5 October 2011.

 

European regulation on short selling adopted by the European Parliament (21-02-2012)

On 21 February 2012, the European Parliament has adopted a new regulation imposing certain restrictions and requirements regarding short selling activities with respect to certain listed instruments.

The new regulation on short selling and certain aspects of Credit Default Swaps (“Regulation”) will enter into force on 1 November 2012. It provides for a harmonised European framework governing short selling of certain listed instruments. Among others the Regulation:

 

(h) prohibits the use of ‘uncovered’ Credit Default Swaps (“CDs”) in sovereign debt, i.e. transactions where no underlying long position exists in the relevant sovereign bond are no longer permitted (Member States are however allowed to suspend the prohibition in their own jurisdiction in certain circumstances);
(i) imposes certain ‘certainty of settlement’-requirements in relation to uncovered short selling of shares and sovereign bonds;
(j) introduces an harmonised notification and reporting regime for shares, whereby holders of net short positions must notify these privately to the regulator when they exceed 0.2% of the issued share capital of the issuer company and must publicly disclose these (on a named basis) when they exceed 0.5%. In each case, further notification or reporting is required at each 0.1% above the initial threshold;
(k) provides national competent authorities and ESMA with additional powers to intervene in the markets in times of stress; and
(l) excludes sales under a repo agreement or futures contracts from the definition of short sales in shares and debt instruments.

 

Many provisions of the Regulation are to be further implemented by means of delegated acts and technical standards. ESMA has been requested to advise the European Commission in that regard.

 

ESMA publishes second consultation paper on short-selling of certain instruments (15-02-2012)

ESMA consults with the market in connection with the elaboration of further measures implementing the new European regulation on short-selling.

On 15 February 2012, the European Securities and Markets Authority (“ESMA”) published a consultation paper regarding its draft technical advice on possible delegated acts in respect of the new regulation on short selling and certain aspects of Credit Default Swaps (the “Regulation”), of which it is required to submit a definitive version to the European Commission by 31 March 2012.

 

The Regulation will enter into force on 1 November 2012. It provides for a harmonised European framework governing short selling of certain listed instruments. Among other, the Regulation:

 

(a) prohibits the use of ‘uncovered’ Credit Default Swaps (“CDs”) in sovereign debt, i.e. transactions where no underlying long position exists in the relevant sovereign bond are no longer permitted (Member States are however allowed to suspend the prohibition in their own jurisdiction in certain circumstances);
(b) imposes certain ‘certainty of settlement’-requirements in relation to uncovered short selling of shares and sovereign bonds;
(c) introduces an harmonised notification and reporting regime for shares, whereby holders of net short positions must notify these privately to the regulator when they exceed 0.2% of the issued share capital of the issuer company and must publicly disclose these (on a named basis) when they exceed 0.5%. In each case, further notification or reporting is required at each 0.1% above the initial threshold;
(d) provides national competent authorities and ESMA with additional powers to intervene in the markets in times of stress; and
(e) excludes sales under a repo agreement or futures contracts from the definition of short sales in shares and debt instruments.

The consultation is designed to obtain comments from stakeholders on the technical advice that ESMA proposes to give to the European Commission. The deadline for stakeholders to submit comments has been set on 9 March 2012.

 

ESMA publishes first consultation paper on short-selling of certain instruments (24-01-2012)

ESMA consults with the market in connection with the elaboration of technical standards in relation to the new European regulation on short-selling.

On 24 January 2012, the European Securities and Markets Authority (“ESMA”) published a consultation paper on draft technical standards in respect of the new regulation on short selling and certain aspects of Credit Default Swaps (the “Regulation”), of which it is required to submit definitive versions to the European Commission by 31 March 2012.
The Regulation will enter into force on 1 November 2012. It provides for a harmonised European framework governing short selling of certain listed instruments. Among others the Regulation:
(f) prohibits the use of ‘uncovered’ Credit Default Swaps (“CDs”) in sovereign debt, i.e. transactions where no underlying long position exists in the relevant sovereign bond are no longer permitted (Member States are however allowed to suspend the prohibition in their own jurisdiction in certain circumstances);
(g) imposes certain ‘certainty of settlement’-requirements in relation to uncovered short selling of shares and sovereign bonds;
(h) introduces an harmonised notification and reporting regime for shares, whereby holders of net short positions must notify these privately to the regulator when they exceed 0.2% of the issued share capital of the issuer company and must publicly disclose these (on a named basis) when they exceed 0.5%. In each case, further notification or reporting is required at each 0.1% above the initial threshold;
(i) provides national competent authorities and ESMA with additional powers to intervene in the markets in times of stress; and
(j) excludes sales under a repo agreement or futures contracts from the definition of short sales in shares and debt instruments.

 

The consultation is designed to obtain comments from stakeholders concerning the draft technical standards that ESMA proposes to submit to the European Commission for endorsement by the end of March 2012. The deadline for stakeholders to submit comments has been set on 13 February 2012.

 

ESMA publishes guidelines on automated trading environment for trading platforms, investment firms and competent authorities (24-02-2012)

In Europe (inter alia), an increasing part of trading in financial instruments takes place through electronic trading systems operated by market operators or investment firms. On 24 February 2012, ESMA published guidelines that clarify the application of the MiFID in relation to such trading platforms.

The implications of the Markets in Financial Instruments Directive (“MiFID”) in relation to automated trading are not always clear. In order to provide clarity in that regard, the European Securities and Markets Authority (“ESMA”) has published on 24 February 2012 the final version of its guidelines on automated trading environment for trading platforms, investment firms and competent authorities. The guidelines describe the arrangements market operators (regulated markets or investment firms operating a multilateral trading facility) should have in place in relation to automated trading, as well as specific organisational requirements for investment firms providing direct market access facilities to clients or using algorithms for trading or client order execution purposes. The new guidelines will enter into force on 1 May 2012.

 

ESMA publishes Q&A with respect to the concept of “inside information” under the Market Abuse Directive in connection with dividend-related information concerning a listed issuer (09-01-2012)

Prior to its publication, non-public information concerning expected dividend payment or changes in dividend policies and payment patterns may qualify as “inside information” under the MAD. In this Q&A, ESMA provides guidance to issuers whose shares are used as underlying of listed derivative contracts.

Further to the guidance published by its predecessor (the Committee of European Securities Regulators) regarding the interpretation of the Market Abuse Directive (see CESR/04-505b; May 2005, CESR/06-562b; July 2007 and CESR/09-219; 15 May 2009), the European Securities and Markets Authority (“ESMA”) published on 9 January 2012 a Q&A on the Market Abuse Directive regarding "inside information" on dividends.

 

In the document, ESMA sets out what is expected from issuers of shares that are used as underlying of listed derivative contracts with respect to the disclosure of information on their dividend policy and change in this policy. The document will be updated when new questions or issues arise.

 

 

 

 

 

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