There have been many developments in national and European financial markets regulation during the past month. Among other things, the Ministry of Finance has submitted a Bill providing that, in the future, issuers will not be required to publish quarterly financial reports. In addition, supervisory authorities have published a large number of consultation documents, draft rules and other information since the last edition of In context.
Bill implementing the Transparency Directive submitted
In the future, listed companies will not be required to publish their quarterly figures. This follows from the Bill implementing the amended Transparency Directive. Although the revised Transparency Directive provides that member states may require issuers to publish interim financial statements, the Ministry of Finance has decided against this possibility. The Directive’s other options and national discretions will also not be exercised. In addition, the Bill proposes the following changes:
- Issuers whose securities are admitted to trading on a regulated market and which have activities in the extractive or logging of primary forest industries must disclose in a separate annual report payments made to governments in the countries where they operate. This system of country-by-country reporting will be introduced to increase the transparency of payments (taxes, royalties and bonuses) made by the oil, gas, mining and logging industries to their host governments worldwide. All payments exceeding EUR 100,000 will have to be disclosed. These provisions apply to financial years started on or after 1 January 2016.
- The sanctioning powers of the financial supervisors will be amended in accordance with the Transparency Directive. The maximum fine that can be imposed on an issuer in the case of a single serious breach will be EUR 10,000,000 (or up to 5% of the total annual turnover). The maximum fine is currently EUR 4,000,000.
- The definition of home member state will be clarified so that it will no longer be possible for issuers to avoid being supervised by any competent authority in the European Union.
- The deadline for publishing half-yearly financial reports will be extended to three months after the end of the reporting period.
- Issuers shall ensure that half-yearly and annual reports remain publicly available for at least 10 years (instead of five years).
- Issuers will no longer be required to disclose new loan issues.
- Proposed amendments of an issuer’s articles of association will no longer have to be communicated to the AFM.
The Transparency Directive must be implemented no later than 26 November 2015.
Act implementing the Single Supervisory Mechanism Regulation
The Act implementing the Single Supervisory Mechanism Regulation, which divides tasks and responsibilities between the European Central Bank and the Dutch supervisory authorities, took effect on 12 June.
Consultation on regulation for credit unions
The First Chamber adopted a bill introducing regulation and supervision for credit unions in April. As a result, under certain circumstances credit unions will no longer need a banking licence for attracting withdrawable funds.
The Ministry of Finance has launched a consultation on a regulation and a decree containing further rules for credit unions. The regulation specifies the exemptions applicable to credit unions. The decree includes rules on the suitability and integrity test, the banker’s oath, remuneration policy and integrity requirements.
DNB calls for more diversity in the Dutch banking sector
The Dutch Central Bank (DNB) has published its “Perspective on the structure of the Dutch banking sector”. The report describes the current structure of the Dutch banking sector and assesses its development with a view to the stability and efficiency of banking services. Among other things DNB calls for more diversity and wider competition. This may be achieved by improved market entry for foreign banks.
Agreement on improving transparency of securities financing transactions
The European Commission, the European Parliament and the Council of the European Union have reached agreement on the proposal for a regulation on reporting and transparency of securities financing transactions. The proposed regulation must prevent that banks circumvent certain rules by moving their activities to the shadow banking sector. The proposal is expected to be formally adopted later this year.
Restructuring risky banks
The Council of the European Union has agreed on its negotiating stance on structural measures to improve the resilience of EU credit institutions. The proposal is aimed at strengthening financial stability by protecting the deposit-taking business of the largest and most complex EU banks from potentially risky trading activities. It provides for the mandatory separation of proprietary trading and related trading activities and establishes a framework for competent authorities to take measures to reduce excessive risk taking. The regulation will apply to global systemically important institutions or to entities exceeding certain thresholds.
European and international supervisors
The Eurosystem’s platform for securities settlement (TARGET2-Securities or T2S) was launched on 22 June. Securities depositories from Greece, Malta, Romania and Switzerland are now connected to T2S. The Italian security depository will join the platform on 31 August. Euroclear Nederland is expected to follow by the end of March 2016.
Draft regulatory standards on prospectus related issues under the Omnibus II Directive
ESMA has published regulatory technical standards on prospectus-related issues under the Omnibus II Directive. The standards cover the following points:
- procedures for approval of prospectuses
- information to be incorporated by reference
- publication of the prospectus
- dissemination of advertisement
ESMA has sent its proposal to the European Commission. The Commission has three months to decide whether to endorse the draft standards.
European Securities and Markets Authority – publications
- Guidelines on periodic information to be submitted by credit rating agencies
- 2014 annual report and strategy for 2016-2020
- Final report on the extension of the scope of interoperability arrangements
- Q&A’s on investment-based crowdfunding: money laundering/terrorist financing
- ESMA assessment of Israeli laws and regulations on prospectuses
- Consultation on regulatory technical standards on the CSD Regulation
- Opinion agreeing to a seven-day emergency short-selling prohibition proposed by the Hellenic Capital Market Commission
- Guidelines on Alternative Performance Measures
European Banking Authority – publications
- Amended technical standards on reporting of liquidity coverage ratio
- Amended technical standards on leverage ratio disclosure and reporting
- 2014 Annual Report
- Technical advice on the contributions to the Single Resolution Fund
- Consultation on margin requirements for non centrally cleared derivatives
- Passport notifications for mortgage credit intermediaries
Joint Committee -publications
- Technical Discussion Paper on risk, performance scenarios and cost disclosures for Key Information Documents) for packaged retail and insurance-based investment products
IOSCO – publications
- Report on credible deterrence approaches in securities market regulation
- Consultation on international standards on fees and expenses of investment funds
Basel Committee on Banking Supervision – publications