The European Securities and Markets Authority (ESMA) has published a final report containing draft regulatory technical standards relating to the notification of major shareholdings under the revised Transparency Directive. The report includes a summary of the feedback from the consultation on the draft regulatory technical standards which was published in March this year. Click here to read our report on the consultation in our April 2014 newsletter.

Background – Revised Transparency Directive

The revised Transparency Directive (2013/50/EC) (the revised TD), which entered into force on 27 November 2013, harmonises the transparency requirements relating to information about issuers whose securities are admitted to trading on an EU regulated market and revises the scope of the original Transparency Directive (2004/109/EC). The changes are intended to enhance transparency for cross-border investors and reduce the administrative burden on issuers. Member states are required to implement measures to transpose the revised TD into national law by 27 November 2015. A popular amendment introduced by the revised TD is the abolition of the requirement to publish interim management statements, which the UK Government has fully supported. The FCA anticipates that the abolition of interim management statements will come into effect this Autumn.

Other significant changes to the regime include the extension of the requirement to disclose major holdings in financial instruments to include holdings in all instruments with similar economic effect to holding shares and entitlements to acquire shares. (The UKLA DTRs already contain requirements to this effect.) The effect of this change means that notification obligations will relate to both cash-settled, as well as physically settled, financial instruments. The revised TD further seeks to clarify the methodology for calculating the number of voting rights and specifies a list of financial instruments which will be subject to the notification requirements.

ESMA final report

ESMA was required to publish regulatory technical standards to provide more detailed rules to implement the revised TD. These draft standards cover:

  • the method of calculation of the 5% threshold for the market maker and trading book exemptions
  • the method of calculation of the number of voting rights in relation to financial instruments referenced to a basket of shares or an index
  • a principle-based approach to determine delta for the purposes of calculating voting rights relating to financial instruments which provide exclusively for a cash settlement, and
  • an indicative list of financial instruments that are subject to notification requirements.

Click here to read ESMA's final report and draft standards.

Next steps

The final report will be submitted to the European Commission by 27 November 2014, following which the European Commission must decide whether to endorse the standards within three months of that date.