There have been many developments in national and European financial markets regulation during the past month. Among other things, the European framework for recovery and resolution of credit institutions and investment firms has been implemented in the Netherlands. Also, the European Commission has proposed a review of the current prospectus regime. In addition, supervisory authorities have published a large number of consultation documents, draft rules and other information since the last edition of In context.
Framework for recovery and resolution of credit institutions and investment firms implemented
The European rules for the recovery and resolution of credit institutions and investment firms have been implemented in the Netherlands. The implementing Act, Decree and Regulation took effect on 26 November. They contain rules on recovery and resolution plans, the national resolution fund and the powers of the Dutch Central Bank.
Implementation of the Directive on Deposit Guarantee Schemes
The European rules on Deposit Guarantee Schemes have been implemented in the Netherlands. Deposit guarantee schemes are now funded ex-ante: this means that banks will pay quarterly contributions to the DGS funds.
Other amendments include:
- Deposit Guarantee Schemes will protect all deposits held by individuals and enterprises whatever their size, except for deposits of financial institutions and authorities.
- Repayment deadlines will be gradually reduced from 20 working days to 7 working days.
European deposit insurance scheme
The European Commission proposed a euro-area wide deposit insurance scheme for bank deposits last month. This scheme will fully insure national deposit guarantee schemes as of 2024. The Commission has set out further measures to reduce remaining risks in the banking sector in parallel.
Dutch regulations – other amendments
- The Financial Markets Amendment Act 2016 has been published. For an overview of the amendments, please see our article in the June In context.
- The Regulation on European long-term investment funds has been implemented. The implementing Act entered into force on 9 December.
- The Act implementing the Regulation on improving securities settlement in the European Union and on central securities depositories has been published and will enter into force shortly.
AFM provides clarity on publication of quarterly figures
One of the proposals included in the Bill implementing the amended Transparency Directive is that listed companies will no longer be required to publish their quarterly figures. Although this Bill is expected to enter into force after 1 January, the AFM explains on its website that no quarterly figures will have to be published as from that date.
European Commission proposes overhaul of prospectus rules
The European Commission has published its proposal for a review of the current prospectus regime. According to the Commission, the new rules will make it easier and cheaper for smaller companies to access capital markets. Also, the rules will be simplified for all companies that wish to issue shares or debt. Finally, the Commission wants to improve prospectuses for investors by introducing a retail investor-friendly summary.
The proposal will make the following changes:
- The current Prospectus Directive will be turned into a Regulation, which will reduce the scope for differences in national implementation.
- No EU prospectus will be required for capital raisings below EUR 500,000 (the current threshold is EUR 100,000). Member States will also be able to set higher thresholds for their domestic markets. Here the threshold will doubled from EUR 5 million to EUR 10 million.
- A lighter prospectus will be created for smaller issuers (up to EUR 200 million market capitalisation).
- The information to be included in a prospectus will be specified more clearly. As a result prospectuses and their summaries will be shorter and clearer.
- A lighter prospectus will be created for companies already listed on a public market that want to issue additional shares or raise debt.
- An optional fast-track approval mechanism will be introduced for frequent issuers. They will be able to use an annual “universal registration document” containing all the necessary information on the company.
- ESMA will provide free and searchable online access to all prospectuses approved in the European Economic Area.
The proposal now goes to the European Parliament and the Council of the European Union for discussion and adoption. The current regime will remain in force for prospectuses approved before the date of entry into application of the proposed Regulation.
Technical standards for approval and publication of prospectuses and dissemination of advertisements
The European Commission has also adopted a Delegated Regulation containing technical standards for the approval and publication of prospectuses and the dissemination of advertisements. This regulation supplements the Prospectus Directive and amends the Prospectus Regulation. It will enter into force on the twentieth day following its publication in the Official Journal
European and international supervisors
European Securities and Markets Authority – publications
- Q&As regarding the implementation of the Market Abuse Regulation
- Update EMIR standards on data reporting
- Discussion Paper on the validation and review of Credit Agencies’ (CRAs) methodologies
- New database on suspicions and removals from trading
- Final Report on guidelines on complex debt instruments and structured deposits (link)
European Banking Authority – publications
- Legal framework for banking supervision – volume III
- Report on publication of administrative penalties on an anonymous basis
- Updated list of identified Financial Conglomerates
- Consultation on draft Guidelines on the treatment of CVA risk under SREP
- Publication on remuneration practices and the use of allowances across the EU
- Benchmarking report on the use of higher ratios for variable remuneration
- Consultation on criteria for preferential treatment in cross-border intragroup financial support under LCR
Joint Committee – publications
- Consultation on PRIIPs Key Information Documents
- Implementing Technical Standards on credit assessments by External Credit Assessment Institutions
European Central Bank – publications
- Interconnectedness of the banking sector as a vulnerability to crises
- Draft ECB Regulation on the exercise of options and discretions available in Union law
International Organization of Securities Commissions – publications
- Consultative report Guidance on cyber resilience for financial market infrastructures
- Final report on Standards for the Custody of Collective Investment Schemes’ Assets
- Final report Transparency of Firms that Audit Public Companies
Basel Committee on Banking Supervision – publications