Implementation of MiFID
The FSMA issued on 18 July 2017 a communication (the “Communication”) on the preparation for the entry into force of the Directive 2014/65/EU on Markets in Financial Instruments (“MiFID II”). Such Communication (FSMA_2017_11) aimed at facilitating the identification and the understanding of the new rules of conduct entering into force on 3 January 2018.
For this purpose, the Communication:
- Identifies the most relevant texts with regard to the rules of conduct laid down in MiFID II.
- Summarizes the main changes brought by MiFID II.
- Draws the attention of the regulated entities on the importance of an action plan identifying the measures to adopt in order to meet the requirements resulting from MiFID II.
In the meantime, MiFID II has been implemented in Belgium by the law dated 21 November 2017 on infrastructure for markets in financial instruments and on the implementation of Directive 2014/65/EU (“MiFID II Law”) which entered into force on 3 January 2018. A Royal Decree dated 19 December 2017 contains further detailed rules on the implementation of the Directive (the “MiFID II Royal Decree”).
As a consequence of MiFID II Law, the payment of commissions, fees or retrocession payments by funds or fund managers to fund distributors is now restricted (Art. 105 of MiFID II Law transposing Art. 23 to 30 of the Directive). The MiFID II Royal Decree implements Art. 11-13 of the Commission Delegated Directive 2017/593/EU (Level 2 of EU regulatory framework).
Belgian FSMA Communication Related to the Ancillary Activity Exemption and Position Limits in Commodity Derivatives
This Communication dated 1st December 2017 (FSMA_2017_22) details the procedure to be followed by entities whose trading activity is ancillary to their main business and that wish to be exempted from the obligation to hold an authorization as an investment firm. It also explains certain aspects of the position limits regime introduced pursuant to MiFID II and that applies to commodity derivatives. The method for setting position limits is laid down in Commission Delegated Regulation 2017/591 (‘RTS 21’).
In order to be eligible for the exemption from authorization as an investment firm, the relevant entity must complete the notification form attached to the Communication and send it by email to the FSMA, on an annual basis.
Further Implementation of the Market Abuse Regulation in Belgium
On 31 July 2017, a new law was adopted to further implement and ensure the effectiveness of Regulation 596/2014 on market abuse ("Market Abuse Regulation"). This new law amends the law of 2 August 2002 on the supervision of the financial sector and on financial services ("Financial Law") and aims, among others, at:
- Introducing and refining the FSMA’s investigation powers (including professional bans, home searches and seizure of documents or electronic data).
- Implementing the Directive 2014/57 on criminal sanctions for market abuse ("Market Abuse Directive on Criminal Sanctions"). To this end, the law introduces several changes to the Financial Law to align the notions of "insider trading", "market manipulation" and "unlawful disclosure of inside information" to the Market Abuse Regulation and the Market Abuse Directive on Criminal Sanctions. In addition, the law introduces new sanctions: the FSMA may cumulatively impose administrative sanctions on both the legal person and any physical person who committed such infringement on behalf of the legal person or who participated in the decision-making process leading to such infringement.
- Partially implementing the Directive 2015/2392 as regards reporting to competent authorities of actual or potential infringements of the Market Abuse Regulation. Pursuant to Article 32 of the Market Abuse Regulation, Member States must ensure that competent authorities establish effective mechanisms to enable reporting of actual or potential infringements of the Market Abuse Regulation to such authorities. In this perspective, the law introduces a new article 69bis in the Financial Law allowing any individual, acting in good faith, to report infringements to the Market Abuse Regulation while being protected from any civil, criminal or disciplinary action or professional sanctions. The FSMA will ensure that the identity of such individual remains confidential.
The new law on market abuse entered into force on 21 August 2017.