Today, the Belgian Act of 25 April 2014 amending various financial legislation in view of Regulation 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (the “EMIR Implementing Act”) and the Act of 19 April 2014 on the introduction of Book VII “Payment Services and Credit” Code of Economic Law (the “Act introducing Book VII of the Code of Economic Law ”) were published in the Belgian Official Journal.
EMIR Implementing Act
EMIR contains new EU regulations with respect to Over the Counter (OTC) derivatives. The purpose of EMIR is to improve transparency and reduce the risks associated with the (OTC-) derivatives market. As a result of EMIR, OTC derivatives contracts will either have to be centrally cleared through central counterparties (“CCPs”) or will be subject to risk mitigation measures to be taken by the relevant counterparties. Details of every derivative transaction will have to be reported to a so- called trade repository. A trade repository is an entity that will centrally collect the reports of derivative transactions in a transaction register. It is expected that the trade repositories will provide regulators and supervisors with a better view of the (OTC-) derivatives market.
Whereas the provisions of EMIR are directly applicable in all EU member states, without having to be implemented into national legislation, the EMIR Implementing Act adapts the current Belgian regulatory and supervisory framework to EMIR’s provisions. In addition to (technical) amendments throughout various financial laws, the EMIR Implementing Act applies the Belgian “Twin Peaks” supervisory architecture to the financial sector and also to OTC derivatives, central counterparties, and trade repositories.
The EMIR Implementing Act designates the National Bank of Belgium (the “NBB”) as the competent authority for the authorisation and prudential oversight of CCPs established in Belgium (including, but not limited to, most organisational requirements, fit & proper character of management, requirements in respect of qualified holdings in CCPs, exposure management, margin requirements, liquidity risk management, collateral requirements, ...). The detection of systemic risks and the supervision of clearing, reporting, and risk mitigation requirements under Title II of EMIR are also within the remit of the NBB.
The Financial Markets and Services Authority (the “FSMA”), amongst others, supervises CCPs’ compliance with conduct of business rules and manages conflicts of interests within the CCPs.
The EMIR Implementing Act outlines the supervisory cooperation between the NBB and the FSMA and lays down several rules on penalties applicable to violation of certain rules under EMIR.
The text of the EMIR Implementing Act can be found here. The EMIR Implementing Act enters into force as from 7 June.
Act introducing Book VII of the Code of Economic Law
The Act introducing Book VII of the Code of Economic Law, integrates various regulations with regard to payment services and credit into the Code of Economic Law. The Act introducing Book VII of the Code of Economic Law hence supersedes the following legislation:
- the Act of 10 December 2009 on Payment Services;
- the Act of 24 March 2003 establishing the Basic Bank Account;
- the Consumer Credit Act of 12 June 1991;
- the Mortgage Credit Act of 4 August 1992; and
- the Act of 10 August 2001 on the Central Individual Credit Register.
The Act introducing Book VII of the Code of Economic Law furthermore:
- implements various provisions with regard to Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009 (the “Sepa-Regulation”);
- implements various provisions on the supervision and authorisation of credit providers and credit intermediaries included in Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 (the “Mortgage Credit Directive”). The full implementation of the Mortgage Credit Directive by 21 March 2016, will however require important amendments to Book VII Code of Economic Law (among others with regard to information requirements, conduct of business requirements, competence and knowledge requirements for staff, the requirement to assess a consumer’s creditworthiness, provisions on early repayment, provisions on foreign currency loans, provisions on tying practices and some other high-level principles (financial education, property valuation, foreclosures, etc.)); and
- introduces several new conduct of business rules with regard to the provision of credit to consumers (including with regard to the advertising, the introduction of a mandatory questionnaire, the requirement for credit providers to annually re-assess the creditworthiness of a consumer in case of open-end credit, a prohibition to grant credit to consumers registered with a payment arrear exceeding 1000 EUR in the Central Individual Credit Register, etc..). The Act introducing Book VII Code of Economic Law designates the Financial Services and Markets Authority (the “FSMA”) as competent authority for the authorisation of credit providers and the registration of credit intermediaries.
The Royal Decree implementing the Act introducing Book VII of Code of Economic Law provides that a number of provisions of the Act introducing Book VII of the Code of Economic Law enter into force as from tomorrow. Other provisions enter into force as from 1 April or 1 July 2015.