The Minister of Finance is holding a consultation on this bill, which is open for comment until 18 October 2012. The bill forms part of an amendment cycle for national financial markets regulation. The proposed commencement date of the bill is 1 January 2014.
The changes introduced relate, among other things, to:
- supervision of clearing and settlement institutions
- a general duty of care for financial service providers
- improved effectiveness of the supervision on financial reporting and information provided to investors
- revision of the regime for homeowner's saving deposits in connection with the deposit guarantee system and transfer plan
- adjustment of the asset separation rules for investment institutions and UCITs
- information sharing within the Financial Expertise Centre
Supervision of settlement institutions
The bill provides for the supervision of companies involved in the settlement of the electronic retail payment system ("afwikkelondernemingen"). Anyone carrying on such a settlement business will require a licence from the Dutch Central Bank (DNB). This applies to all settlement institutions operating in the Netherlands.
The proposed rules for settlement institutions replace a 2009 bill on the same subject, which was overtaken by EU Regulation no. 648/2012 on OTC transactions, counterparties and trade repositories.
General duty of care for financial service providers
A new provision will be added to the Financial Markets Supervision Act (FMSA) requiring financial service providers to exercise due care at all times in dealing with their clients' interests. The Minister of Finance has stated that the introduction of this general duty of care will enable the AFM to take action even before a consumer, client or beneficiary has incurred any damage. But, as a general principle, the AFM will continue to act on the basis of existing, specific regulations for financial service providers and take action on the basis of the general duty of care only in exceptional situations. The AFM may exercise part of its enforcement powers – i.e. the power to give an order subject to a penalty for non-compliance or an administrative fine – only in those cases involving an evident breach of the general duty of care.
The Financial Reporting Supervision Act (FRSA) allows the AFM to ask for additional information if it is unsure whether the financial reporting of a securities issuer has complied with the requirements mentioned in section 2 (1) FRSA. When the AFM believes that an issuer insufficiently cooperates with the AFM's request for an explanation, the AFM may ask the Enterprise Chamber to order the issuer to provide the explanation. Currently, the AFM may only do this if its request for information concerns an issuer which has its corporate seat in the Netherlands. The bill enables the AFM to apply to the Enterprise Chamber for an order to any issuer supervised by the AFM under the FRSA to provide a further explanation.
The bill allows the AFM to pass data and information received in the fulfilment of its tasks under the FRSA to the International Organization of Securities Commissions (IOSCO). The same safeguards should be observed as those applying to the exchange of information with the European Securities and Markets Authority (ESMA).
Issuers will be required to inform users of information set out in their annual financial reporting about changes or events occurring after the date on which the financial reporting was drawn up.
Separation of assets
The following points regarding the rules for asset separation at investment institutions and UCITs will be revised :
- The rules on asset separation will become applicable to investment companies, investment funds and UCITs.
- The current obligation to transfer the legal ownership of the assets of an investment institution or UCIT to a separate entity has been worded too widely and could be limited, according to the Minister of Finance. The Minister has stated that a separate entity is only required if there is a real risk that the ranking order is not effective. This is the case where an investment institution is exposed to claims under foreign law. The creation of a separate entity is not required if a leveraged investment institution or UCIT can demonstrate, on the basis of its investment policy, that it is only active in the Netherlands or only enters into agreements subject to Dutch law. In that case, the separation of assets is sufficiently ensured by the ranking order.
- The exception from this obligation, currently available to sub-funds, will be abolished.
Exchange of information within the Financial Expertise Centre
The Financial Expertise Centre (FEC) aims to safeguard and reinforce the integrity of the financial sector. To promote cooperation between DNB and AFM and other agencies such as the public prosecution service and the tax authorities within the FEC, the bill allows DNB and the AFM to share certain confidential information. The confidentiality requirements set out in the FMSA currently prevent such information sharing.