News in the financial markets
There have been recent developments and publications that we want to inform you about. The coming about of the coalition agreement will not have escaped your notice. But which consequences will named coalition agreement have for the financial sector? Furthermore, both the ESMA and the AFM have announced their plans for 2013, indicating the spearheads of their activities and supervision in the year to come.
Below we have listed the outlines of the several above-mentioned publications.
The Rutte – Samson Cabinet – and the coalition agreement
On October 29th, news got out that the Rutte – Samson cabinet had reached a coalition agreement covering the main topics. Within this agreement a number of issues are relevant to financial markets. Below is a summary of the most important ones:
- A compulsory banker’s oath, with strict sanctions in the event of transgressions.
- Bank employees who are co-responsible for high-risk transactions will be screened by the Autoriteit Financiële Markten (AFM) and De Nederlandsche Bank (DNB).
- Banks are not allowed to sell products, which are not in the client’s interest. The duty of care for banks will become enshrined in law.
- Based on the advice of the recently installed Commissie Structuur Nederlandse Banken, propositions will be made to improve protection of civilian savings against risky banking.
- Between 2013 and 2018 the capital requirements for banks (Basel III) will be gradually raised in order to substantially reduce the risk of financial crises. The growth path for the additional buffers for system-relevant banks (SIFI) will be advanced to further restrict any risks. This will take place in a responsible way, on the basis of a risk assessment and an international comparison, also taking into consideration the competitive position.
- ABN AMRO cannot go back to the market before the financial sector has stabilized. There has to be sufficient interest in the market and the company has to be ready enough so as to be able to recover as much as possible of the total State investment. Against this background other options are also being explored as well as a possible complete stock-market flotation.
- The limit of the maximum variable rewards within the financial sector has been legally established at 20% of fixed rewards.
- To be able to effectively tackle abuse, fraud, constructions and money laundering, the tax authorities and the FIOD/ECD will get more resources.
- The College Bescherming Persoonsgegevens (protection of personal data), will receive more powers, including the authority to impose more fines. When building systems and constructing databases, the protection of personal details will be the point of departure. A so-called privacy impact assessment (PIA) will be a standard part of that.
ESMA publishes work programme for the year 2013
At the beginning of October 2012, ESMA published its work programme for the year to come. Its priorities are mainly focused on new regulation, such as the ‘single rulebook’, MiFid and MAD, European legislation for investment companies, credit rating agencies and EMIR. But also the protection of the financial consumer and financial innovation come up for discussion, as well as how ESMA will contribute to financial stability, transgressions of European legal rules and mediation. Finally, a paragraph is dedicated to the organisation of ESMA.
With regard to MiFID the emphasis lies on the development of new rules for ‘high frequency trading’, improved rules for the commodity derivatives trade, improved investors protection and improvement in the quality of trading data.
For investment companies ESMA’s focus will be on the conclusion of the most important parts of the AIFM Directive, until the transposition date in July, 2013, work in the area of UCITS, and on the regulation for Venture Capital. Furthermore ESMA will continue working on the Prospectus Directive, the Transparency Directive and Corporate Governance.
In the area of EMIR, ESMA will comment on the question of which OTC derivatives will be subjected to the clearing obligation. In addition ESMA will start and maintain a register for the clearing obligation and decide which countries will be regarded as third country for CCP.
ESMA will also investigate the implementation of European legislation by member states (peer-reviews), in particular the rules of conduct under MiFID and the rules of ESMA in the field of high frequency trading and best execution.
Due to the increase in the number of ESMA’s tasks and competences the number of employees and the organisation’s budget will increase too. In 2013 it will remain equally challenging to offer the necessary administrative and technological support to continue realising ESMA’s objectives.
The complete contents of ESMA’s work programme can be read on ESMA’s website.
AFM publishes provisional annual plans 2013
In recent years the AFM has published an annual agenda, setting out its priorities regarding supervision in the year to come. A temporary agenda for the 2013 was published at the end of September. The reaction time to this provisional agenda expired on 21st October. Again, the client will be at the heart of the matter and the supervision’s priorities will be the quality of service and in particular the appropriateness of advice.
A new item on the agenda is the investigation into the recommendation of complex products to professional investors, this investigation has already been set up. The first analysis has given rise to the AFM carrying out further investigations. In addition, the functioning of the inter-professional market for derivatives and ‘structured products’ is also being examined.
In the framework of well functioning capital markets issues are being tackled surrounding accountancy, company boards and annual reports, under the heading ‘quality governance, reports and accountancy’.
The AFM will be discussing the provisional agenda in the near future with the Advisory Panel of representative organizations. Of course, as soon as the AFM has permanently set the 2013 agenda, we will give you further information.
In conclusion
Although a number of subjects from among other things the coalition agreement will still be elaborated, there are several points you could focus your attention on within your company. For instance, you could think about the statutory basis of the maximum variable bonus and the PIA (Privacy Impact Assessment). After all, these are matters that call for internal harmonization and preparation.
Also ESMA’s points of interest, incorporated in its work programme, will lead to the implementation of new or additional obligations for the different players in the financial markets. Of course, which of these obligations are of importance to your company depends on the type of financial institution and the services your institution offers.
It is evident that in 2013 you will be faced with a number of new regulations and obligations. It goes without saying that we will keep you posted. If you so desire, we can make an inventory of the implications of the new laws and regulations for your company and advise you how to implement these matters.