A number of changes in Dutch financial market regulation are now in effect as of 1 January 2014. There have also been many developments in European regulation. Supervisory authorities have published a large number of consultation documents, draft rules and other information since the last edition of In Context. We provide an overview of this news, signal important court decisions, and also list relevant articles in international legal journals.
Changes in effect as of 1 January 2014
- The Financial Markets Amendment Act 2014 introduces a number of changes, which were summarised in the December 2013 issue of In context. The Financial Markets Amendment Decree, which has also entered into force, has amended a number of decrees based on the Financial Markets Supervision Act. Among other things an inducements ban has come into effect for investment companies. In addition, the Decree includes additional rules for supervision of settlement companies. A summary of the main changes are set out > here.
- The professional competence requirements for financial service providers have been amended. This means that all employees who give advice to clients must have a diploma. Companies must also demonstrate that other employees who provide services to customers are competent to do so. There is a transitional arrangement for companies that held a licence on 31 December 2013 and met the then applicable competence requirements. These companies have until 1 January 2016 to ensure that all advisers have the necessary qualifications.
- A Temporary Resolution Levy Act introduces a one-off bank levy of in total EUR 1 billion in relation to deposits held on 1 February 2013.
- New rules for supervision of financial conglomerates are in place aimed at improving cooperation between the various supervisors involved in a financial conglomerate.
- The FMSA Exemption Regulation has been amended in connection with the implementation of the AIFM Directive. Public interest entities will get wider exemptions from licence requirements when they advise on or act as an intermediary in the opening of current or savings accounts. There is also a wider exemption for salary administration offices, accountants, and trustees as referred to in Book 1 Dutch Civil Code. They may not pass consumer data on to providers without becoming subject to licence requirements. But a condition is that they do not receive inducements from the provider.
- DNB has been designated as the body charged with supervising the Capital Requirements Regulation.
- The rules for calculating the theoretical solvency requirement by insurers have been amended.
Agreement on recovery and resolution of
The European finance ministers have agreed a position on the single resolution mechanism. If the European Parliament approves the proposed directive, not only shareholders but also bond holders and large savers will from 2016 have to contribute to a bank's rescue.
The regulation will enter into force on 1 January 2015. Bail-in will become possible from 1 January 2016, two years earlier than originally planned.
European Parliament adopts new mortgage lending
These rules are set out in a directive that aims to offer better protection to consumers taking out a mortgaged loan. It will become easier to compare mortgages, and consumers will get a cool-off period of seven days. The directive will also offer more protection when payment problems arise. Consumers will have the right to repay early, but member states may make this subject to additional conditions. Finally, a licence and registration requirement is introduced and a European passport for credit brokers.
The directive needs to be adopted by the Council, and according to current expectations, it will have to be implemented in 2016.
Reporting on derivatives transactions
Banks and insurers will have a duty – based on EMIR – to report derivatives transactions from 12 February 2014. DNB has placed information on this new duty on its website.
Dutch Central Bank
Policy guideline on netting in transfer of business
pursuant to section 3:159c FMSA
If DNB believes that a bank or insurer is in financial difficulty, it can prepare a transfer plan. The plan may relate to deposit agreements, assets or liabilities other than deposits, shares issued by the financial institution, or a combination of these. But the new rules have caused concern as they could frustrate netting powers. For this reason, DNB has published a policy guideline that assets and liabilities covered by an agreement with a netting clause may only be jointly included in a transfer plan. The policy guideline also applies to a transfer plan that is submitted to the district court for approval if a bankruptcy application has been submitted or during the bankruptcy of a troubled institution.
DNB responds to questions about CRD IV transition
The Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD IV) came into effect on 1 January 2014. The directive is expected to be implemented in the FMSA by the middle of 2015. On its website, DNB answers questions about the new rules and the transition period:
- Scope of capital requirements of CRR and CRD IV for investment firms
- Concurrence of CRD provisions regarding the prohibition against intra-group guarantees of own capital instruments and against an intra-group guarantee as a condition for the solo waiver
- The definition of credit institution
European and international supervisors
- Draft Regulatory Technical Standards on specific situations that require the publication of a supplement to the prospectus
- Opinion on the format of the base prospectus and consistent application of Article 26(4) of the Prospectus Regulation
- Data on prospectuses approved and passported (January 2013-June 2013)
- Consultation paper on revision of the provisions on diversification of collateral in ESMA's guidelines on ETFs and other UCITS issues
- Waivers from pre-trade transparency: CESR positions and ESMA opinions
- ESMA identifies deficiencies in CRAs sovereign ratings processes
- Updated Q&A on ETFs and other UCITS issues
- Final draft technical standards on market risk and credit valuation adjustment risk
- Final Guidelines on capital measures for FX lending to unhedged borrowers under the Supervisory Review and Evaluation Process
- Reports on liquidity
- Consultation on disclosure of encumbered and unencumbered assets
- Report on risks and vulnerabilities of the EU banking sector
- Consultation on harmonised definitions and templates for funding plans of credit institutions
- Technical advice on possible treatments of unrealised gains
- Final draft technical standards on supervisory disclosure
- Final draft technical standards on the reporting of the hypothetical capital of a central counterparty
- Consultation on the minimum amount of professional indemnity insurance for mortgage credit intermediaries
- Final draft technical standards on metrics for monitoring additional liquidity
- Draft technical standards on market risk
- Final draft technical standards on securitisation retention rules
- Consultation on significant credit risk transfer for securitisation transactions
- Final draft technical standards on own funds
- Final draft Implementing Technical Standards on joint decisions on institution-specific prudential requirements
- Final draft Technical Standards on passport notifications
- Warning on virtual currencies
- Consultation on methodology for identifying global systemically important institutions
- Follow-up review of banks transparency in their 2012 reports
- Guidelines on retail deposits subject to different outflows for the purpose of liquidity reporting
- Final draft technical standards on the determination of the overall exposure to a client or a group of clients in respect of transactions with underlying assets
- Final draft technical standards on conditions for assessing materiality of extensions and changes of internal approaches for credit and operational risk
- Report on the remuneration of EU bank staff who received one million Euro or more in total in 2012
- XBRL taxonomy for remittance of supervisory reporting by competent regulatory authorities
- Opinion on the licensing, regulation and supervision of cooperative credit institutions
- Inter-Institutional Agreement between the European Parliament and the ECB on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB within the framework of the Single Supervisory Mechanism
- Report on regulatory issues raised by changes in market structure
- Report on the impact of trading fee models on trading behaviour
- Report on regulation of retail structured products
Basel Committee on Banking Supervision publications
- Capital requirements for banks' equity investments in funds – final standards
- Consultation on revisions to the securitisation framework
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