There have been many developments in national and European financial markets regulation during the past month. Among other things, the Minister of Finance unfolded plans to revise the Dutch Financial Markets Supervision Act. In this article we provide a brief overview of this and other developments.
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Market Abuse Directive and Regulation Implementation Bill
This bill implements the Market Abuse Directive (MAD) and reflects the changes brought about by the Market Abuse Regulation (MAR) by amending, among other things, the Dutch Financial Markets Supervision Act (Wft). The main rule remains unchanged: if a listed company has inside information directly concerning the company, it should, as a general rule, immediately make this information public. Under the new market abuse regime, if an issuer has delayed disclosing information to the public, that issuer must inform the competent authority immediately after the information is disclosed to the public. A written explanation has to be provided only if the competent authority (the AFM) requests this.
The bill furthermore includes the following amendments:
- The MAR will have direct effect as it is a regulation. This means that several market abuse provisions currently included in the Wft will be deleted, including the requirement to disclose inside information.
- The regime of administrative fines will be amended. The maximum fine for serious infringements will be raised from EUR 4 million to EUR 5 million and, as a result, the maximum fine for repeat infringements will be EUR 10 million. A fine of up to 10% of net annual turnover will be introduced for large enterprises. In the event that European rules impose higher fines, this maximum fine can be raised to EUR 20 million or (for large enterprises) 15% of net annual turnover. The Dutch Decree on Administrative Fines in the Financial Sector will be updated to reflect these changes
- The AFM will be designated as the competent authority for the purposes of the MAR
The MAR will apply as of 3 July 2016, which is also the deadline for the implementation of the MAD.
Revision of Dutch Financial Markets Supervision Act
In a letter dated 7 April 2016, the Minister of Finance informed the Dutch parliament that he wants to explore whether the Dutch Financial Markets Supervision Act (Wft) can be revised to make financial regulation more accessible and future-proof. Other considerations for revision are better alignment with the developments in European legislation and technological innovations in the financial sector (fintech). The Minister announced that he intends to take the following steps:
- consultations with financial sector representatives, supervisory authorities and other stakeholders, followed by a first public consultation about the preliminary results
- preparation of an outline policy document which will be submitted for advice to the Council of State
- a second public consultation about the outline policy document
Following the two public consultations, the final outline policy document is expected to be presented to the Dutch parliament in the summer of 2017.
Report on quality of investment services
The financial markets supervisor AFM published a report on the quality of the provision of investment services in the Netherlands in 2015. The report reflects research of 88 client files of 20 investment firms. The AFM assessed whether the client information these firms obtained was adequate in relation to the services that were provided.
The AFM concludes that investment firms have made progress obtaining relevant and concrete client information in order to provide suitable investment advice or asset management. A significant number of firms, however, still fail to meet the applicable requirements and to adequately assess the clients' individual needs. The AFM has therefore indicated that further measures are required.
The report also provides examples derived from practical experience to give market parties additional guidance.
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