Public Hearing on four projects for the incorporation of European law norms into the Spanish legal system
The Ministry of Economic Affairs and Digital Transformation has opened for public hearing four draft Royal Decrees for urgent processing, with a deadline to submit comments until September 28, 2023. The four serve for the incorporation of European law standards into the Spanish legal system. The drafts are as follows:
Draft Royal Decree developing the administrative powers and faculties of the National Securities Market Commission.
The draft Royal Decree partially transposes Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019. It is the instrument that allows to reduce the matters that until now have been regulated in legal seat in the field of securities markets and that now will be made with a rule of regulatory rank.
In terms of content, it focuses on the development of the powers and supervisory powers that the Law confers on the National Securities Market Commission (CNMV) in order to fulfill its objectives.
The decree establishes the official registries that the CNMV must create and maintain, which are fundamental to guarantee transparency in the operation of the securities markets.
It also regulates in detail the relations of cooperation between the CNMV and other supervisory authorities, whether national, European or from third countries, when the CNMV exercises competences that may affect the competences of these authorities. This includes cooperation with the Bank of Spain, the supervisory authorities of other EU Member States, the European Securities and Markets Authority, and the supervisory authorities of third countries.
In addition, an important aspect addressed in this royal decree is the specific supervision of investment services firms, which are key financial intermediaries in the securities markets in terms of number and importance. The regulation establishes special provisions for the supervision of these firms, largely derived from European Union law, especially Directive (EU) 2019/2034 of the European Parliament and of the Council, which addresses the prudential supervision of investment firms and amends several related directives.
Draft Royal Decree on financial instruments, admission to trading, registration of negotiable securities and market infrastructures.
This Royal Decree transposes Directive 2021/338 of the European Parliament and of the Council of 16 February 2021 on reporting obligations and position limits in derivatives to facilitate economic recovery from the COVID-19 pandemic, amending Directive 2014/65/EU as well as amendments to the MiFID II Directive. The transposition seeks to strike the right balance between providing a regulatory framework that fosters the competitiveness of the financial sector while ensuring investor protection, which will help strengthen confidence in the financial sector and improve its performance in the Spanish economy.
The draft Royal Decree addresses the legal regime for the representation of negotiable securities and their registration, including the representation of securities by means of distributed registry technology. It is divided into three chapters covering common provisions, registration of securities admitted to trading on trading venues and accounting registration of securities not admitted to trading on trading venues.
In addition, it focuses on the admission to trading of securities in regulated markets, public offerings for sale or subscription, and prospectus liability. It adapts to European regulations and eliminates provisions already included in previous regulations.
On the one hand, it regulates trading centers and securities settlement, clearing and registry systems. It details organizational and operational requirements, as well as specific regulations for regulated markets and trading systems.
On the other hand, it focuses on limits to derivative positions, establishing position limits in derivatives on agricultural commodities and others, as well as regulations on the communication of derivative positions.
It also addresses the legal regime for settlement, clearing and registry systems, including the mandatory intervention of a central counterparty.
The decree also includes transitory provisions that regulate the validity of certificates issued prior to the entry into force of the decree and deadlines to eliminate certain obligations. A single repealing provision eliminates previous regulations related to marketable securities.
Draft Royal Decree amending Royal Decree 1082/2012, of July 13, approving the Regulations implementing Law 35/2003, of November 4, on collective investment undertakings.
The draft Royal Decree is the instrument to carry out the transposition of the Commission's Delegated Directive (EU) 2021/1270 integrating sustainability risks in the processes, systems and internal controls of collective investment institutions and, where applicable, of their management companies. It is also the instrument to adapt at regulatory level the amendments introduced by Law 18/2022, of September 28, on the Creation and Growth of Companies and Law 6/2023, of March 17, on Securities Markets and Investment Services, as well as to introduce amendments to Royal Decree 1082/2012.
Adaptations are to be made to Royal Decree 1082/2012, of July 13, which approves the Regulations for the development of Law 35/2003, of November 4, on collective investment institutions, significant modifications are implemented.
First, Article 106a(3) is adjusted to ensure that the risk management policy of Collective Investment Schemes (CIS) is adequate and documented, considering the sustainability risks defined in Regulation (EU) 2019/2088 of the European Parliament and of the Council. This implies that CIIs must have the necessary resources and expertise to address these risks.
Secondly, Article 106.7 is amended to establish the board of directors' responsibility for integrating sustainability risks into its functions.
Thirdly, Article 115.1 n) is adapted to include the integration of sustainability risks in the management of CIIs, considering the nature and complexity of their activities.
Fourthly, a section is added to article 144 related to conflicts of interest, where reference is made to the identification of conflicts that may arise due to the integration of sustainability risks in processes, systems and internal controls.
Finally, a new section is introduced in Article 148, which deals with due diligence in the selection and monitoring of investments. In this case, it is established that the Management Companies of Collective Investment Institutions (SGIIC) or the CIIs themselves must evaluate the exposure to sustainability risks of each CII and consider the adverse consequences of investment decisions on sustainability factors.
These amendments seek to ensure that CIIs adequately integrate sustainability risks into their operations and investment decisions, in compliance with European regulations.
Draft Royal Decree on the legal regime of investment services companies and other entities providing investment services.
This Royal Decree transposes Directive 2019/2034/EC. In turn, it partially transposes Directive (EU) 2021/338 known as MiFID II quick fix and also incorporates the content of Royal Decree 217/2008, which in turn transposes other European regulations.
With respect to its main objective, it consists of developing the provisions contained in Title V and Title VIII of Law 6/2023, of March 17, regarding investment services companies. It also addresses the regulations set forth in Title VI of the Law, which refer to data supply service providers.
This Royal Decree establishes:
> Rules on the authorization of investment services firms, including specific requirements.
> Organizational and operational requirements for these companies, as well as initial capital and solvency requirements.
> Standards of conduct to be followed by investment services firms in providing investment services.
In addition, the decree also establishes regulations related to:
> Authorization requirements for data supply providers.
> Requirements related to the dissemination, communication and treatment of information by these suppliers.
> Operational requirements and internal organization of data service providers.
The Royal Decree also develops the regime applicable to national financial advisory firms, pursuant to Article 128.5.a) of Law 6/2023 of March 17.
