• The basic objectives of the text are to reinforce the protection of financial services clients and increase transparency and information related to operations carried out with financial instruments.
  • The approved Royal Decree develops the legal regime of the regulated markets, as well as that of the Investment Services Companies.
  • In relation to incentives and retrocessions, specific requirements are established to consider that there is an improvement in the quality of the service offered and provided to the client

The Council of Ministers today approved the Royal Decree on the development of the Securities Market Law to adapt it to the regulations on the markets for financial instruments, better known as MIFID II. This Royal Decree completes the transposition into the Spanish legal system of the MIFID II regulatory package.

The urgency to complete the transposition is given by the end of the term in July 2017 and the filing of a claim for non-compliance before the Court of Justice of the European Union (CJEU), with the corresponding proposal for sanction. Likewise, its incorporation into Spanish regulations is a priority in order to have all the instruments that allow greater client protection and a better functioning of the markets, which ultimately results in the improvement of financing for companies and individuals.

The MIFID II Directive has been transposed into the legal system through Royal Decree-Law 21/2017, of December 29, on urgent measures for the adaptation of Spanish law to the European Union regulations on the stock market, of the Royal Decree-Law 14/2018, of September 28, which modifies the consolidated text of the Securities Market Law and the Royal Decree that is approved today.

The Royal Decree has as basic objectives to reinforce the protection of financial services clients, increasing the level of trust in the entities that provide these services, and increasing the transparency and information available to supervisors and the general public about the operations that They are carried out with financial instruments in the stock markets.

In response to these objectives, the approved text details the legal regime of the regulated markets, as well as that of the Investment Services Companies.

As regards the regulatory development of the securities markets, A set of requirements are established to improve the corporate governance of its governing bodies. Likewise, the requirements for access, loss and suspension of the condition and management of conflicts of interest of the so-called members of the regulated markets are developed.

Limits are established for positions in derivatives on raw materials, in order to prevent market abuses and promote correct price formation and settlement conditions to avoid positions that distort the market. Finally, in relation to the providers of data supply services, the typology of these entities is developed, which are an important part of increasing transparency in the negotiation of financial instruments pursued by the standard.

The Royal Decree addresses the regulatory development of the operation and obligations of the Investment Services Companies, also with the aim of reinforcing investor protection. In this area, and regarding the limitation of the collection of incentives or retrocessions, the marketing of at least 25% of third-party financial products and at least two third-party alternatives in each category of funds marketed, so that it can be estimated that there is an increase in the quality of the service offered and therefore retrocession can be charged.

Regarding the supervision and control of the design and distribution of financial products, it is established that the prior approval process of each investment product will be the responsibility of the board of directors of the investment services company.

The aim is that the characteristics of the products are the most appropriate for each type of customer. In this way, the main objective of protecting the financial client is reinforced, since the aspects related to the suitability of the financial instrument for the specific client to which it is addressed are not only present at the time of commercialization, but from the very conception of the same.

Another issue that reinforces both investor protection and the supervisory capacity of the CNMV is that of the obligation to include in the records of investment service companies telephone conversations and electronic communications related to the execution of orders on their own account. and with the provision of the order reception, transmission and execution service.

The obligations that investment services companies that carry out algorithmic trading are also developed. In the adaptation of MIFID II to the Spanish legal system, requirements are established in order to avoid the operational risk derived from the lack of human intervention and ensure a correct assumption of responsibilities.

Regarding direct electronic access, the regulation requires investment services companies to guarantee the proper functioning of this functionality, as well as the adequate allocation of responsibilities in case of errors or anomalies.

Finally, regarding third-country companies that provide investment services in Spain, the regulation details the procedure for authorizing the opening of branches.

Additionally, this Royal Decree also completes the transposition of the CRD IV Capital Directive with respect to certain obligations of financial services companies when they maintain client assets in their accounts, since they must establish controls and receive authorizations. necessary to guarantee the adequate protection of said files.



Source of the new