A NOTEPAD ON COMPANY AND FINANCIAL LAW, NEWS AND REGULATION
The European Commission today gave 10 EU member states the green light to go ahead with the introduction of a financial transactions tax through the enhanced cooperation procedure. The countries are Germany, France, Austria, Belgium, Portugal, Slovenia, Greece, Italy, Span and Slovakia.
The Commission’s press release is here and a set of Q&As are here.
Trust cash cows rather than herd instincts – Luke Johnson, FT
Why leaving the EU would be bad for City – Anthony Hilton, Evening Standard
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On 17 September 2012 ESMA issued a consultation paper on proposed remuneration guidelines for MiFID investment firms. ESMA press releases are here and here, and the consultation paper is here. From the press releases:
“The Guidelines aim to strengthen investor protection by seeking to improve the implementation of the MiFID rules on conflicts of interest, and thereby preventing mis-selling of products. The Guidelines will apply to investment firms, credit institutions, fund management companies when providing investment services, and to competent authorities. Firms must ensure that they have appropriate remuneration policies and practices in place, bearing in mind the obligation on firms to act honestly, fairly and professionally in the best interests of their clients.”
The consultation closes on 7 December 2012.
The new EU short selling regime will come into force on 1 November 2012, with the existing UK rules on short selling being abolished at the same time. We described the new EU regime in this post.
On 13 September 2012 ESMA, the EU securities and markets regulator, published a set of Q&As “to promote common supervisory approaches and practices amongst the EU’s national securities markets regulators on the requirements of the short selling regulation once it comes into force on 1 November 2012”. The Q&As can be read here and the accompanying ESMA press release is here.
The Q&As cover issues related to:
The NYT’s DealBook’s has a useful analysis of why BAE Systems and EADS are pursuing a DLC structure for their proposed merger. Excerpts:
In a speech on 6 September 2012 Michel Barnier, the European Commssioner for Internal Market and Services, announced that later in 2012 he will launch a “broad consultation” on “how to ensure” that European financial centres are fulfilling the following three roles “as efficiently and effectively as possible”:
“First, they need to provide a stable platform for institutional investors such as pension funds and insurers to match their long-term liabilities with long-term assets;
They should also offer safe and profitable vehicles for household savings;
Lastly, they need to support sustainable, green and socially-responsible economic growth.”
See also: Lord Myners sticks it to European Commissioner
Fresh from proposing amendments to its own draft regulation and directive on market abuse that would criminalise the manipulation of benchmarks, including LIBOR and EURIBOR, the Commission has today launched a consultation on “a possible framework for the regulation of the production and use of indices serving as benchmarks in financial and other contracts”. The Commission’s press releases is here, the consultation page is here and the consultation document is here.
The Financial Times reports today that Viviane Reding, the EU Justice Commissioner, will next month propose that listed companies “will be forced to reserve at least 40 per cent of their non-executive board seats for women by 2020 or face fines”. The FT points out that such rules could be adopted by majority voting, so the UK would not have a veto. The draft of the proposals obtained by the FT suggests that the proposals would apply to companies with more than 250 employees or more than Euro 50 million in revenues, with those failing to meet the mandatory quota being subject to “administrative fines” and, more seriously, potentially being barred from state aid and contracts.
Mario Draghi’s article today in Die Zeit on “The future of Euro: stability through change” has been published by the European Central Bank. Excerpt:
The UK introduced a temporary short selling regime in 2008, placing it on a permanent footing in 2009 and 2010 through rules now contained in Chapter 2 of the FINMAR module of the FSA Handbook. That regime requires the public disclosure of net short positions of 0.25% or above of the issued equity of selected UK financial stocks and UK stocks undertaking rights issues.
The UK regime will be abolished on 1 November 2012 when the EU Short Selling Regulation (EU No 236/2012) comes into effect. The Regulation is directly applicable in the UK and requires no further domestic implementation. The Regulation requires that:
A rather grim article from the Economist on the difficulties that face entrepreneurs, particularly start-ups, in Europe. The accompanying editorial contains the amazing statistic that:
“Since 1975 the countries now in the euro zone have given birth to just one company currently among the world’s 500 biggest…by contrast California alone has created 26.”
The Commission has today published amendments to its October 2011 “Proposals for a Regulation on Market Abuse and for a Directive on Criminal Sanctions for Market Abuse” (which we discussed in this post). The amendments would criminalise the manipulation of benchmarks, including LIBOR and EURIBOR and all other benchmarks which “determine the amount payable under a financial instrument”.
The Commission’s press release is here, the EU Justice Commission’s press release is here and a set of FAQs is here.
The Commission proposes to achieve this criminalisation of benchmark manipulation through amendments to its draft Directive on Criminal Sanctions for Market Abuse:
This note discusses developments since the European Commission’s autumn 2011 proposal for a financial transaction tax, and this note looks at the historical background to the “Tobin tax”.
See also: French trading tax lacks details, say banks – Financial Times
Press release here and FAQs here.
See also: Short selling and CDS regulation adopted, will apply from 1 November 2012
The Foreign and Commonwealth Office has today launched a “review of the balance of competences of the EU as it affects the United Kingdom”. From William Hague’s statement to Parliament today:
In September 2011 the European Securities and Markets Authority opened an investigation into “empty voting”, which it described as:
“The separation of the economic interest relating to shares from their voting interest (decoupling of voting rights), usually achieved by using derivative instruments and trading strategies in the securities markets…(i.e. having voting rights attached to shares without corresponding economic exposure).”
On 29 June 2012 ESMA released a Feedback Statement summarising responses received to its investigation. Based on its analysis of the responses, ESMA has decided that there is no basis for any regulatory action in relation to empty voting. From page 12 of the Feedback Statement:
Following the European Parliament’s approval of the European Market Infrastructure Regulation on 29 March 2012, the Council of the EU adopted the EMIR on 4 July 2012. The final text of the EMIR is here.
The EMIR, more formally the “Regulation on OTC derivatives, central counterparties and trade repositories”, will apply from the end of 2012. The European Securities and Markets Authority now has to prepare the technical standards required to support the EMIR. Steven Maijoor (the Chair of ESMA) stated in this speech on 4 July 2012 that it plans to submit those technical standards to the European Commission on 30 September 2012. ESMA’s 25 June 2012 consultation on those technical standards is here.
UPDATE 27 July 2012: The text of the EMIR has been published in the Official Journal and so will come into force in 20 days time. For key dates on its implementation thereafter, see this Herbert Smith note.
UPDATE 10 August 2012: ESMA has published the responses received to its June 2012 technical standards consultation.
See also: What is the EMIR?
The European Securities and Markets Authority published on 2 July 2012 the fifteenth updated version of its “Question and Answers on Prospectuses“. The purpose of the Q&As is to “promote common supervisory approaches and practices in the application of the PD [the Prospectus Directive] and its implementing measures. It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of the PD”.
In Geltl v Daimler AG the European Court of Justice ruled on 28 June 2012 on an important case for the interpretation of the UK market abuse regime. The ECJ ruling emphasises that very careful thought is required when determining at what point in an ongoing process information becomes “inside information” and potentially announceable to the market.
The UK market abuse regime is contained in Part VIII of the Financial Services and Markets Act 2000, and in its current form reflects two EU directives (2003/6 and 2003/124). The ECJ judgment is here and the accompanying press release is here.
Mr Geltl’s case
The case arose from the sale of shares by Mr Geltl, a Daimler shareholder.
In March 2012 the European Securities and Markets Authority published a discussion paper on possible policy options on the proxy advisory industry, “to gain evidence on the extent to which market failures related to the activities of proxy advisors may exist, the extent to which EU-level intervention might be appropriate, and what ESMA’s role might involve”.
We covered the launch of the discussion paper in this post.
Today ESMA has published the responses it has received to the discussion paper.
On 28 June 2012 the European Securities and Markets Authority published a consultation paper on its proposed guidelines on the remuneration of alternative investment fund managers. The consultation paper is here and the accompanying press release is here.
The guidelines, once adopted, will apply to hedge fund, private equity fund and real estate fund managers where those alternative investment funds are within the ambit of the Alternative Investment Fund Managers Directive (AIFMD). For background on the AIFMD, see these posts.
The European Securities and Markets Authority has published the 14th version of its “Question and Answers” on prospectuses. (This was originally produced by CESR, the forerunner to ESMA.)
The changes to be made to the FSA Handbook as part of the UK implementation of the EU Amending Directive have been published. The changes relate principally to the Prospectus Rules and to the Disclosure Rules and Transparency Rules and will come into force on 1 July 2012.
The EU Amending Directive amends the prospectus regime established by the 2003 EU Prospectus Directive. We discuss the Amending Directive and its UK implementation in this post.
The final text of The Prospectus Regulation 2012 (SI2012/1538) has been published, together with an explanatory memorandum.
The Prospectus Regulation amends the Financial Services and Markets Act 2000 as part of the UK implementation of the EU Amending Directive, which amends the prospectus regime established by the 2003 EU Prospectus Directive. We discuss the Amending Directive and its UK implementation in this post.
With the Chancellor of the Exchequer and the Governor of the Bank of England setting out their policy responses (last night’s Mansion House speeches here and here) to the continuing tightness of credit in the UK and anticipated liquidity problems following the Greek elections, and the ECB also hinting that it will make additional liquidity available to Eurozone banks, the retail forex trading OANDA is suspending its service on Sunday:
“The decision to halt trading is very much tied to the uncertainty in Europe and in particular, the Greek election. Given these events, there is the potential for extreme exchange rate volatility at a time when global currency markets are closed. OANDA’s concern is that exchange rates could undergo significant fluctuations as the exit polls are made public. If these fluctuations are wide enough, accounts that under normal conditions would be considered well-capitalized, could become subject to a margin call.
By halting trading and holding the closing prices steady during this period, we aim to shelter traders from the potential for price spikes.”
See also: Brokerage exits Greek stock market, credit insurer reviews [now pulls] cover for exports to Greece
A Eurozone exit: forex traders and retailers prepare
A Eurozone exit: Legal implications for companies and businesses
Look what Bloomberg appears to have been testing.
See also: Brokerage exits Greek stock market, credit insurer reviews [now pulls] cover for exports to Greece
The unravelling of the Greek economy’s infrastructure continues, with the brokerage firm Newedge informing clients that it will only process sell orders on Greek shares and will not extend margin loans on positions in Greek securities (Financial Times), and (more ominously) the large credit insurer Euler Hermes stating that it is reviewing coverage for exports to Greece (Bloomberg).
UPDATE 30 May 2012: Euler Hermes pulls cover on exporters to Greece
See also: A Eurozone exit: forex traders and retailers prepare
How would Greece actually carry out a Eurozone exit?
A Eurozone exit: Legal implications for companies and businesses
The European Parliament has today adopted the Commission’s proposal for a financial transaction tax, and widened its scope. The Parliament’s press release is here and the text adopted is here (shows changes made by the Parliament to the Commission’s proposal). The Parliament’s vote is advisory at this stage and the Council can ignore or adopt the Parliament’s amendments. The timetable for the FTT remains:
The Financial Times reports today that Michel Barnier, the European Commissioner for the Internal Market and Services, will propose that shareholders should get a binding vote on directors’ pay in quoted companies when he makes his final recommendations on corporate governance in listed companies in autumn 2012.
For the UK, the suggestion simply replicates the Government’s own proposals for a binding vote confirmed in the May 2012 Queen’s Speech.
In his interview with the FT, Mr Barnier also suggests that:
Currency traders recreate drachma in their trading systems, reports ITV, whilst Dixons prepares for its Greek business for civil unrest, reports the Financial Times.
See also: A Eurozone exit: Legal implications for companies and businesses
How would Greece actually carry out a Eurozone exit?
What are the contractual implications of a country leaving the Euro?
EIB inserts currency change clauses into loans to Greek firms
A good note from Stephenson Harwood on “20 things a UK-based hedge fund manager needs to do” when planning for the Alternative Investment Fund Managers Directive.
The European Commission published seven explanatory notes on 4 May 2012 that provide analysis and clarification on how the proposed EU financial transactions tax would work in practice. The notes and related webpage are here.
Company and Financial Law 