As a result of the ongoing Eurozone sovereign debt crisis, and in accordance with recent European Council measures intended to reinforce the equity of large credit institutions and to give such institutions easier access to medium and long-term financing, the Spanish government has passed a law which establishes a programme that guarantees credit institutions' debt issues by up to €100 billion.
The lower house of Parliament has approved the reform of the Collective Investment Undertakings Law, with the main objective of implementing various EU directives, particularly the EU Undertakings for Collective Investment in Transferable Securities IV Directive, into Spanish law. The reform will also introduce other amendments to bolster the competitiveness of the Spanish financial services industry.
The lower house of Parliament has approved a reform of the Securities Market Law relating to the securities clearing, settlement and registry system. In light of the fact that post-trading activities are to be carried out against a backdrop of greater integration at EU level, the reform seeks to modernise such activities, allowing the process to be simplified and costs to be cut.
A new circular of the CNMV, the Spanish securities market regulator, came into force on July 1 2011. It specifies the information that must be submitted by foreign collective investment schemes that are registered with the CNMV. Other developments to streamline the Spanish regulatory framework are still pending.
New Law 6/2011 amends the Spanish regulations on hybrid instruments for credit institutions. The new law follows the EU Capital Requirements Directive which, adopted against the backdrop of the global financial crisis, aims to adjust the failings in the prudential regulation of credit institutions by establishing new conditions for acceptance of hybrid capital instruments as own funds.
The Comisión Nacional del Mercado de Valores has published its latest report on the reform of the Spanish system for the clearing, settlement and registration of securities. The report focuses on the introduction of central counterparty clearing houses, and on alternative models for the registration and safekeeping of securities via a settlement system.
Amendments have been made to the regulations governing Iberclear, the central securities depository, which is in charge of both the registration of book-entry securities and the clearing and settlement of trades on the Spanish stock exchanges. The new Title V regulates settlement services in respect of out-of-the-market transactions, while Title VI establishes the scope of agreements between Iberclear and securities entities.
The Comisión Nacional del Mercado de Valores has published a document containing criteria to implement liquidity provisions for fixed-income issues addressed to retail investors (excluding commercial paper). The criteria establish a framework for both issuers and financial entities, when negotiating stipulations and agreements, in order to provide liquidity to issues to be listed on a Spanish secondary market.
The Executive Committee of the Comisión Nacional del Mercado de Valores has agreed to incorporate measures approved on September 22 2008 into the disclosure regime on short positions recently proposed by the Committee of European Securities Regulators. The measures include extending the obligation to disclose short positions on any share or 'cuota participativa' admitted to trading in the Spanish regulated markets.
The National Securities Commission Circular on Material Information sets out a list of illustrative cases involving material information to facilitate its identification and classification, although inclusion in the list does not necessarily mean that the information has such status. The circular designates the CIFRADOC system as the means through which issuers should provide such information.
The Ministry of Economy and Finance has approved an order to enforce new procedures and methods for securities issuers to communicate material information. The order establishes that securities issuers must communicate material information to the market and the Comisión Nacional del Mercado de Valores as soon as they become aware of the event.
The National Securities Market Commission Circular regulates the content of communications that custodians must send every six months to the commission for each management company for whose collective investment institutions they are custodians, or for each self-managed open-end investment company for which they are custodians, on the reference date of the six-monthly report.
The Stock Exchange Commission recently published a guide on the transmission of inside information to third parties. The guide contains a series of non-binding measures and recommendations to ensure the confidentiality of inside information held by issuers and disclosed to third parties in accordance with the Securities Market Act.
The EU Markets in Financial Instruments Directive creates a new kind of investment service, which will be carried out by so-called ‘financial advising firms’ (FAFs) and places it among the financial services subject to prior authorization. Royal Decree 217/2008 regulates the procedure to authorize a FAF, as well as the financial requirements and the aspects which must be fulfilled for its establishment.
Following the Committee of European Securities Regulators' coordinated action on short-selling practices, the Securities Market Commission has issued a notice in which it reiterates that naked short sales are prohibited and will be penalized. The notice also establishes temporary measures aimed at ensuring that the public is informed of short positions.
The Spanish Securities Market Commission has recently published the criteria that must be complied with by investment banks when distributing or purchasing large packages of shares (ie, block trades). Financial institutions should bear in mind the inside information rules established by Law 24/1988.
Hedge funds and funds of hedge funds are regulated by Articles 43 and 44 of the Collective Investment Schemes Regulation, which has recently been amended by Royal Decree 362/2007. Among other things, hedge funds and funds of hedge funds may now establish a maximum limit on redemption amounts.
The National Securities Market Commission has launched an initiative to prevent insider dealing and market manipulation. Among other things, the initiative aims to prevent the use or disclosure to third parties of insider information on major transactions of the company. It also aims to prevent the manipulation of the quotation or trading of shares.
The government has recently passed a bill on the transparency of security issuers. Issuers whose securities are admitted to trading on a regulated market in the European Union must, among other things, disclose and disseminate their annual financial report within four months of the end of each financial year and ensure that this information remains available to the public for at least five years.
Under the new Collective Investment Institutions Law, admission to listing on a stock market is no longer necessary to acquire and retain the status of open-ended investment company. An alternative stock market was created to provide open-ended investment companies with an alternative means of selling and repurchasing their shares.