This newsletter gathers the latest news, published by the national and european authorities about the Stock Market.

ESMA. MiFID II Supervisory Briefing

On the 22nd February 2019, ESMA published the MiFID II Supervisory Briefing on the Supervision of non-European Union (EU) branches of EU firms that provide investment services and activities (“Supervisory Briefing”).

This Supervisory Briefing has been designed to aid National Competent Authorities (“NCAs”) in their  authorisation and supervision of the establishment by EU firms of branches in non-EU countries.

The Supervisory Briefing includes the following information:

(i) Supervisory expectations in relation to the authorization of investment firms.  

(ii) Ongoing supervision of non-EU branch activity.

(iii) Supervisory activity and coordination with non- EU NCAs.

ESMA briefing [1]

ESMA. 2018 Annual Report and 2019 Work Programme

On the 19th February 2019, EMSA brought out its 2018 Annual Report, demonstrating the work performance throughout 2018, particularly those relating to Credit Rating Agencies (“CRAs”) and Trade Repositories (“TRs”), similar to this year ́s foreseen Work Programme (the “ESMA Report”). This document contains an overview of a course of action carried out by ESMA in relation to the acknowledgement of Third-Country Central Counterparty (“TC-CCPs”), and Third-Country Central Securities Depositories (“TC-CSDs”).

Throughout 2018, the following activities must be emphasized:

(i) Supervision of TR´s and CRA´s.             

(ii) Given the Brexit situation, a contingency plan concerning TR´s and CRA´s.

(iii) Supervision of the use of “cloud support”, for CRA´s and TR´s.

Annual Report [3]

CNMV. January 2019 Financial Stability Note

On 18th December 2019, the CNMV published the January 2019 Financial Stability Note (the “Note”), which reveals that the stress levels of the Spanish financial markets are currently at 0,20, ranking it as one of the highest stress levels in the Financial Intermediaries sector (mainly comprised by banks) and the fixed income sector.

The Note specifically emphasizes the global slowdown, among other aspects, the disagreement on commercial exchange and the doubts concerning Brexit`s final results, or the lack of tax consolidation in some european countries. At national level, in spite of Spain still taking part in this slowdown, it is still producing a lower rate in the eurozone (the last estimations of the International Monetary Fund place the GDP growth in 2019 between 2.2% and 2.5%, versus the 1.6% in 2018 in the eurozone).

Financial Stability Note [5]

 

CNMV. Technical Guide 1/2019 about Nomination and Remuneration Committee

On 20th February 2019, the CNMV published the Nomination and Remuneration Committee (“NRC”) after having finalized the consultation period, last year on 20th December, about the proposed published texts in November.

In the proposed text, the guide contains: (i) a section on prior clarifications, which gives advice on dividing the NRC into 2 separate Committees and shows the advantages of having the NRC lead as senior management. (ii) a section which gives the core performance standards and a guide on good practices and the way in which these can be developed within the Committee, this having an influence on the final version of the text in terms of the organizational nature of the guide. The main changes consist of the following:

(i) Senior Management. To be considered as "those who develop managerial functions under the direct dependence of the board, executive committees or the first executive, as well as the internal auditor”.

(ii) Basic Principles of Internal Dialogue. If necessary, the possibility remains that the NRCstays in regular contact with the directors as a consequence of the high importance to assure dialogue and collaboration with other areas.

(iii) Composition:

· Within the knowledge and experience that is required from each member of the NRC, should include the ability to select directors . For both instances, they need to be able to evaluate the suitability requirements that will be demanded of each candidate according to the standards of the company.

· The benefits for those who comply with all the requirements needed to be considered a “micro-dominical director”, form part of the NRC, although this term is no longer used.

· The advisability of the coordinating advisor being a member of these committees, at establish the mandatory nature with respect to those entities in which such circumstance has sense. However, the convenience of at least maintaining regular contact with him is indicated.

(iv) General Aspects of the operation. The number of required meetings has been reduced to a minimum of 3 times per year. The NRC should to “establish an objective to better the representation of women on the board of directors and to prepare a set of guidelines to achieve this goal.” in the corporate governance annual report. 

(v) Evaluation and selection of directors:

· It is qualified, in relation to the legal entity directors, that the valuation must be made taking as a reference, the individual representing it, without prejudice to the NRC also analyzing the circumstances that may affect the "suitability" of the legal entity (insolvency situations, criminal procedures, administrative sanctions, conflicts of interest, etc.).

· The important to define in the parent company the competences, aptitudes and knowledge required to fill the role of both executive and independent director.

(vi) Examination and organization of the succession of the chairman of the board and the chief executive. The purpose of these Committees are flexible, with regards to the succession and career plans or professional development of senior executives, as long as everything is approved.

(vii) Evaluation of the board of directors and their Committees:

· The implementation of the use of a questionnaire or an automatic procedure as an evaluation system with more personal and direct involvement from the advisors.

· The performance evaluation of the board secretary was removed as the minimum requirement of evaluation has already been carried out.

(viii) Proposal to determine or verify of the accrued interest of Counsel and Senior Management. It has been considered sufficient that the NRC remains informed about the degree of compliance of the criteria and objectives established by the Senior Management.

(ix) Other functions. It involves the participation of the president and of other members of the NRC with the voting advisors. The involvement with non-represented board members is not considered of equal importance.

(x) Reasons for the dismissals of the directors. It will be considered appropriate for the NRC to establish a dialogue with the director to find out the reasons for his / her termination, only in the event that the information available in the document that the outgoing director has sent to the board is not sufficient.

Technical Guide [6]