EUROPE: ESMA publishes draft RTS and ITS on EU substantial acquisitions in investment firms

Monday March 30 2015

The European Securities and Markets Authority has published its draft regulatory technical standards and implementing technical standards on EU substantial acquisitions in investment firms.

Under Article 10 of the Markets in Financial Instruments Directive, Member States shall require any natural or legal person that proposes to acquire or sell, directly or indirectly, a qualifying holding in an investment firm to notify the competent authority of the size of the resulting holding. Such persons shall likewise be required to notify the competent authority if they propose to increase or reduce their qualifying holding, if in consequence the proportion of the voting rights or of the capital that they hold would reach or fall below or exceed 20%, 33% or 50% or the investment firm would become or cease to be their subsidiary.

Article 10b(4) of the Markets in Financial Instruments Directive (MiFID ) requires Member States to make publicly available the information necessary to carry out the assessment of a proposed acquirer of an investment firm. This information must be provided by the proposed acquirer at the time of the initial notification. This information is aimed at ensuring that competent authorities are provided with adequate and proportionate information in order to assess the acquisition.

Article 10a of MiFID, as amended by Article 6(4) of the Omnibus Directive, requires ESMA to draft:

– regulatory technical standards (RTS) to establish an exhaustive list of information referred to in Article 10b(4) of MiFID; and
– implementing technical standards (ITS) to determine standard forms, templates and procedures for the cooperation and exchange of information between the relevant competent authorities as referred to in Article 10(4) of MiFID.

ESMA’s Consultation Paper (CP) on ‘Draft Regulatory Technical Standards on information requirements for assessment of acquisitions and increases in holdings in investment firms (MiFID)’ (Ref: ESMA/2013/918) was published on 9 July 2013. ESMA had submitted the draft RTS and ITS to the European Commission (Commission) by 1 January 2014, as required.

However, following the original submission to the Commission, a few changes have been necessary because of:

– the adoption of a Corrigendum to MiFID to include a cross-reference to paragraph 4 of Article 10a of MiFID, instead of paragraph 4 of Article 10b of MiFID; and
– the publication of MiFID II which repeals MiFID but confirms the empowerment to adopt the same RTS/ITS.

ESMA submitted the updated draft RTS and ITS to the Commission on 27 March 2015, taking into consideration the points above and has included a new Article to cover the information to the provided by the proposed acquirer to enable the competent authority to assess “the reputation and experience of any person who will direct the business of the investment firm as a result of the proposed acquisition”.

The Commission has three months to decide whether to endorse ESMA’s draft technical standards.

Click on the above link for ESMA’s final report.