New steps in Spain towards MiFID2

Spanish implementation of MiFID2 moves a step closer with the approval by the Government of the preliminary draft of the Securities Market and Financial Instruments Act and additional regulations.

Following the publication in August 2017 by the Spanish Ministry of Economy, Industry and Competitiveness of various preliminary draft of legal texts implementing MiFID2, on Friday 01 December 2017, the Spanish Council of Ministers approved the text of the Preliminary Draft of the Securities Market and Financial Instruments Act and other regulations, which will transpose MiFID2 into the Spanish legal framework.

The press release issued by the Spanish Ministry of Economy, Industry and Competitiveness highlights and reinforces the prohibition of receiving inducements when providing independent investment advice or portfolio management to clients. For other investment services for which inducements are allowed, it will be necessary to increase the quality of the service and guarantee that it is being provided in an honest, fair and professional manner in accordance with the best interest of the client.

It is noted that the requirement to “increase the quality” of the service will be met, for instance, when at least 25% of the products offered comprise third party products, taking into account the total amount of products relating to the same category.

With regard to structured deposits, it is also remarkable that its sale must comply with strict good governance rules as well as be preceded by a suitable assessment. Investment firms will need to keep a registry of all actions carried out with clients and in relation to the markets where they operate.

Next steps

Now it is time for the parliamentary approval process to take place (including subsequent approval by Congress and Senate, with the latter having the option to incorporate further amendments). Taking into account the complexity of the legislative process in Spain, at this stage it is not possible to clearly determine an expected date for final enactment of the new Securities Market and Financial Instruments Act and additional Regulations which have been recently approved, and therefore to determine the date for MiFID2 transposition in Spain.

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