First step in Spain towards MiFID2

​The Spanish Ministry of Economy, Industry and Competitiveness has opened a public consultation on the draft law implementing MiFID2 in Spain.

On Wednesday 15 March 2017, the Spanish Ministry of Economy, Industry and Competitiveness published a consultation paper (the Consultation Paper) - available only in Spanish - on the first draft of the law which will implement Directive 2014/65/EU on markets in financial instruments (commonly referred to as "MiFID2") and the supplemental Commission Delegated Directive of 07 April 2016 into Spanish law. The draft law will amend the current Spanish Securities Markets Act (the SMA) and implementing regulations (the Regulation). The consultation period will end on 10 April 2017.

The Consultation Paper sets out options on various aspects which MiFID2 raises, its main aims being:

  • to ensure high standards of protection for investors in financial instruments, with special attention to retail investors
  • to improve the regulatory framework of securities markets to encourage greater legal certainty (reducing normative dispersion) and to facilitate its application in the financial sector (entities, investors and supervisory authority), and
  • to reduce unnecessary administrative burden on investment firms and simplify administrative procedure (such as the authorisation process and subsequent changes to services which have already been authorised).

The Consultation Paper includes a description of the current regime applicable under the SMA and Regulation and sets out the possible regulatory alternatives in view of the forthcoming MiFID2, so that all financial players can provide comments. This feedback will be taken into consideration when finally implementing MiFID2 in Spain.

Among the hot topics under discussion in the Consultation Paper are the following:

  • Natural persons acting as investment firms: at present, natural persons may act as a financial advice company. The question under consideration raised is whether Member States should be able to expand this to cover all types of investment firms, or to restrict the activity only to legal persons.

  • Types of investment firms: until now, investment firms have been categorised into four different types - entities could become one or other type of investment firm depending on the type of services that they perform. Industry is being asked to consider the possibility of maintaining this scheme or modifying it by way of introducing either a unique general category of investment firms, or a general category together with a specified category for entities that provide financial advice.

  • Registration of branches before the Mercantile Registry: the SMA establishes that once the communication to set up a branch is received, the Securities Market Commission (CNMV) will notify the investment firm, who will then have to register the branch with the Spanish Mercantile Registry, and also with the Registry of the CNMV. The question raised is whether the process of registration of branches with the CNMV should be modified by removing the need also to register with the Mercantile Registry.

  • Investor protection and market integrity: the concern is related to the information to be provided to clients - in particular, whether there should be different types of models for each type of service, bearing in mind the information to be standardised under MiFID2 and, if so, whether those models should be (i) obligatory, (ii) a guide subject to the principles of “comply or explain” or (iii) an optional only.

Other questions included in the Consultation Paper relate to, among other things, the following topics:

  • third country access
  • corporate governance
  • regulated markets
  • record keeping
  • facultative exceptions
  • safekeeping of assets
  • inducements
  • highest commissions
  • order processing, and
  • notification of infringements

Next steps

The consultation period closes on 10 April 2017 and the resulting draft Law is expected to be published within the following two months.

The Consultation Paper, only available in Spanish, may be consulted here.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.