On 23 May, Solutions Atlantic released updated rules for Egypt and Romania.
Information pertaining to Egypt:
The EFSA announced new rules which will restrict investment in issued share capital or bonds convertible to shares (voting or non-voting) of securities companies licensed in Egypt.
Such investment will require pre-acquisition approval of any acquisition (directly or indirectly and either alone or through a related group) when the acquisition reaches or exceeds the following percentages of the company’s capital or voting rights: 10%, 25%, one third, 50%, two-thirds or 75%.
Information pertaining to Romania:
- TDA standard disclosure thresholds apply.
- Cash settled instruments need to be disclosed.
- Introduction of 5% trading book exemption.
- Indicative instruments may be disclosable if the conditions for disclosure are met.
SFC new position limit changes in effect 1 June 2017.
The Securities and Futures Commission (SFC) announces that enhancements to the position limit regime, including introducing various excess position limits and raising the statutory position limit for stock options contracts, will come into operation on 1 June 2017, the commencement date of amendments to the Securities and Futures (Contracts Limits and Reportable Positions) Rules.
These changes are a result of a consultation which concluded back in March – consultation results.
On 17 May, SEBI updated position limits for cross-currency futures and options.
- For cross-currency futures and options contracts not involving Indian Rupee in IFSC.
- Gross open position across contracts not to exceed 15% of total open interest or $1bn
- Applies to trading members, institutional investors and the eligible foreign investors
- Other clients must not exceed 6% of total open interest of $100m, which is higher
- Stock exchanges to impose appropriate penalties for violation by market participants
Solutions Atlantic has released new forms to support new requirements by the UK and HK regimes.
United Kingdom – FCA
As reported in early April, the FCA announced its plans to adopt a new TR-1 form which is closer to the ESMA issued form. This new form will be effective on 30 June.
Click the link to see the announcement details (on page 7).
Hong Kong – SFC
As reported early this month, the SFC announced it will move to electronic disclosure filing and has issued a new form. This new form will be effective on 3 July.
Click the link for more details.
The EU issued net short position notification thresholds for sovereign issuers on 1 May, 2017.
According to Article 7(2) of the Short Selling Regulation, ESMA has to publish a list of the thresholds applicable to the sovereign issuers for the purpose of the notification to competent authorities of significant net short position in sovereign debt.
The way these notification thresholds are defined is further specified in the Commission Delegated Regulation No 918/2012 (the “DR”). The DR specifies that initial threshold categories shall be:
- 0.1% applicable where the total amount of outstanding issued sovereign debt is between 0 and 500 billion euros;
- 0.5% applicable where the total amount of outstanding issued sovereign debt is above 500 billion euros or where there is a liquid futures market for the particular sovereign debt.
The additional incremental levels shall be set at 50% of the initial thresholds. The reporting thresholds shall be monetary amounts fixed by applying the percentage thresholds to the outstanding sovereign debt of the sovereign issuer. They will be revised and updated quarterly to reflect changes in the total amount of outstanding sovereign debt of each sovereign issuer.
In addition, the DR states that the amount of outstanding debt should be calculated using a duration adjusted approach. ESMA has published a Q&A document on how to proceed for the duration adjustment.
The table of thresholds contains the name of the sovereign issuer, the amount of outstanding debt duration adjusted, the initial threshold amount and the relevant percentage, the incremental threshold amount and the relevant percentage.
Please note that the figures of the amount of outstanding debt are duration adjusted (not nominal amounts) and are approximations provided by competent authorities.
On 28 April PRA issued final policy on implementation of MiFID II: Part 2 and MiFIR
This PS is relevant to banks, building societies, PRA-designated investment firms and their qualifying parent undertakings, which for this purpose comprise financial holding companies and mixed financial holding companies, as well as credit institutions, investment firms and financial institutions that are subsidiaries of these firms.
Feedback on consultation responses
The PRA received no responses to CP43/16. The final rules are as consulted, with some minor drafting changes to the instruments to clarify language, correct formatting and referencing (see Appendices 1-4). Appendices 5-7 include links to three supervisory statements (SSs). The three SSs have been updated to refer to MiFID II where previously they referred to MiFID I, and associated implementing directives.
MiFID II will apply from Wednesday 3 January 2018 and Member States must transpose their provisions in national legislation and regulations by Monday 3 July 2017. The PRA’s rules, and the relevant sections of the SSs that apply to MiFID II, (Appendices 1-7) will take effect from Wednesday 3 January 2018.
Chapter 2 outlines the implementation arrangements for:
- granting authorizations in respect of a new MiFID investment activity, ‘operation of an organized trading facility (OTF)’, a new MiFID financial instrument ‘emission allowances’, and regulated activities of dealing, advising, managing and arranging structured deposits. Firms should submit complete applications for variation of permission by 3 July 2017; and
- notification to the PRA for firms wishing to carry out the following activities: Structured deposit in respect of the regulated activities; Dealing in investment as principle; Arranging deals in investment; Making arrangements with a view to transactions in investment; Managing investments; and Advising on investments.
On Apr. 27, ACNV issued rules to raise public acquisition offers.
- Increased the percentage from 15% to 35%, to be considered significant participation.
- Significant participation determines the mandatory nature of launching a takeover bid.
- RG No. 689 establishes obligation to launch partial takeover bid, when stake exceeded.
- When intend to achieve a stake of 35% of voting capital stock and/or votes of company.
- In that case, offer must be made for securities to reach 50% of company voting capital.
- Exception to bid where acquisition does not entail acquisition of control of the company.
- Required to launch full takeover when seek share above 50% of voting capital or votes.
- Offer must be made on a number of securities that enable the acquirer to reach 100%.
Read more on these changes.