Short Reads

Changes on asset segregation rules applicable to investment firms

Changes on asset segregation rules applicable to investment firms

Changes on asset segregation rules applicable to investment firms

06.04.2017 NL law

Effective 1 February 2017, changes to the client asset segregation obligation (vermogensscheiding) applicable to investment firms have been implemented in the Netherlands.

Effective 1 February 2017, changes to the asset segregation obligation (vermogensscheiding) to protect client funds have been implemented in the Further regulation on the supervision of the business conduct of financial undertakings (Financial Supervision Act) (Nadere regeling gedragstoezicht financiële ondernemingen Wft).

The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the "AFM") consulted market parties on the amendment rounds. Based on this feedback, the AFM maintained what is known as the investors giro system (beleggersgiro) as an acceptable asset segregation system. The investors giro system segregates the clients' assets by means of a separate entity that has the administration of the assets of that investment firm's clients as its sole purpose. The AFM did add a number of conditions to the investors giro system and changed the name of the investors giro system to 'common depository' (bewaarinstelling). The AFM clarified that an investment firm that holds securities through a 'common depository' provides the service 'custody and administration of financial instruments on behalf of clients' as a ancillary service within the meaning of MiFID.

The AFM now also expressly confirms that investment firms without a banking licence can rely on the regime under the Dutch Securities Book-Entry Transfer Act (Wet op het giraal effectenverkeer, "Wge") when segregating the assets of their clients. This means that as long as the investment firm holds client funds in accordance with the requirements of the Wge, the asset segregation obligation is deemed to be complied with. In that case, the use of a bankruptcy remote custody vehicle is no longer required nor is it desirable, in the view of the AFM.

If an investment firm holds a banking licence, the requirement to segregate clients' assets is restricted to financial instruments (e.g. securities), and not to cash. Such an investment firm was already entitled to hold the financial instruments in accordance with the Wge, or with a separate securities depository (effectenbewaarbedrijf).

Investment firms that will negotiate a new agreement with their 'common depositary', should take the new conditions attached to the 'common depository' into account. Investment firms without a banking licence should decide whether or not they want to segregate their clients' assets in line with the Wge.

Team

Related news

05.09.2018 NL law
Consultation on additional remuneration restrictions within the financial sector

Short Reads - A team from Stibbe has participated in the public consultation launched by the Minister of Finance on additional remuneration restrictions within the financial sector. In their response (in Dutch), the Stibbe team pointed out that there are several legal objections to the proposed measures. Furthermore, the team has raised questions regarding the necessity and legal justification for introducing these additional measures.

Read more

11.07.2018 NL law
Update initiatiefwetsvoorstel introductie instemmingsrecht en aanscherping vaste beloning bankiers

Short Reads - Op 25 april 2018 heeft de Afdeling advisering van de Raad van State (hierna Raad van State) een kritisch advies uitgebracht over het initiatief-wetsvoorstel om de wet op het financieel toezicht (Wft) te wijzigen. Op 5 juli 2018 is dit advies tezamen met de reactie van de initiatiefnemers van het wetsvoorstel op het advies van de Raad van State gepubliceerd, evenals het aangepaste wetsvoorstel dat is aangeboden aan de Tweede Kamer.

Read more

23.07.2018 NL law
Evaluatie Wbfo en start consultatie over mogelijke wijzigingen/wettelijke maatregelen voor vaste beloning

Short Reads - Op 17 juli 2018 heeft de minister van Financiën de twee rapporten over de evaluatie van de Wet beloningsbeleid financiële ondernemingen (Wbfo) aangeboden aan de Tweede Kamer. Tevens is een maatschappelijke consultatie naar drie wettelijke maatregelen met betrekking tot de vaste beloningen geopend.

Read more

16.07.2018 NL law
ISDA publishes consultation on benchmark fallbacks

Short Reads - ISDA publishes consultation on benchmark fallbacks. As part of an initiative to amend its standard derivatives documentation to facilitate the replacement of existing interbank offered rates (IBORs) by risk free rates (RFRs), the International Swaps and Derivatives Association (ISDA) has published a consultation paper on certain adjustments required to such RFRs.

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy – en cookieverklaring