CP15/11: Implementing the TDAD and Transparency Rule Changes

21 03 2015

Directive 2004/109/EC or the Transparency Directive (TD) operates principally to harmonise the requirements on companies regarding information disclosure. The TD (i) focuses on what information companies must disclose periodically, how they handle investor disclosures and how they distribute regulated information and; (ii) ensures that investors disclose their stakes in companies. Directive 2013/50/EU or the Transparency Directive Amending Directive (TDAD) amends the TD. It also amends Directive 2007/14/EC (the Transparency Directive Implementing Directive (TDID)) and Directive 2003/71/EC (the Prospectus Directive (PD)). The implementation of the TDAD is a responsibility that is shared between HM Treasury and the Financial Conduct Authority (FCA). Consultation Paper CP15/11 concerns the implementation of the TDAD and other Disclosure Rule and Transparency Rule changes. The European Commission reviewed the TD and the TDAD came into force on 26 November 2013. It undertakes a revision of the regime for notification of major holdings of voting rights, introducing the rule of aggregation of holdings of shares with holdings of financial instruments and harmonising the calculation of notification thresholds and exemptions from the notification requirements.

It is required that each Member State must implement the TDAD within 24 months of that date. At the Treasury’s request, the FCA implemented the new requirement to report on payments to governments, which is effective for financial years beginning on or after 1 January 2015. Moreover, the FCA has already removed the requirement to publish interim management statements from the DTRs. Both changes are reflected in the Disclosure Rules and Transparency Rules (DTRs) contained in the FCA Handbook. The implementation of the remaining provisions of the TDAD are addressed in this consultation. It is a joint consultation between HM Treasury and the FCA setting out in general terms the proposed amendments to FSMA and details of the FCA’s proposed amendments to the DTRs (including the text of the proposed rule changes) that are required as a result of the TDAD modifications.

Moreover, CP15/11 identifies other modifications made to TD provisions by the TDAD that may impact the current structure but either do not require new or amended DTRs to implement, or DTRs are not yet required. Furthermore, other miscellaneous changes – identified as necessary to improve the current UK regime – to the DTRs are also proposed.

Feedback from investors, issuers and market participants are sought on the authorities’ proposals for implementing the TDAD, the proposals on other TD modifications made by the TDAD that may impact the current system.

According to the FCA, CP15/11 should be of interest to:

  • issuers of securities admitted to trading on a regulated market where the UK acts as home or host Member State and local DTRs apply
  • listed companies who are required by LR9.2.6BR, LR14.3.23R or LR18.4.3R to comply with DTR4, DTR5 and DTR6 as if they were an issuer for the purposes of the DTRs
  • issuers of securitised derivatives who, under LR19.4.11BR, FCA believes should comply with DTR4, DTR5 and DTR6 as if they were an issuer of debt securities as defined in the DTRs
  • issuers of securities admitted to trading on a prescribed market in the UK
  • firms advising issuers
  • firms advising persons investing or dealing in listed securities
  • firms or persons investing or dealing in listed securities
  • primary information providers

According to the government, this consultation, which closes on 20 May 2015, will also be of interest to consumers who directly or indirectly deal and invest in listed securities or shares admitted to trading on a prescribed market.

CP15/11 invites answers on a lot of questions. Draft FCA Handbook text is annexed to CP15/11 as the Disclosure and Transparency Rules Sourcebook (Transparency Directive Amending Directive) Instrument 2015.

ESMA’s final report on the draft regulatory technical standards (RTS) under the TD explained that the TD requires ESMA to develop draft RTS on major shareholdings. Moreover, with the aim to further enhance the transparency of major holdings of voting rights, the revised TD establishes an obligation to disclose holdings of financial instruments considered to be economically equivalent to shares in Article 13(1)(b) of the TD.

In relation to a national storage mechanism (central access point), the TD undertakes a revision of the regime for notification of major holdings of voting rights, introducing the rule of aggregation of holdings of shares with holdings of financial instruments and harmonising the calculation of notification thresholds and exemptions from the notification requirements.


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