As parliamentary elections draw near, in Slovenia the law may be delayed until the end of 2018. By Vanda Močnik, Senior Relationship Manager, GSS Slovenia
The Ministry of Finance prepared the first draft of the Market in Financial Instruments Act for government procedure and public discussion in Slovenia at the end of January. Its initial discussion in the Parliament was expected to be held in May but after the recent resignation of Prime Minister Miro Cerar, it is doubtful that this session will be held at all.
The new legislation will implement the MIFID II Directive and correct some flaws of the currently valid act.
Provisions for broker defaults
One of them is an investor protection scheme in the event of the collapse of a brokerage house. The failure of Slovene brokerage house Moja delnica in 2016 disclosed deficiencies of the currently valid bankruptcy process and in the activation of the investor protection scheme. The Bank of Slovenia played the main role, taking care of the bankruptcy and spurring the scheme to action.
The new Act sets out the obligations of both the Securities Market Agency and the Bank of Slovenia in a potential bankruptcy of a brokerage house and the activation of the protection mechanism. It transfers the major responsibility to the Securities Market Agency, which will have to prepare detailed regulations. The investor protection scheme will, as now, not apply to professional investors.
Additional obligations
Other rulings in the new Act include:
- implementation of two new organised markets in Slovenia, an OTF and a SME Development market, through which Slovene financial market regulators would like to gain more control over the OTC market,
- intensified obligations of market participants concerning personal data protection in line with European Union General Data Protection Regulation (GDPR),
- unchanged regulation on threshold reporting and related fines for noncompliance
The Securities Market Agency has 6 months’ time to prepare all the regulations after the Act becomes valid. The brokerage houses will have to comply with new act within 3 months and inform all their clients on their classification. The Ljubljana Stock Exchange will have to implement novelties within 6 months and the CSD-KDD within 3 months.
The market participants, through their industry organisations, closely co-operate with the Securities Market Agency and with IT providers to ensure that the changes, required in IT applications and internal regulations, will be prepared in line with the new legislation.
Vanda Močnik-Kohek
Senior Relationship Manager
Global Securities Services Slovenia
vanda.mocnik-kohek@unicreditgroup.si