The first one contains amendments to some of the topics of Directives 2014/65/EU (Mifid II), 2013/36/EU (CRD IV) and 2019/878/EU (CDR V), the second one intervenes with amendments to both the EU Directive 2017/1129 (Prospectus Directive), establishing the “EU Recovery Prospectus”, and the Directive 2004/109/EC (Transparency Directive) as regard the use of the single electronic reporting format for annual financial reports.
Both, the Quick Fix Directive and the Regulation, are part of the “capital markets recovery package” agreed between the Council and the Parliament of the European Union at the end of December 2020, in order to support economic recovery in the countries of the Union after the Covid-19 pandemic
Such objective has been pursued through ‘the introduction of limited amendments to existing Union legislation on financial services law” which, inter alia, resulted in the removal of some unnecessary red tape.
In particular, the Quick Fix Directive by amending Mifid II:
- significantly simplifies reporting requirements establishing that: a) as regard transactions involving financial instruments concluded using a means of distance communication, the investment firm may provide the information on costs and charges after the conclusion of the transaction (provided that the client has consented to it and the investment firm has given to the client the option of delaying the conclusion of the transaction until the client itself has received such information; b) all information required to be provided to the client are provide in electronic format, unless the client expressly requests otherwise; c) as regard services provided to professional clients: i) the information on costs and charges are provided only for investments advice and portfolio management; ii) the requirements of information on costs and benefits involving in a switching of financial instruments do not apply, unless the client expressly requests otherwise; iii) the periodic reporting requirement on the service provided as well as the statement on suitability, do not apply, unless the client expressly requests otherwise; d) the investment firms providing the service of reception, transmission and execution of the orders, must have the possibility of bringing about or entering into transactions with eligible counterparties without being obliged to comply with the information requirements as well as with those regarding the suitability assessment, best execution and handling of client orders;
- suspends up to 28 February 2023 the periodic reporting requirement to the clients laid down in Article 27(3) of Mifid II ;
- provides exception from product governance requirements, where the investment service provided by an investment firm “relates to bonds with no other embedded derivative than a make-whole clause or where the financial instruments are marketed or distributed exclusively to eligible counterparty“.
The Member States shall adopt measures transposing the Quick Fix Directive by 28 November 2021 and such measures shall apply from 28 February 2022, with the exception of the amendments to directives CRD IV and CRD V which shall apply from 28 December 2020.
In order to facilitate the issuance of capital by companies to overcome the crisis arising from the Covid-19 pandemic, the Regulation established the EU Recovery Prospectus. It is a single document of limited size for which there is a simplified regime which also includes shorter deadlines for approval. Such regime will apply until 31 December 2022 for capital increases of up to 150% of the existing capital, in order to avoid, as expressly stated in recital 11 of the Regulation, a high dilutive effect. The Regulation also includes a grandfathering provision, under which the EU Recovery Prospectuses approved by 31 December 2022 will continue to be governed in accordance with Regulation provisions until the first between the expiry date of their validity and 31 December 2023.
The Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Community and it is binding and directly applicable in all Member States.
Our Firm, constantly monitors the development of the legislation, also in the light of the Mifid II review process to be carried out by the European Commission as laid down in article 5 of the Quick Fix Directive.
