MiFID II / MiFIR update - The Netherlands

In October 2016 the Dutch proposal for implementing MiFID II into Dutch law was published and sent to the Second Chamber for approval. The most important thing to know about this legislative proposal is that there is not too much gold plating. For instance, the rules in relation to inducements, we [in the Netherlands] already have a strict regime around this, so [the lack of] gold plating is not at all surprising, it’s nothing new. 

In addition, the legislative proposal also clarifies scope and the applicability of the rules of MiFID II in relation to fund managers. For instance, the rules in relation to transaction reporting on MiFID II will not be applicable to fund managers. Previously this was discussed by the AFM and the AFM was of the opinion that those rules would apply to fund managers. Based on a review of MIFIR and comments on the [Dutch] consultation document these rules are now explicitly excluded from the scope of fund managers who provide investment services to clients.

In relation to implementing Article 39 of MiFID II in relation to third country firms active in the Netherlands, there is the following regime. Third country firms in principle who propose to provide investment services or provide their investment activities into the Netherlands to retail investors or professional investors need to be licenced and need to open a branch office in the Netherlands. There is an exemption but that’s only possible for third country firms from the US, Switzerland and Australia. And only if they provide their investment services to professional investors in the Netherlands then they don’t need to open / establish a branch in the Netherlands and no Dutch rules will apply to them nor will the AFM or DNB supervise them. They need to be supervised in their home jurisdiction.

Some MiFID II rules and rules laid down in the delegated directive need to be implemented into Dutch legislation, the so called degree of conduct of business rules. A consultation of the proposal for implementing these rules was published (by the end of March). There was a consultation period for a month so this consultation has now been closed. Also there, not too much gold plating. If you look at the explanatory note it was really meant to implement the text almost literally into the Dutch law. The only thing, if you really look at the text, you do see that there are omissions. They sometimes refer incorrectly, they sometimes use words or leave out words that are not really correct. So therefore if you look at the responses to the [Dutch] consultation there is a lot of doubt, it is mentioned if the purpose of [some of the Dutch] implementing rules are different to MiFID II. So it’s now really just wait and see, until the final publication of the [Dutch] degree. It is still the intention that the degree and also the legislative proposal will be approved and published by 3 July. However we still need to see as there is no news and no update yet.