The Belgian government has submitted a bill on financial markets and financial instruments to the Parliament. This bill is expected to be enacted within the next few days.

The purpose of the bill is to implement European Directive 93/22 concerning securities investment services and European Directive 93/6 on capital adequacy requirements for investment firms and credit institutions.

The government wants to take advantage of the implementation of these directives to carry out the reorganisation of Belgian financial markets, which had already been reviewed by the Law of 4 December 1990, in order to improve their integrity, security, transparency and, ultimately, their competitiveness.

The bill therefore comprises three main types of provisions: (i) provisions relating to the organisation of secondary markets for financial instruments, (ii) provisions with respect to the status and control of investment firms and (iii) provisions with respect to the status of intermediaries and advisors in investments (in commodities, financial instruments and currencies).

The following comments will focus on the reorganisation of financial markets. The latter two aspects of the bill will be reviewed in subsequent contributions to Business Monitor.

The bill sets forth a re-definition of the respective powers of the Banking and Finance Commission and the financial market authorities in the organisation and supervision of the markets and financial information.

The bill, as it currently stands following some amendments adopted by the Senate, provides for a regulation of the Stock Exchange and authorises the government to organise and regulate other financial markets as it sees fit.

The bill provides for a two-tier control of the Stock Exchange. A first control is to be exercised by the Steering Committee (which is to replace the Stock Exchange Commission), independent from the Board of Directors of the Stock Exchange and deemed to be closer to the market operations than the Banking and Finance Commission. The Steering Committee shall oversee the integrity of the market (no insider dealing, proper information, etc.). At a second level, the authority of the Banking and Finance Commission, in addition to approving the prospectus, shall consist in ensuring that the Steering Committee has established procedures necessary for the pursuance of its missions.

The bill also provides for a direct access to the Stock Exchange for stockbroking firms and portfolio management firms, as well as for credit institutions (and investment firms and credit institutions operating under an EC passport).

Under the bill, Belgian investors are required to effect transactions on securities issued by a Belgian company on the regulated market where such securities are listed, except e.g. (i) where the transaction bears on securities representing less than 10% of the voting rights in the relevant company, (ii) for occasional transactions between individuals, (iii) for intra-group deals.

The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.

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