The transposition of the Directive 2014/65 (through this Royal Decree-Law, which came into force 30 of September 2018) is aimed at improving the soundness, transparency and regulation of the Spanish Financial Market´s trading activities, increasing the investor protection and harmonising the regulations of the Spanish Financial Markets market regulations with the rest of the countries in the Union.
The Royal Decree-Law reinforces the information that the financial entity should present to their clients and potential clients before providing services, with special attention to the type and complexity of the financial instruments offered, the investment strategy, the costs and the expenses associated with the investment service. For these purposes, investment service companies must establish sufficient and adequate policies and procedures to guarantee compliance with their obligations and avoid conflicts of interest. Said procedures will include a record of all the services, activities and operations carried out, including recordings of phone conversations or electronic communication relating to receiving, transmitting or executing of client orders. These measures respond to the National Commission of Stocks Markets (Comisión Nacional del Mercado de Valores) need to access the information in its function as supervisor.
Furthermore, the investment service companies that design financial instruments will maintain, manage and review a process for the approval of each of the instruments and of the significant adaptations of existing products before their commercialisation or distribution to clients.
Likewise, the execution of clients´ orders must be aimed at achieving the most advantageous outcomes for them, taking into account the price, the costs, the speed, the probability of execution and liquidation or any other pertinent consideration for the execution of the order. In turn, the investment service company will not receive any type of compensation, discount or non-monetary benefit by directing clients´ orders to a specific trading or execution centre, except in cases of increased quality of service.
For the above purposes, the CNMV has increased its powers of supervision and intervention, as well as inter-administrative cooperation tools and the possibility of reaching cooperation agreements with other competent authorities of non-member States of the European Union, including the development of cooperation regulations with the European Securities and Markets Authority (ESMA) and other supervisory authorities of the Member States.
Finally, the investments activities and services companies of the Member States will not require prior authorization of the CNMV for the establishment of their branches in Spain, for which prior notification is sufficient. However, third-country companies will require said authorisation and will not be able to carry out any provision of services or investment activities aimed at retail clients if they do not have a branch in Spain.