Legal Updates

Legal updates covering current topics.

Legal Updates / 24.03.2016

Finnish clearing and settlement of securities to be opened to all EU licensed CSDs

A Government Bill for new legislation on central securities depositaries (CSDs) was presented to the Finnish Parliament on 17 March 2016, with effective date proposed for 1 July 2016. A central objective of the new legislation is integrate the Finnish national legislation with the provisions of the EU Regulation on CSDs (909/2014, the CSDR) by opening the Finnish clearing and settlement market to all CSDs that have been licensed in the EU and passported to Finland in accordance with the CSDR, and by allowing Finnish licensed CSDs to provide services cross border to issuers across all EU Member States. For Finnish issuers the proposed change is designed to mean more choices for depositaries of their shares and for investors increased flexibility to transfer their holdings from one CSD to another through links established between the CSDs. To safeguard that such links are reliable and that the investors’ proprietary rights are not jeopardized, any link between a Finnish and a foreign CSD is, however, proposed to be allowed only where first approved by the Finnish Financial Supervision Authority (FFSA).

The new legislation is not proposed to amend the current rules on nominee registration of listed shares. As currently, only foreign investors will be entitled to nominee register their holdings, while all Finnish investors will continue to be required to hold listed shares in their own name and to have information on their holdings in each listed company publicly available thought the company’s register of shareholders. The Government Bill acknowledges, however, that the publicity of holdings and the related additional technical requirements will increase the cost and may reduce foreign CSDs’s interest to enter the Finnish market, which will off-set some of the benefits sought by the new legislation.