Final Report On draft Regulatory Technical Standards on major shareholdings and an indicative list of financial instruments subject to notification requirements under the revised Transparency Directive 29 September 2014 | 2014/1187 Table of Contents I. Executive Summary ....................................................................................................................................... 5 II. Background .................................................................................................................................................... 6 II.I Mandates and consultation process .................................................................................................... 6 II.II Elements of the Final Report .............................................................................................................. 6 III. Summary of the feedback and amendments to the draft RTS .................................................................... 8 III.I Draft RTS on the calculation method of the 5 % threshold referred to in the Article 9(5) and (6) exemptions of the TD .................................................................................................................... 8 III.I.a Horizontal aggregation – Aggregation of different categories of holdings (Article 9, 10 and 13 of the revised TD) ................................................................................................................ 9 III.I.b Vertical aggregation – Aggregation of holdings of financial instruments within a group of companies in relation to the trading book and market making exemptions ............................. 11 III.II Draft RTS on the method of calculating the number of voting rights referred to in Article 13(1a)(a) in the case of financial instruments referenced to a basket of shares or an index ......... 15 III.III Draft RTS on the methods of determining delta for the purposes of calculating voting rights relating to financial instruments which provide exclusively for a cash settlement ....................... 19 III.IV Draft RTS on client-serving transactions ........................................................................................ 23 IV. Definition and scope of the indicative list of financial instruments......................................................... 30 ANNEX I – SUMMARY OF QUESTIONS .........................................................................................................35 ANNEX II – LEGISLATIVE MANDATE TO DEVELOP DRAFT RTS ............................................................. 37 ANNEX III – COST-BENEFIT ANALYSIS ....................................................................................................... 38 ANNEX IV – SMSG OPINION .......................................................................................................................... 54 ANNEX V – DRAFT REGULATORY TECHNICAL STANDARDS ................................................................. 62 ANNEX VI – INDICATIVE LIST OF FINANCIAL INSTRUMENTS ............................................................... 67 2 Acronyms and definitions used Capital Requirements Regulation Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 CESR Committee of European Securities Regulators Commission The European Commission Commission Directive Commission Directive 2007/14/EC of 8 March 2007 laying down detailed rules for the implementation of certain provisions of Di- rective 2004/109/EC on the harmonisation of transparency re- quirements in relation to information about issuers whose securi- ties are admitted to trading on a regulated market CP Consultation Paper on Draft Regulatory Technical Standards on major shareholdings and indicative list of financial instruments subject to notification requirements under the revised Transparency Directive (ESMA/2014/300) CRD IV Directive 2013/36/EU of the European Parliament and of the Coun- cil of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC CWG Consultative Working Group of the Corporate Finance Standing Committee Directive 2013/34/EU Directive 2013/34/EU of the European Parliament and of the Coun- cil of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of under- takings, amending Directive 2006/43/EC of the European Parlia- ment and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC EEA European Economic Area ESMA European Securities and Markets Authority ESMA Regulation Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervi- sory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC EU The European Union 3 MiFID Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Di- rective 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC NCA National Competent Authority OJ The Official Journal of the European Union RTS Regulatory Technical Standard SMSG Securities and Markets Stakeholder Group set up in accordance with Article 37 of Regulation 2010/1095 of 24 November 2010 SSR Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps Takeover Bids Directive Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids TD Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securi- ties are admitted to trading on a regulated market and amending Directive 2001/34/EC TFEU Treaty on the Functioning of the European Union UCITS Directive Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009, on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) 4 I. Executive Summary Reasons for publication Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 amended by Directive 2013/50/EU of the European Parliament and of the Council of 22 October 2013 (hereinaf- ter the “Transparency Directive” or “TD”) requires ESMA to develop draft regulatory technical stand- ards (“RTS”) on major shareholdings. The TD furthermore mandates ESMA to establish an indicative list of financial instruments that are subject to notification requirements according to Article 13(1) of the TD. While developing the draft RTS and establishing the above mentioned indicative list of financial in- struments, ESMA consulted stakeholders by way of a Consultation Paper (a “CP”) (ESMA/2014/300). Contents This Final Report contains a summary of the feedback from the public consultation as well as the changes to the draft RTS and the indicative list which ESMA proposes based on this feedback. To a large extent the structure of the Final Report follows the structure of the Consultation Paper with the first part dealing with each of the four mandates given to ESMA to develop draft RTS and the second part dealing with the indicative list of financial instruments. The annexes of the Final Report consist of the questions asked in the Consultation Paper (Annex I), the legislative mandates for ESMA to develop draft RTS (Annex II), a revised cost-benefit analysis (Annex III), the advice submitted by the Securities and Markets Stakeholder Group (the “SMSG”) (Annex IV), the revised draft RTS (Annex V) and the indicative list of financial instruments (Annex VI). Next steps This Final Report will be submitted to the European Commission (the “Commission”) by 27 November 2014. The Commission has three months to decide whether to endorse ESMA’s draft RTS. 5 II. Background II.I Mandates and consultation process 1. The revised Transparency Directive was published in the Official Journal of the European Union on 6 November 2013 and entered into force on 26 November 2013. The Directive undertakes a re- vision of the regime for notification of major holdings of voting rights, introducing the rule of ag- gregation of holdings of shares with holdings of financial instruments and harmonising the calcu- lation of notification thresholds and exemptions from the notification requirements. 2. The revised TD thus makes market making, trading book and stabilisation exemptions mandatory for EU Member States. The Directive itself contains certain provisions on the requirements of such exemptions and these provisions are to be complemented by the RTS which ESMA is em- powered to draft in the area. 3. Moreover, with the aim to further enhance the transparency of major holdings of voting rights, the revised TD establishes an obligation to disclose holdings of financial instruments considered to be economically equivalent to shares in TD Article 13(1)(b). ESMA is empowered to develop draft RTS to ensure consistent harmonisation in respect of the calculation of notification