New procedure for UCIT authorizations
The Spanish National Securities Market Commission (CNMV) has recently issued a Circular in relation to the procedure for authorization of proposals for the creation of Undertakings for Collective Investment Trusts (UCITs). The Circular reflects the agreement reached among the regulatory authorities to expedite authorization procedures and the Commission's guiding principle of cooperating with investors.
From January 1 1997 the documentation required to apply for authorization to create new UCITs or modify those already in existence must be filed directly with the CNMV. Once the CNMV has analyzed the supporting documents and checked that the proposal meets all legal requirements, the CNMV will send a report and proposal for authorization to the Directorate-General of the Treasury and Financial Policy (DGTPF), together with a copy of the proposal. If the application is for authorization of a minor change, the CNMV will also include its opinion on the matter for a final determination by the DGTPF. In our opinion, this reform will probably mean a noticeable reduction in the time needed to obtain this type of authorization.
In addition, the CNMV has produced standard forms for the documents required for the creation of UCITs. The new forms should mean further time savings in the authorization process.
Deposit guarantee funds adapted to EU law
The recent enactment of Royal Decree No.02606/1996 has completed the process begun in 1995 of incorporating EU Directive 43/19/CE into Spanish national law, for the purpose of adapting the deposit guarantee funds of banks, saving banks and cooperative credit institutions to the requirements of EU law.
The Decree thus provides positive and negative definitions of which deposits in credit institutions are protected by these funds. The guaranteed amount is set at the peseta equivalent of Ecu15,000 (US$18,400), to be increased to Ecu20,000 by the year 2000. Spanish coverage extends to deposits in branches of Spanish credit institutions located in other member states, although it is limited to the maximum required coverage under the law of the member state in which the particular branch is located.
In addition, the new law establishes the system by which Spanish branches of foreign credit institutions can join deposit guarantee funds, which is an optional step for EU entities. For third-country entities, this may be mandatory, depending on their home country legislation.
These funds have the additional purpose of ensuring the stability of the financial system itself by preventing the failure of one entity from affecting the remaining entities within the market. The intervention of these funds is therefore authorized, for both preventative and remedial purposes, within the framework of a plan of action resolved by the entity itself and approved by the Bank of Spain. Among the actions available to the funds are grants, guarantees, loans on favourable conditions, subordinated debt, the acquisition of non-performing assets and subscription of capital increases.
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