Changes to the EU Transparency Directive – Now in force

Thursday November 26 2015

The changes to the EU Transparency Directive were published in November 2013 and are to be implemented in all Member States by the 26th November 2015. The changes will result in an increase in the number of financial instruments that need to be disclosed, modifications to the notification threshold criteria as well as the introduction of minimum sanctions for breaches of the transparency rules.

The revised Transparency Directive (TDAD) will require disclosure of major holdings of all financial instruments that could be used to acquire economic interest in listed companies which have the same effect as holdings of equity. This will include both cash and physically settled instruments, with holdings of financial instruments that provide exclusively for a cash-settlement being calculated on a ‘delta-adjusted’ basis. Holdings of financial instruments will be aggregated with holdings of shares for the purpose of calculation of the thresholds that trigger the notification requirement.

Member States will no longer be free to adopt more stringent requirements regarding the regime for notification of major holdings of voting rights, subject to certain exceptions. These include the permission to set both lower and additional notification thresholds, meaning that the UK will maintain its current disclosure thresholds (3% and every 1% thereafter). As the UK DTR5 Rules were already super equivalent to the original Transparency Directive provisions, the Directive has a more limited impact in terms of changes required in respect of UK Disclosures; however there have been amendments as regards the trading book exemption, the treatment of stock borrowing, and sanctions.

For more detailed analysis, click here.