Transparency Directive rules too complex, says ESME

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BRUSSELS – The European Securities Markets Expert Group (ESME), created by the European Commission, has produced its first report on the European Union’s Transparency Directive.

The report is the first since the directive’s application by market participants, and provides an opportunity for a review, with recommendations to be applied in future.

ESME reports that the rules for the notification of major shareholdings are too complex and difficult to comply with. It says this is often due to the nature of holdings that count towards the disclosure requirement, the thresholds at which holdings must be disclosed, the time period in which a shareholder has to make the disclosure and to whom.

Another major finding is that the understanding and consequences of security lending vary between member states – leading to recommendations that the role of the Committee of European Securities Regulators (CESR) be expanded.

The report says CESR and the Commission need to further harmonise reporting timeframes, mechanics and thresholds, and that CESR should produce specific recommendations on reporting requirements, ensuring members provide proper and prompt guidance.

Other recommendations include that reporting should be electronic; there should be at least three days in which to file with the issuer or competent authority; supervisors should notify the public rather than the issuer; the Commission should adopt a right for companies to ask for shareholder identification; there should be a uniform threshold of at least 3%; and that notifications should be made at the end of the global trading day.