In review: capital markets law in Spain – Lexology
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Like the global capital markets, Spain’s have experienced significant volatility over the past 12 months. This affected the ability of issuers to access the capital market, and windows of opportunity have been shortened. The principal macro events influencing the capital markets are driven by the Russian invasion of Ukraine and higher inflation, which in turn is leading to higher interest rates. From a legal perspective, extensive sanctions regulation has impacted the documentation for securities issuances. That said, the capital markets continue to evolve, and certain trends identified previously have started to bed down. The markets have seen the adoption of risk-free rates, because of the discontinuation of LIBOR and other reference rates. The trends around ESG have continued with the issuance of a number of green bonds, whereby proceeds are used in green projects, and sustainability-linked bonds (SLBs), whereby the coupon payable to investors depends on the issuer meeting certain sustainability targets. There has been movement on digitised bonds, with some activity in the market and some regulation.
The markets have coped well with new legislation described in previous editions, including in relation to the Spanish Companies Act and the requirements for foreign direct investment (FDI) approval. But the legislative avalanche continues. In Spain, there is an ongoing review of the securities market regime, including distributed ledger technology (DLT) bonds. The cédulas bond legal regime has been substantially changed by the implementation of Directive 2019/21622 on the issue of covered bonds and covered bond public supervision (the Covered Bond Directive) into Spanish law. Although this has affected the cédulas market with only two issuances this year, more activity is expected for the end of the year and next year once the ECB repurchase programmes need to be refinanced by banks. The EU standards for green bonds are expected soon, and it will be interesting to see how these interact with other green bond standards in the market (e.g., those promulgated by the International Capital Markets Association (ICMA)).
The principal law applicable to the Spanish capital markets is Royal Legislative Decree 4/2015 of 23 October, which enacted the restated text of the Securities Market Act (SMA). This law provides the framework under which the majority of the laws and regulations applicable to the capital markets are developed. As Spain is an EU Member State, the SMA reflects the implementation of numerous EU directives in the Spanish legal system. This means that, in general, the laws and regulations applicable in Spain are aligned with those applicable in other EU jurisdictions. Accordingly, since the SMA entered into force on 13 November 2015, there have been a number of relevant amendments, primarily to implement EU directives coming into force since that date.
Other relevant legislation includes:
Some EU legislation is directly applicable in Spain and so forms part of the body of law applicable to capital market activities. The most relevant is as follows:
Finally, and in line with other jurisdictions, capital market practice in Spain is impacted by guidance issued by relevant authorities: the Spanish Securities Market Commission (CNMV) in respect of Spanish legislation and the European Securities and Markets Authority (ESMA) in respect of EU legislation. Market practice, often as formulated by trade bodies such as the ICMA, the International Securities and Derivatives Association and the Association for Financial Markets in Europe (AFME), is also relevant.
The key institution for the Spanish capital markets is the CNMV. By virtue of the SMA, the CNMV is the entity with primary responsibility for the regulation of the capital markets and it has a supervisory role in respect of entities and individuals carrying out securities and investment services in Spain. It is empowered to sanction breaches, including through the issue of fines. It also issues circulars that are intended to provide guidance on certain aspects of the capital markets.
Other entities relevant for the operation of the capital markets in Spain include:
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