European brochure norm comes into effect: end to more burdensome regime for Spanish issuances

From 21 July the regulator (CNMV) will no longer require an expert report on the emission of bonds or structured products aimed at retail investors to ensure the accuracy of the associated brochure. The new European norm on brochures will come into effect on 21 July, so the need for this requirement, which CNMC decided to seek in 2005 for Spanish shares, will disappear.

Analysts at Link point out that with the elimination of this requirement, the supervisor believes it has ended a burdensome regime for Spanish issuances, but without reducing the protection for retail investors because there are already enough precautions. Among them they highlight the obligation for banks and investment services companies to warn if there is a substantial difference between the price that the investor will pay and the “reasonable” value of the financial instrument, which should be estimated by the entity. Specifically, the first cannot be 5% greater then the latter.

In addition, the entities are obliged to strengthen the information on the cost of financial products and in the case of emissions of subordinated shares or others computable as own resources of the credit entities, at least 50% of the shares must be bought by a minimum of 50 professional investors.