Newsletter November 2019
At the end of October, significant changes were made to the Markets in Financial Instruments Act (MFIA), with the introduction of measures to implement Regulation (EU) No 909/2014 of the European parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (Regulation (EU) No 909/2014).
The amendments to the MFIA introduce requirements for the continuity of the activities of central securities depositories, even in the event of an emergency load, as stipulated in Regulation (EU) No 909/2014. In this sense, the new Art. 227n, para. 1 of the MFIA provides that the Central Depository of Securities shall prepare and maintain a recovery plan with contents in accordance with Art. 8 (3) of Delegated Regulation No 2017/392 of 11.11.2016 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council as regards regulatory technical standards on the licensing, supervision and operational requirements of central depositories of securities (OJ, L 65/145 of 10.03.2017).
The incorporation of the requirements of Regulation (EU) No 909/2014 into Bulgarian law requires changes in other Laws as well. As a result, § 67 of the MFIA provides for amendments to the Credit Institutions Act, under which new powers are vested in the Bulgarian National Bank in relation to: issuance, refusal of issuance and revocation of a license for performing banking activities of the central securities depositaries and of the persons designated by them for rendering banking type ancillary services under Art. 54 (2) of Regulation (EU) No 909/2014; supervision according to Art. 60 (1) of Regulation (EU) No 909/2014 on the activity of providing ancillary services of a banking type and for fulfilling the prudential requirements of art. 59 of Regulation (EU) No 909/2014; and the powers under Art. 39, paragraph 3 and art. 42 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173/84 of 12 June 2014 ).
Changes are also envisaged in the Law on Public Offering of Securities, which provides for the creation of a central registry of securities. Keeping this register in accordance with Art. 127a, para. 3 of the Law on Public Offering of Securities is an obligation of “Central Depository” – AD, which is a joint-stock company with one-tier management system, managing the securities settlement system referred to in section “A”, item 3 of the Annex to Regulation (EU) No 909/2014, and provides at least one of the basic services listed in section “A” of the Annex to Regulation (EU) No 909/2014. The Central Securities Register shall record information about the central securities depositories at which the relevant issues of dematerialized securities are registered. Issuance and disposal of dematerialized securities issued by companies domiciled in the Republic of Bulgaria, as well as by issuers whose securities have been issued under the legislation of the Republic of Bulgaria, shall be effective from their registration in the Central Registry of Securities.