Royal Decree 814/2023 on Financial Instruments, Admission to Trading, Register of Negotiable Securities and Market Infrastructures

Royal Decree 814/2023, of November 8, on financial instruments, admission to trading, register of negotiable securities and market infrastructures. Ministry of Economic Affairs and Digital Transformation "BOE" No. 268, of November 9, 2023 Reference: BOE-A-2023-22764

INDEX

Preamble ................................................................ 4 PRELIMINARY TITLE. General provisions........................................... 9 TITLE I. Representation of negotiable securities ......................................... 12 CHAPTER I. Common provisions ................................................ 12 Section 1. Types of representation of negotiable securities ......................... 12 Section 2. Record and publicity of the characteristics of negotiable securities................ 13 Section 3. Legal regime of negotiable securities .................................. 15 Section 4. Legitimation certificates ............................................. 17 Section 5. Other common rules ................................................ 18 CHAPTER II. Accounting register of negotiable securities admitted to trading in trading venues... 21 Section 1. General aspects .................................................. 21 Section 2. Practice of registrations ............................................ 24 Section 3. Supplementary application ................................................. 26 CHAPTER III. Accounting register of negotiable securities not admitted to trading in trading venues 26 Section 1. Entity in charge of the accounting register ..................................... 26 Section 2. Keeping of the accounting register ........................................... 28 TITLE II. Admission to trading of securities in regulated markets, public offers of sale or subscription and liability of the prospectus................................................... 29 CONSOLIDATED LEGISLATION Page 1

CHAPTER I. Common provisions ................................................ 29 CHAPTER II. Admission of securities to trading in regulated markets......................... 30 Section 1. General provisions ............................................... 30 Section 2. Suitability requirements relating to the issuer and the securities ......................... 31 Section 3. Information requirements and their exceptions.................................. 32 CHAPTER III. Liability of the prospectus ............................................. 33 CHAPTER IV. Public offers of sale or subscription of securities ............................ 35 TITLE III. Trading venues and clearing, settlement and registration systems for financial instruments ................................................................. 35 CHAPTER I. Common provisions to regulated markets, MTFs and CSDs.................. 35 CHAPTER II. Regulated markets.................................................. 39 Section 1. Authorization....................................................... 39 Section 2. Governing bodies ................................................. 41 Section 3. Organization and operating requirements .................................. 42 Section 4. Participation in a regulated market ...................................... 48 Section 5. Trading and regime of suspension and exclusion from trading .................... 51 Section 6. Requirements applicable to regulated markets of an autonomous community scope and by category of financial instrument ...................................................... 53 CHAPTER III. MTFs and CSDs ...................................................... 54 Section 1. Authorization....................................................... 54 Section 2. Organization and operating requirements .................................. 55 Section 3. Specific organization and operating requirements for MTFs and CSDs ............ 57 CHAPTER IV. Position limits on derivatives on commodities ....................... 59 CHAPTER V. On clearing, settlement and registration systems for securities and post-trade infrastructures ............................................................ 65 Section 1. Mandatory involvement of a central counterparty and provisions relating to the settlement of negotiable securities............................................... 65 Section 2. Common provisions applicable to central counterparties and central securities depositories ........................................................ 68 Section 3. Specific provisions applicable to central securities depositories of negotiable securities ...... 70 Section 4. Specific provisions applicable to central counterparties ............. 72 Transitory provisions ...................................................... 74 Repealing provisions ..................................................... 75 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 2

Final provisions ......................................................... 75 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 3

CONSOLIDATED TEXT Last modification: no modifications I The recent Law 6/2023, of March 17, on Securities Markets and Investment Services, which repeals the consolidated text of the Securities Market Law, approved by Legislative Royal Decree 4/2015, of October 23, aims to improve the technical aspects, modernize and adapt the legal regime of Spanish securities markets, to face the challenges of digitalization and take advantage of its opportunities, improving their competitiveness. Firstly, this law systematizes and reorders the current legislation in order to guarantee clarity and simplicity in the regulation of capital markets. The law is therefore configured as a framework law regulating the basic elements regarding securities markets, the obligations and rights of the agents participating in them and the supervision and sanction regime of the National Securities Market Commission (CNMV). By synthesizing the content of the law, adequate distribution between law and royal decree is ensured, and the development of this basic framework is entrusted to regulations, for which the restructuring of the current regulatory legislation is necessary. Thus, in line with the financial policy objectives of the law, its regulatory development has been compiled through general royal decrees that bring together, on the one hand, the current regulatory development and, on the other hand, the specific provisions that, until now, were contained in the body of the law with the rank of law. The new division between law and royal decree thus ensures sufficient flexibility and legal certainty to introduce normative modifications that occur in the future, both at the national and European Union levels. In this sense, with the aim of providing greater simplicity, the previously valid provisions regarding the regulatory framework applicable to the register of financial instruments and negotiable securities, the admission to trading of negotiable securities in regulated markets, public offers of sale or subscription and the prospectus required for such purposes, as well as that corresponding to trading venues and post-trade market infrastructures, have been summarized and reordered, maintaining the basic regime in the text of the Law and transferring the development of the same to this royal decree. The distribution of matters between the Law and this regulation thus improves the knowledge and understanding of the norm by its recipients, facilitating its interpretation and application. On the other hand, with the aim of reducing the number of applicable norms and ensuring adequate identification by those obliged to comply with them, all regulatory provisions regulating the regime applicable to the register of negotiable securities, trading venues and clearing, settlement and registration systems are gathered in this regulation. Consequently, the current royal decrees are repealed by incorporating them into this text. Firstly, the content of Royal Decree 878/2015, of October 2, on clearing, settlement and registration of negotiable securities represented by book entries, on the legal regime of central securities depositories and central counterparties and on transparency requirements for issuers of negotiable securities admitted to trading on an official secondary market is incorporated. Secondly, the provisions of Royal Decree 1310/2005, of November 4, which partially develops Law 24/1988, of July 28, on the Securities Market, in matters of admission to trading of negotiable securities in official secondary markets, public offers of sale or subscription and the prospectus required for such purposes, are included, eliminating those provisions already included in Regulation (EU) 2017/1129 of the European Parliament and of the Council, of June 14, 2017, or that conflict with it. Thirdly, the provisions relating to the legal regime of regulated markets and position limits on derivatives are included from Royal Decree 1464/2018, of December 21, which develops the consolidated text of the Securities Market Law, approved by Legislative Royal Decree 4/2015, of October 23 and the Royal Decree-Law 21/2017, of December 29, on urgent measures to adapt Spanish Law to European Union legislation in the matter of securities markets, and which partially modifies Royal Decree 217/2008, of February 15, on the legal regime of investment service companies and other entities providing investment services and the Regulation of Law 35/2003, of November 4, on Collective Investment Institutions, approved by Royal Decree 1309/2005, of November 4, and other royal decrees in the matter of securities markets. Additionally, Royal Decree 361/2007, of March 16, which develops Law 24/1988, of July 28, on the Securities Market, in the matter of participation in the capital of companies managing secondary securities markets and companies administering registration, clearing and settlement systems for securities, is incorporated. Fourthly, the legislation is updated considering the latest advances and progress that have taken place in Spanish capital markets both from the normative and technological points of view. It is worth highlighting, in this sense, the elimination of the obligation for central securities depositories to have an information system for the supervision of the trading, clearing, settlement and registration of negotiable securities. And it is that the current community legislation already has the necessary instruments to guarantee the adequate traceability and security of transactions settled through central securities depositories, making the aforementioned obligation unnecessary. With this, it is also intended to reduce the regulatory burden falling on these market infrastructures and favor their competitiveness by approximating the applicable legislation to that of the rest of Member States. In the same line, the monitoring and control obligations of the central securities depository are aligned with those provided for in European legislation that limits them to those related to settlement efficiency. At the same time, it remains the responsibility of the central depository to guarantee the integrity of the issue. In this sense, Chapter IX of Delegated Regulation (EU) 2017/392 of the Commission of November 11, 2016, which supplements Regulation (EU) No. 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards relating to the operational, authorization and supervision requirements applicable to central securities depositories, contains the necessary measures for central securities depositories to ensure the permanent match between the securities comprising an issue, those registered in the accounts opened in it by its participants and the absence of discrepancies between the balances of third-party general accounts and the records of participating entities. In order to ensure the adaptation of market infrastructures and participating entities, a two-year transitional period is provided from the publication of Law 6/2023, of March 17. In no case will the actions necessary to have information from third-party registers that allow both the fulfillment of current tax nature information obligations and the correct self-assessment of the Financial Transactions Tax be affected by this modification. Likewise, technological development in areas such as artificial intelligence (AI) has led to growing interest on the part of community authorities, which has been reflected in the current proposal for a Commission Regulation (EU) on the legal framework applicable to Artificial Intelligence systems, of April 21, 2021, which regulates different AI systems depending on the level of risks they entail for citizens' rights. In the matter of securities markets, the possible effects that these technologies generate, currently and in the near future, on the markets, the various financial instruments and their management, the possible impact that community regulation entails on the current legal regime and the need, in such case, to adapt and comply with what is provided in the European proposals on AI systems that are being developed, must be taken into consideration. On the other hand, those mentions that have become outdated, those that are currently inapplicable or that do not adequately reflect the reality of Spanish capital markets, such as, for example, the provisions relating to the Public Debt in book entries market, are eliminated. The adaptation of the norm and its developing royal decrees to the reality prevailing in our capital markets favors legal certainty and the certainty of the agents participating in them and contributes to a more efficient evaluation of risk and investment profitability, which, ultimately, increases the national and foreign attractiveness of Spanish financial markets. All the objectives sought by the law are extrapolable to this royal decree in such a way that, analogously, this regulation synthesizes and updates the current legislation, specifically with regard to the representation of negotiable securities, the admission to trading of negotiable securities and the legal regime applicable to trading venues and post-trade market infrastructures. The transposition carried out in this regulation of Directive 2021/338 of the European Parliament and of the Council, of February 16, 2021, on information obligations and position limits on derivatives to facilitate economic recovery after the pandemic caused by the COVID-19 virus, by which Directive 2014/65/EU is amended, is of special relevance. Due to the crisis caused by the COVID-19 virus, the European Commission launched a legislative proposal under the "Capital Markets Recovery Package" with concrete reforms of Directive 2014/65/EU of the European Parliament and of the Council, of May 15, 2014, on markets in financial instruments and amending Directives 2002/92/EC and 2011/61/EU (hereinafter, MiFID II). In particular, those requirements and obligations that, in the current context, may be redundant or superfluous have been identified, adjusting them to facilitate the channeling of savings towards the financing of companies through securities markets and ensuring that the high level of investor protection already achieved, in particular of the retail client, is maintained. Likewise, with the aim of stimulating the competitiveness of European derivatives markets, certain modifications have been introduced in the field of position limits on derivatives, these provisions being those that are regulatory developed in this royal decree. The modifications introduced in MiFID II aim to adjust the application of position limits to contracts for derivatives on agricultural commodities and derivatives on critical or significant commodities, as well as to economically equivalent derivative contracts not traded in a trading venue. On the other hand, additional exemptions are introduced for financial and non-financial counterparties that are subject to a legal obligation to provide liquidity with the aim of ensuring the effectiveness of market creation operations. Furthermore, since the relevant national provisions of Royal Decree 1310/2005 are included in this royal decree, it should be noted that the content of Directive 2001/34/EC of the European Parliament and of the Council, of May 28, 2001, on the admission of negotiable securities to official listing and the information to be published on such securities, will be incorporated into this royal decree. Additionally, it is worth highlighting that this royal decree contemplates the adaptation that has been made in Law 6/2023, of March 17, to the latest directly applicable European regulations. On the one hand, the adaptation of Spanish legislation to Regulation (EU) 2017/1129 of the European Parliament and of the Council, of June 14, 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing Directive 2003/71/EC has been included. On the other hand, the adaptation of Spanish legislation to the regulations governing the legal regime of post-trade infrastructures and, in particular, central counterparties and central securities depositories has been contemplated. Specifically, the duplicities existing in relation to Regulation (EU) No 648/2012 of the European Parliament and of the Council, of July 4, 2012, on OTC derivatives, central counterparties and trade repositories, and Regulation No 909/2014 of the European Parliament and of the Council, of July 23, 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 have been eliminated. II The royal decree consists of 169 articles, two transitory provisions, one single repealing provision and four final provisions. The preliminary title regulates the general provisions of the royal decree. In this title, it is worth highlighting the precision included in Article 3.1.a) to consider participations in limited liability companies as shares suitable for the development of the activities of participatory financing platforms and investment service companies provided for in Regulation 2020/1503 of the European Parliament and of the Council, of October 7, 2020, on European crowdfunding service providers for businesses, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937. Title I contains the legal regime for the representation of negotiable securities by book entries. This title is divided into three chapters. Chapter I contains the common provisions. Chapter II develops the regime applicable to the register of securities admitted to trading in trading venues, and finally, Chapter III encompasses the provisions relating to the accounting register of negotiable securities not admitted to trading in trading venues. Title II regarding the Admission to trading of securities in regulated markets, public offers of sale or subscription and liability of the prospectus, adapts the development of Law 6/2023, of March 17 to Regulation (EU) 2017/1129 of the European Parliament and of the Council, of June 14, 2017. Thus, those provisions already included in Regulation (EU) No 2017/1129 of the European Parliament and of the Council, of June 14, 2017, or that conflict with it, are eliminated. All provisions relating to the prospectus included in Royal Decree 1310/2005 (included, specifically, in "Title II. The informative prospectus") are suppressed. These provisions are already regulated by Regulation (EU) No 2017/1129 of the European Parliament and of the Council, of June 14, 2017. The definition of the concept of public offer is also suppressed, insofar as Regulation (EU) No 2017/1129 of the European Parliament and of the Council, of June 14, 2017, already includes a definition of the same, as well as other provisions relating to public offers of sale or subscription as they are also already regulated by Regulation (EU) No 2017/1129 of the European Parliament and of the Council, of June 14, 2017. In addition to the adaptation to European regulation, a series of modifications are introduced that will improve the attractiveness of our markets in the European environment. Thus, the verification of the admission to trading requirements for non-participatory securities by the governing bodies of regulated markets is contemplated in line with what is provided for in Law 6/2023, of March 17. One of the main shortcomings of the Spanish securities market is the scarce issuance of fixed income that trades in Spain. To contribute to improving this situation, the admission to trading requirements for each of the fixed income issuances will be checked only by the governing body of the fixed income market, but not by the CNMV. With this, in addition to improving the competitiveness of the Spanish fixed income market, duplicities between the functions of the CNMV and the market are avoided. This will allow the CNMV to concentrate its supervisory efforts on the verification of the issuance prospectus. On the other hand, the wording of the text is simplified by including references to the definitions contemplated in Regulation (EU) No 2017/1129 of the European Parliament and of the Council, of June 14, 2017, certain articles that were repetitive with those already included in Law 6/2023, of March 17, in matters of admission to trading are suppressed, and the liability of the directing entity is limited to public offers of sale directed to retail clients. Title III regulates trading venues and settlement systems.