Spanish National Securities Commission outlines e-prospectus plans for fixed income markets

Source: Spanish National Securities Commission

The Spanish National Securities Commission, the CNMV, yesterday unveiled the eprospectus, which represents a significant step forward in the work started by the CNMV in partnership with AIAF in early 2005 in the task force to enhance the competitiveness of the fixed-income markets, according to the deputy chairman of the CNMV, Carlos Arenillas.

It is a new IT system developed to automatically compile the prospectus for debt issues and fully complies with the requirements of the new Prospectuses Directive and regulations.

The new system was presented today in a joint event organised by the CNMV and the AIAF private fixed-income market, which also reviewed other developments affecting the market.

These initiatives come on top of those adopted by the task force created by the CNMV last year in partnership with AIAF aimed at making the Spanish private fixed-income market more competitive. The main aim of these measures is to streamline and simplify the procedures for issuers, to reduce their costs and to shorten the amount of time involved.

AIAF President Francisco Oña said that the task force proved extremely timely and was the driving force behind the sustained overhaul of this market and the implementation of new measures and initiatives.

The e-prospectus will enable issuers to generate the documentation to be submitted to the CNMV quickly and easily. Initially, it will be used for specific, single issues of bonds and securities, but in future it will be extended to prospectuses with an issuance programme.

The new system makes it possible to generate a complete document ready for dissemination by entering data electronically.

CNMV Deputy Chairman Carlos Arenillas said at the presentation that following the standardisation of the prospectus, the next step would be the full computerisation of the notification, verification and registration of issues via the e-prospectus with a CIFRADOC crypto system, similar to that used for mutual funds. To achieve this we have worked together with AIAF and held numerous meetings with the main issuers on which the new e-prospectus has been tested. The final objective is to send the eprospectus by means of an electronic signature.

It is therefore a particularly important innovation in terms of the progressive automation and standardisation of the prospectus registration and supervision process and simplifies and eases the processing and transfer of the documents that the issuer must provide to the supervisory authorities, the market’s governing body and Iberclear. In addition, it prevents errors, simplifies processes and saves technical and human resources. At the same time, by streamlining the entire process the amount of time involved is significantly reduced.

The results of the various measures adopted in the last year to simplify procedures for issuers are already beginning to take effect. They already have a better opinion of the prospectus registration and supervision procedure and believe it is now easier and faster.

This marks a shift in trend among some Spanish issuers, who were more inclined to make issues in other markets or other European exchanges: in March and February 2006 AIAF reported record figures for new debt listings.

CNMV Chairman Manuel Conthe, who took part in the closing ceremonies, said it marked a step forward in making the Spanish fixed-income market more competitive with the rest of Europe.

Meanwhile, BME Chairman Antonio Zoido, who also participated in the presentation, said the e-prospectus was another example of the aim of standardising and simplifying the prospectus registration and supervision procedures, streamlining both human and material resources and increasing information security to benefit all market participants.

The growth of the Spanish private fixed-income market remained robust in 2005, with record trading volumes. The total volume admitted to trading on AIAF rose 25.5% to 411.78 billion euros, of which 148.05 billion euros corresponding to medium- and longterm instruments. Specifically, some 43.42 billion euros worth of simple bonds were admitted to trading and 33.38bn worth of covered bonds (cédulas hipotecarias).

A total of 872.29bn euros worth of securities were trading on the AIAF market in 2005, 54% above the average in recent years.

In the first quarter of 2006, some 24.26 billion euros of instruments were admitted to trading, 33.1% more than in the same period last year. The largest increases were precisely in simple bonds and debentures, and covered bonds.

Measures already taken: The new measures announced today for private fixed-income issues come on top of those announced in 2005 following the creation of the CNMVAIAF task force. Those include the design of standard prospectus formats for the largest number of securities possible as a prelude to the "e-prospectus".

It was also agreed to allow the annual financial statements of companies delivered to the CNMV to be used as a registration document, while the use of English in the prospectuses was allowed, in line with the provisions of the Directive.

As part of the economic reform plan, the government approved a series of measures that affect the fixed-income markets, such as the supervision of the requirement to raise bond issues to the status of a public deed and register them in the Mercantile Register, establishing the same condition for Spanish private fixed-income issues as for the rest of the EU markets where this practice is in place.

Lastly, the CNMV decided last year to considerably reduce the fees charged for overseeing balances deposited at Iberclear for private fixed-income securities and put a cap on the fee applied to verification of the requirements for admission to trading of securities on AIAF.

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