ESMA defends dividend scheme delay
05 April 2019 London
Image: Shutterstock
Steven Maijoor of the European Securities and Markets Authority (ESMA) has defended the delay of their inquiry into dividend arbitrage schemes in a letter to the European Parliament.
This follows the European Parliament’s adoption of a resolution on the cum-ex scandal last November, where they called upon ESMA and the European Banking Authority to conduct an inquiry.
Maijoor noted that dividend arbitrage trading schemes such as cum-ex/cum-cum constitute a threat to the integrity of financial markets caused by a “financial activity or type of product or type of conduct”.
He cited: “In the view of the European Parliament such inquiry should, therefore, establish the nature and magnitude of actors in these schemes, assess whether there were breaches of either national or Union law, assess the actions taken by financial supervisors in the Member States and make appropriate recommendations for reform and for action to the competent authorities concerned.”
“Threats to the integrity of a market go beyond questions of legality. Market integrity encompasses the fair and safe operation of markets, without misleading information or inside trades, so that investors can have confidence and be sufficiently protected.”
Maijoor highlighted that it is obvious according to the widely published evidence that the cum-ex/cum-cum practices violate this fundamental principle in a social market economy as foreseen in the European Union Treaties.
To date, ESMA has only initiated a discussion among its members on the matter without
adopting any decision.
In ESMA’s view, this is insufficient given both, the urgency of the matter as well as the request made by the European Parliament more than four months ago.
In his letter, he continued: “It should also be noted that it is the first time that the European Parliament has used this power since the establishment of the European System for Financial Supervision.”
“Beyond this, it was brought to our attention that there seems to be considerable reluctance among national competent authorities to initiate such an inquiry any time soon.”
Elsewhere in the letter, Maijoor urged the European Parliament to make all possible efforts to initiate this important inquiry as soon as possible since ongoing fraud practice requires “swift” and “determined” action.
Maijoor concluded: “European Parliament on this important matter is simply overheard. In the case no further action is taken, the European Parliament will of course reserve its right to initiate another resolution on the matter.”
“Counting on the spirit of good cooperation, we remain at your disposal for further
questions and look forward to hearing from you.”
This follows the European Parliament’s adoption of a resolution on the cum-ex scandal last November, where they called upon ESMA and the European Banking Authority to conduct an inquiry.
Maijoor noted that dividend arbitrage trading schemes such as cum-ex/cum-cum constitute a threat to the integrity of financial markets caused by a “financial activity or type of product or type of conduct”.
He cited: “In the view of the European Parliament such inquiry should, therefore, establish the nature and magnitude of actors in these schemes, assess whether there were breaches of either national or Union law, assess the actions taken by financial supervisors in the Member States and make appropriate recommendations for reform and for action to the competent authorities concerned.”
“Threats to the integrity of a market go beyond questions of legality. Market integrity encompasses the fair and safe operation of markets, without misleading information or inside trades, so that investors can have confidence and be sufficiently protected.”
Maijoor highlighted that it is obvious according to the widely published evidence that the cum-ex/cum-cum practices violate this fundamental principle in a social market economy as foreseen in the European Union Treaties.
To date, ESMA has only initiated a discussion among its members on the matter without
adopting any decision.
In ESMA’s view, this is insufficient given both, the urgency of the matter as well as the request made by the European Parliament more than four months ago.
In his letter, he continued: “It should also be noted that it is the first time that the European Parliament has used this power since the establishment of the European System for Financial Supervision.”
“Beyond this, it was brought to our attention that there seems to be considerable reluctance among national competent authorities to initiate such an inquiry any time soon.”
Elsewhere in the letter, Maijoor urged the European Parliament to make all possible efforts to initiate this important inquiry as soon as possible since ongoing fraud practice requires “swift” and “determined” action.
Maijoor concluded: “European Parliament on this important matter is simply overheard. In the case no further action is taken, the European Parliament will of course reserve its right to initiate another resolution on the matter.”
“Counting on the spirit of good cooperation, we remain at your disposal for further
questions and look forward to hearing from you.”
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