Directive 93 /22/EEC of the Council of 10 May on investment services in the field of securities is an important step forward in the financial integration of the European Union, in so far as it does not regulates the Community passport for investment firms. The transposition of this standard into Spanish law was carried out through Law 37/1998 of 16 November, of reform of the Law 24/1988, of July 28, of the Market of Securities, which the present Royal Decree develops.

Law 37/1998 defines investment firms as those financial institutions whose main activity is to provide investment services on a professional basis to third parties. Within this category it includes securities companies, securities agencies and portfolio management companies, entities which will be able to take advantage of the single passport to act in other Member States of the Union through the freedom to provide services or freedom of establishment.

The first objective of this development of Law 37/1998 is, therefore, to regulate the administrative regime to which investment firms will be subject in such aspects as the requirements for access to the activity and their operational. In this regard, the rule replaces Royal Decree 276/1989 of 22 March 1989 on companies and securities agencies and on the regulation of the holding companies contained in Title IV of the Regulation of Law 46/1984 of 26 December 1989, Regulation of collective investment institutions, approved by Royal Decree 1393/1990 of 2 November 1990.

Secondly, this Royal Decree regulates the cross-border performance of investment firms, in application of Directive 93 /22/EEC.

On the other hand, this standard represents an effort to homogenize the financial regulations, in seeking the maximum parallelism of the regulation of the investment services companies with respect to that of the credit institutions. It could not be otherwise, since Law 37/1998 allows credit institutions to carry out all kinds of investment services.

Finally, it is worth highlighting the liberalizing mood of this Royal Decree. The provision of investment services is, in fact, exposed to increasing competition, the result of the opportunities offered by the Community passport provided by the Investment Services Directive and the opening of the services of all the Member States. investment services to credit institutions. In this context, the regulator should seek not to impose entry barriers or operational requirements that are not justified by the risks to be avoided. As a result of this concern, among other developments, the reduction of the initial capital requirements required of the agencies and the securities companies is highlighted.

In this way, Title I of this Royal Decree establishes the concept and typology of the investment services companies, while regulating the activities they have reserved and the authorization procedure.

The liquidity requirements and the legal regime of the operations that they may develop are subject to Title II regulation.

The Royal Decree also includes rules of transparency, as the regime of significant participations and information obligations of investment services companies is regulated in its Title III.

In turn, Title IV regulates the performance outside Spain in the regime of freedom of establishment and freedom to provide services of domestic investment services companies and foreigners in our territory.

The additional provision first incorporates an amendment to Article 61 of Royal Decree 116/1992 of 14 February on the representation of securities by means of account and clearing and settlement of transactions To facilitate the operation of the investment services companies in the Securities Clearing and Settlement Service, by extending the range of assets eligible to be used as collateral by the attached entities. The text also incorporates an additional second provision declaring its basic character, a transitional provision to facilitate the adaptation of the entities, a derogation provision and an end.

In its virtue, on the proposal of the Second Vice President of the Government for Economic Affairs and Minister of Economy, after approval of the Minister of Public Administration, according to the State Council and after deliberation of the Council of Ministers at its meeting on 20 July 2001,

D I S P O N G O:

TITLE I

From investment services companies and other individuals and entities operating in the Stock Market

CHAPTER I

Concept and types of investment services companies

SECTION 1. GENERAL REGIME

Article 1. Concept.

1. Investment firms are those financial institutions whose main activity is to provide investment services on a professional basis to third parties. The investment services companies are governed by Law 24/1988, of July 28, of the Stock Market, the present Royal Decree and their respective development provisions.

2. The following entities are investment services companies:

(a) Securities companies.

b) The securities agencies.

(c) Portfolio management companies.

Article 2. Investment services and complementary activities.

1. Investment firms, under their specific legal arrangements, may carry out the following investment services:

(a) The receipt and transmission of orders on behalf of third parties.

b) The execution of such orders on behalf of third parties.

c) The trading on its own account.

d) The discretionary and individualised management of investment portfolios under the mandates conferred by investors.

e) The mediation, by direct or indirect account of the issuer, in the placement of the issues and public offers of sales.

f) The underwriting of the subscription of issues and public offers of sale.

2. Investment firms, under their specific legal arrangements, may carry out the following additional activities:

(a) The deposit and administration of the instruments provided for in Article 3 of this Royal Decree, including the keeping of the accounting records of the securities represented by notes.

b) The rental of security boxes.

(c) The granting of loans or loans to investors, in order to enable them to carry out an operation on one or more of the instruments provided for in Article 3 of this Royal Decree, provided that the undertaking intervenes which grants the loan or loan.

d) Advice to companies on capital structure, industrial strategy and related issues, as well as advice and other services related to mergers and acquisitions of companies.

e) Services related to insurance operations.

(f) The investment advice on one or more of the instruments provided for in Article 3 of this Royal Decree.

g) The performance as registered entities for performing foreign exchange transactions linked to investment services.

Article 3. Instruments.

Investment services and, where appropriate, complementary activities shall be provided on the following instruments:

(a) marketable securities, in their different modalities, including investment fund shares.

(b) Monetary market instruments that are marketable securities.

(c) Monetary market instruments that are not marketable securities.

(d) Contracts of any kind that are traded on a secondary, official or non-official market.

(e) Term financial contracts, option financial contracts and financial swap contracts, provided their underlying assets are marketable securities, indices, currencies, interest rates or any other type of financial swap. underlying financial nature, irrespective of the way in which they are settled and even if they are not traded on a secondary, official or non-official market.

(f) Contracts or transactions on instruments not referred to in the preceding letters, provided that they are liable to be traded on a secondary market, whether official or not, and even if their underlying is non-financial, comprising, for this purpose, inter alia, goods, raw materials and any other consumable goods.

SECTION 2. TYPES OF INVESTMENT SERVICES COMPANIES

Article 4. Typology.

1. Securities companies are those investment firms that are able to operate professionally, both on an employed and self-employed basis, and to carry out all the investment services and complementary activities provided for in the Article 2 above.

2. Securities agencies are those investment firms that professionally only operate on behalf of others, with or without representation.

They may carry out the investment services and complementary activities provided for in Article 2 above with the following exceptions:

a) The trading on its own account.

b) The underwriting of the subscription of issues and public offers of sale.

(c) The granting of loans or loans to investors to enable them to carry out transactions on one or more of the instruments provided for in Article 3 of this Royal Decree.

3. The portfolio management companies are those investment firms which, on a professional basis, manage discretionary and individualised investment portfolios on the basis of the mandates conferred by investors and carry out the additional activities referred to in paragraphs (d) and (f) of Article 2.2 of this Royal Decree.

Article 5. Credit institutions

1. Credit institutions, even if they are not investment firms, in accordance with Law 24/1988 of 28 July of the Securities Market, may normally carry out all the services and activities provided for in Article 2 of this Royal Decree, provided that their legal status, their statutes and their specific authorisation enable them to do so.

2. Foreign credit institutions which come to lend in Spanish territory any of the investment services provided for in Article 2 of this Royal Decree shall be governed by the provisions of Royal Decree 1245/1995 of 14 July 1995 on creation of banks, cross-border activity and other issues relating to the legal status of credit institutions.

3. The Banco de España shall communicate to the National Securities Market Commission, in order to include the information in its records, the foreign or Spanish credit institutions that provide investment services in Spain.

Article 6. Naming reservation

1. The social names of the investment firms described in the preceding articles shall include the reference to their type of entity: "securities company", "securities agency", "managing company of portfolios", or their abbreviations "SV", "AV" or "GSC", in correspondence, printed, propaganda, contracts and, in general, in all public references of any kind that come from such entities.

2. Foreign investment firms operating in Spain shall retain their original denomination; however, they must express in their public references, in particular in their relations with the customers, their character as undertakings of investment services, as well as their own or foreign operating arrangements.

3. Any person or entity not listed in the records of the National Securities Market Commission may use the names referred to in paragraph 1 of this Article or any other expression that leads to confusion with them.

Article 7. Reserve of activity.

1. No person or entity may, without having obtained the required authorization and be registered in the corresponding administrative records of the National Securities Market Commission or the Banco de España, develop professional or usually the activities provided for in Article 2.1 and in paragraphs (a) and (c) of Article 2.2 of this Royal Decree, in relation to the instruments provided for in Article 3 thereof, comprising, for that purpose, operations on foreign exchange.

2. For the above purposes, it shall be understood that the note of habituality is fulfilled when the activities are accompanied by commercial, advertising or other activities designed to create customer relations or are based on the use of customer relations or interest from another source. It is understood that the note of professionalism is fulfilled when the activities are carried out to clients in general and in a paid way.

Article 8. Rules of conduct applicable to the provision of investment services.

1. The provision of investment services and complementary activities in Spanish territory is subject to the rules of conduct and the supervision and discipline arrangements provided for in Law 24/1988 of 28 July 1988 on the Securities Market and its rules of development.

2. The National Securities Market Commission or, where appropriate, the Banco de España will communicate to foreign-qualified entities the conditions and rules of conduct that they must comply with when they provide services on Spanish territory.

3. Any entity empowered to provide investment services or complementary activities on Spanish territory shall cooperate with the complaints services of the supervisory bodies in the resolution of any conflicts that may arise. with its resident clients, as well as to meet the requirements and requests for information of these services.

CHAPTER II

Activities and services

Article 9. Programme of activities.

1. Investment firms must have at any time before the National Securities Market Commission a programme of activities in which they shall include investment services, complementary and ancillary activities to which refers to the following Article, which they carry out, with the general or limited scope with which they intend to develop them, detailing, in addition, the instruments to which they relate and the organisation and means at their disposal.

2. Investment firms may only provide, with the appropriate scope, the services they have declared to the National Securities Market Commission and shall comply with all rules affecting the service in particular, especially those that relate to the relations with the clientele. Institutions shall not be able to perform services not included in their programme of activities or to do so with a different scope.

Article 10. Ancillary activities.

Investment services companies, provided that they meet the requirements set out in this Royal Decree and properly resolve any conflicts of interest between them and their clients, or between the interests of different types of clients, may carry out activities related to instruments not covered by Article 3 of this Royal Decree, such as those of advice, intermediation, or management of assets.

Article 11. Amendments to the programme of activities.

1. The initial activities programme of the investment firm shall accompany the application for authorisation referred to in Chapter III of this Title. Any subsequent alteration of the programme of activities shall be subject to the procedure laid down in that Chapter.

They will not require authorization from the Minister of Economy, although they will have to be communicated to the National Securities Market Commission, those modifications to the program of activities that have little relevance for affecting services. and activities not reserved, to the alteration or reduction of services and activities already authorized, or because they are considered by the National Commission of the Market of Securities in response to the prior consultation formulated to the effect by the company of investment services concerned.

2. The Minister for Economic Affairs may refuse to amend the programme of activities if the institution fails to comply with Articles 67 and 70 of the Law 24/1988 of 28 July 1988 on the Securities Market and, in particular, if the the administrative and accounting organisation of the institution, its human and technical means, its internal control procedures or the rules of conduct it has adopted, in particular if they are not appropriate to avoid conflicts of interest may arise in the development of the services and activities contained in the programme of activities proposed.

3. In the case of investment firms authorised in another Member State of the European Union, the amendment of the programme of activities shall be subject to the receipt by the National Commission of the Market of Securities of a Communication of the supervisory authority of the country of origin of the investment firm indicating the modification of the activities to be carried out in Spain.

4. The investment firm's programme of activities shall be recorded in the records of the National Securities Market Commission in the form that it determines.

CHAPTER III

Authorization and registration of investment services companies

Article 12. Authorisation.

1. It shall be for the Minister for Economic Affairs, acting on a proposal from the National Securities Market Commission, to report to his Advisory Committee, to authorise the establishment of investment firm undertakings or the transformation of a company into that category.

2. The decision on the application for authorisation shall be reasoned and shall be notified within three months of its receipt, or at the time of completion of the required documentation, and in any event within six months of its receipt. reception.

When the resolution is not notified within the time limit, it may be deemed to be dismissed, as provided for in Article 66.1 of the Law 24/1988 of 28 July of the Securities Market.

3. Obtained the authorization and, after its incorporation and registration in the Commercial Registry, the investment services companies to carry out their activities, must be registered in the Register of the National Commission of the Market of Securities.

4. The entries in the Register referred to in the preceding number, as well as the casualties therein, shall be published in the "Official State Gazette".

5. No inscriptions shall be made in the Register in the event that more than six months have elapsed between the date of authorization and the date of application for registration in the Register of the National Securities Market Commission.

Article 13. Communication to the European Commission.

The Minister for Economic Affairs will communicate to the European Commission the difficulties that Spanish investment firms may encounter in establishing or providing investment services in other EU states or in other Member States. Third States.

Article 14. Requirements for exercising your activity.

1. They shall be eligible for an entity to obtain and retain its authorisation as an investment firm of the following:

(a) To have for exclusive social object the performance of the activities that are their own of the investment services companies, according to the Law 24/1988, of July 28, of the Market of Securities and this Royal Decree.

b) Revestir the form of a public limited company. In the case of portfolio management companies, they may also be set up as limited liability companies. In any event, the company must be of indefinite duration, with a denomination adjusted as provided for in Article 6 of this Royal Decree, and the shares or participations belonging to its share capital must have a nominative character.

(c) In the case of a newly created entity, it shall be constituted by the simultaneous founding procedure.

(d) A minimum share capital and own funds not less than the amounts required in the following Article and the solvency rules applicable to it.

This share capital must be fully disbursed in cash, in the case of new creation.

In the case of transformation, the disbursement of the difference between the minimum social capital and the net worth of the entity applying for the transformation shall be cash.

e) Contar with a Board of Directors consisting of no less than five members in securities companies, and no less than three in securities agencies and portfolio management companies. All of them shall be persons of recognised business or professional repute and shall have at least the appropriate majority, knowledge and experience in matters relating to the securities market in order to perform their duties. Such good repute, knowledge and experience shall also be required in the general or similar directors of the institution, as well as in the natural persons representing legal persons in the Boards of Directors.

f) Contar with a good administrative and accounting organization and adequate technical and human resources in relation to its program of activities, as well as with procedures of internal control and security in the field ensure the sound and prudent management of the institution. In particular, the Management Board shall establish appropriate operating rules and procedures to facilitate the fulfilment of all its obligations by all its members and to assume the responsibilities of the Board of Directors. In accordance with the regulatory standards of the securities market, the Royal Decree 1564/1989 of 22 December 1989 approving the recast of the Law on Limited Companies or other provisions implementing it.

When the entity intends to provide services by telematic means, it must have the appropriate means to ensure the security, confidentiality, reliability and capacity of the service provided and for the proper performance of the rules on money laundering, conduct, internal control and risk assessment and for the proper development of the supervisory and inspection rules of the National Securities Market Commission.

g) Having an internal rules of conduct adjusted to the regulatory standards of the securities market; in particular, those contained in Title VII of Law 24/1988 of July 28, of the Securities Market and rules that develop it, which includes a system of personal operations of directors, managers,

company employees and proxies to ensure compliance with the rules of conduct.

(h) to accede, in the case of companies and securities agencies, to an investor guarantee fund in the terms established by its specific regulation and, in the case of portfolio management companies, to arrange for civil liability with a legally empowered financial institution.

i) Having their registered office, as well as their effective administration and management, in national territory.

2. Commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as the good commercial practices and financial.

In any event, it will be understood that there is no such good repute who has been, in Spain or abroad, declared bankrupt or a competition of creditors without having been rehabilitated; it is processed or, in the case of the procedure referred to in Title III of Book IV of the Law on Criminal Procedure, has been issued to the opening of the oral trial; has a criminal record for crimes of falsehood, against the Public Finance, of infidelity in the custody of documents, violation of secrets, money laundering, embezzlement of public funds, discovery and disclosure of secrets, against property; or is disabled or suspended, criminal or administratively, to exercise public or administrative charges or management of financial institutions.

3. They have adequate knowledge and experience to perform their duties in investment firms, who have performed, for a period of not less than three years, senior management, management, control or advisory functions. of financial institutions or functions of similar responsibility in other public or private entities with a dimension, at least, analogous to the entity to which it is intended to be accessed.

4. Investment firms must comply at all times with the requirements laid down in paragraph 1 of this Article. However:

(a) The authorisation may be revoked only for the lack of suitability of an exceptional partner, in accordance with the provisions of Article 69 (11) of Law 24/1988 of 28 July 1988 on the Securities Market.

(b) For lack of commercial or professional honorability of directors or directors, only the revocation shall proceed if the persons concerned do not cease in their posts in one month, counted from the order that the Commission directs to this effect. National of the Securities Market. There shall be no lack of good repute for the mere fact that, in the course of his duties, a counsellor or director is charged or prosecuted for any of the offences referred to in paragraph 2 above.

Article 15. Initial share capital and own funds.

1. Investment firms shall have a share capital not less than the following amounts:

(a) Securities companies; EUR 2,000,000.

(b) Securities agencies, when they intend to acquire the status of members of secondary markets, or to adhere to securities clearing and settlement systems, or to include in their activity programme the securities deposit and may maintain an instrumental and transitional creditor account in the terms provided for in Article 29.2 of this Royal Decree, EUR 500,000.

(c) Securities agencies that do not intend to acquire the status of members of secondary markets or to join clearing and settlement systems, when they do not include in their activity programme the securities deposit or the the reception of funds from the public, so that, in no case, they can be in a debtor position with their clients, EUR 300,000.

d) Portfolio management companies, EUR 100,000.

2. Where an investment firm carries out the discretionary portfolio management service, as provided for in its activities programme, its own funds may in no case be less than 5 per thousand of the volume of the portfolio. managed 3. Changes in the programme of activities of investment firms which provide for the performance of activities for which a higher social capital is required shall be subject to the corresponding capital increase.

4. The share capital of the agents of investment firms which are legal persons shall not be less than EUR 25 000. Nor will their own funds be less than this figure.

Article 16. Requirements of the application.

1. The application for authorisation for the establishment of an investment firm or the processing of such an investment firm shall be accompanied by the following documents:

a) Project of social statutes, accompanied by a certificate of refusal of the proposed social denomination or accreditation that can be used legitimately.

(b) a programme of activities, in which, in a specific way, the investment services and ancillary and ancillary activities to be carried out, indicating the instruments to be provided, should be included.

(c) Description of the administrative and accounting organisation, the technical and human means appropriate to its programme of activities, as well as the procedures for internal control, access and safeguarding of computer systems; accompanied, where necessary, by the relevant report by an independent expert.

d) Relationship of partners with indication of their holdings in the share capital. In the case of partners having the consideration of legal persons, the shares in their capital shall be indicated, which directly or indirectly represent a percentage higher than 5 per 100. In the case of partners who are to hold significant participation, they shall also be provided, if they are natural persons, information on their career and professional activity, and if their statutes, annual accounts and reports are legal persons. management, with the audit reports, if any, of the last two years, the composition of its administrative organs and the detailed structure of the group to which they may belong.

e) Relation of persons to be integrated by the Board of Directors and those who have to act as Directors-General or assimilated, with detailed information on the trajectory and professional activity of all of them.

(f) Rules of Procedure in which the personal transactions of directors, employees and proxies of the company are provided for, and other aspects referred to in the Title VII of the Law on the Market of securities and their implementing rules which, in accordance with the programme of activities envisaged, are applicable to the institution.

In any case, it will be possible for the promoters to require all data, reports or records to be considered appropriate to verify compliance with the conditions and requirements set out in this Royal Decree.

2. Where the transformation of another entity into investment service undertakings is requested, in addition to the above documents it shall be accompanied by:

(a) An independent expert audited balance sheet, closed no earlier than the last day of the quarter before the filing of the application, with an explicit mention and sufficient detail of possible contingencies may affect the valuation of the assets.

(b) The audited annual accounts of the last two financial years or their creation, if this has occurred during this period.

c) Writing of the institutions and their subsequent amendments.

Article 17. Refusal of application.

1. The Minister for Economic Affairs, by means of a reasoned decision, shall refuse the authorisation to set up an investment firm where the conditions laid down in the preceding Articles are not met and, in particular, when, on the basis of The need to ensure sound and prudent management of the projected entity is not considered to be appropriate for the partners to have significant participation in it. For these purposes:

(a) Significant participation in an investment firm shall be understood to be such that it reaches, directly or indirectly, at least 5 per 100 of the capital or voting rights of the entity; or to reach the percentage point, allow a notable influence to be exerted on it.

b) The suitability will be appreciated, among other factors, depending on:

1. The commercial and professional honorability of the members, in the sense provided for in article 14 of this Royal Decree. This good repute shall always be presumed when the partners are public administrations or entities dependent on them;

2. The assets of these shareholders to meet the commitments made 3. The possibility that the institution may be exposed, inappropriately, to the risk of non-financial activities of its shareholders. promoters, or where, in the case of financial activities, the stability of the institution may be affected by the high risk of such activities.

4. The transparency in the structure of the group to which the entity may eventually belong, or the possibility that the good exercise of the supervision of the entity will be hindered by the close links that they may have with other natural or legal persons, by the laws, regulations or administrative provisions of the country to which they are subject to any such natural or legal person, or by problems relating to the application of such persons provisions.

2. Close links shall mean any set of two or more natural persons joined by:

(a) The fact that they have a direct or indirect ownership, or by means of a control link, 20 per 100 or more of the voting rights or the capital of a company; or b) A link of control in the terms of Article 4 of the Law 24/1988, dated July 28, of the Securities Market.

Article 18. Start of activities.

Authorized the creation of an investment firm, within twelve months, to be counted from its notification, should the promoters grant the appropriate writing of constitution or transformation of the company, to register it in the Mercantile Register and, subsequently, in the Special Register of the National Securities Market Commission and to initiate its operations.

In another case, the authorization granted after the entity's hearing may be revoked.

Article 19. Authorisation of investment services companies subject to the control of foreign persons.

1. The authorisation for the creation of a Spanish investment firm shall be the subject of prior consultation with the supervisory authority of the relevant Member State of the European Union when it has any of the following: circumstances:

(a) That the new company is to be controlled by an investment firm or credit institution authorised in that State.

(b) Your control is to be exercised by the dominant undertaking of an investment firm, or a credit institution, authorised in that State.

(c) that their control is to be exercised by the same natural or legal persons who control an investment firm, or a credit institution, authorised in that Member State.

An enterprise is understood to be controlled by another company when it comes from one of the assumptions referred to in Article 4 of the Law 24/1988, of July 28, of the Securities Market.

2. The consultation shall be directed by the National Securities Market Commission to the equivalent supervisory body of the country of origin of the entity exercising control.

3. In the case of the establishment of investment firm undertakings which are to be directly or indirectly controlled by one or more persons or entities domiciled in a non-Member State of the European Union, the authorisation may be refused requested or limited its effects, in addition to the reasons provided for in the previous Articles, when it had been notified to Spain, in accordance with Article 7 of Council Directive 93 /22/EEC of 10 May concerning the investment services in the field of marketable securities, a decision taken by the European Community to verify that Community investment firms do not benefit in that State from a treatment which offers the same conditions of competition as their national entities and that the conditions for effective access to the market are not met market.

4. The authorisations granted to the investment firms referred to in the preceding paragraph shall be communicated by the National Securities Market Commission to the Commission of the European Union, specifying the structure of the which belongs to the entity.

Article 20. Amendment of the social charter.

1. The amendment of the social statutes of investment firms shall be subject to the authorisation and registration procedure laid down in this Chapter III, but the relevant application shall be settled, the persons concerned within two months of receipt of the complete documentation at the National Securities Market Commission, after which they may be deemed to be estimated, in accordance with Article 43 of Law 30/1992, of 26 November, the Legal Regime of the Public Administrations and the Procedure Joint Administrative.

2. They shall not require prior authorization, although they shall be communicated to the National Securities Market Commission for their constancy in the Register, amendments to the social statutes which are intended to:

(a) The change of the registered office within the national territory.

b) The increase in social capital.

c) The naming change.

d) The incorporation into the social statutes of legal or regulatory precepts of an imperative or prohibitive nature, or to comply with judicial or administrative decisions.

e) The reduction of social capital by compensation for losses.

(f) Those other changes for which the National Securities Market Commission, in response to prior consultation formulated by the affected entity, has deemed it unnecessary, due to its limited relevance, to the processing of the authorisation.

The communication to the National Securities Market Commission shall be made within 15 working days following the adoption of the statutory amendment agreement. If, upon receipt of the notification, such modification exceeds the scope of this paragraph, or will adversely affect the conditions for the authorisation, the National Securities Market Commission shall notify it within the period of 30 days for the parties concerned, to review the amendments or, where appropriate, to comply with the ordinary authorisation procedure.

Article 21. Corporate operations.

1. For the purposes of this Royal Decree, the conversion, merger, division and segregation of a branch of activity, as well as other social modification operations in which at least one company is involved, will be considered to be social operations. investment services or leading to the creation of an investment firm. Operations leading to the loss of the status of an investment firm shall also be understood to be included in this paragraph.

2. Company operations are subject to the authorisation procedure and requirements laid down in this Chapter III.

3. In the processing of the authorisation of corporate transactions, the National Securities Market Commission shall check:

(a) That the change in the structure of the company as a result of the corporate operation cannot mean any of the requirements that the investment services companies ' constitution are required to establish in this Royal Decree.

(b) That, where the disappearance of an investment firm occurs, the clients do not suffer damages, and that, where appropriate, the pending transactions shall be settled in order.

4. The National Securities Market Commission may require, where necessary, the accreditation that the social capital and net worth of the entity resulting from a corporate operation exceeds the minimum capital requirements laid down in the Article 15 of this Royal Decree. For this purpose, the presentation of audited balance sheets, including those of institutions of the consolidated group, may be required not before the last day of the quarter preceding the time of the filing of the application.

CHAPTER IV

Branches and agents of investment services companies

Article 22. Branches of investment services companies.

The opening of branches of Spanish investment services in national territory will be free, but must be communicated to the National Securities Market Commission in advance, within the time and form it determines. The National Securities Market Commission may require additional information on the material and human means or the sufficiency of the control systems.

Article 23. Recruitment of agents.

1. Investment firms may grant proxy powers to natural or legal persons for the promotion and marketing of investment services which are the subject of their programme of activities. For such purposes, they may also grant proxy powers to such persons, in order to carry out the investment services provided for in paragraph 1 (a) and (e) in the name and on behalf of the undertaking, in the name and on behalf of the undertaking. as well as in paragraph 2 (f) of Article 2 of this Royal Decree. Such staff may also carry out these duties in respect of ancillary activities. In any case, the services must be included in the program of activities registered with the National Securities Market Commission. The agents shall act exclusively for a single investment firm and, in no case, shall have any representation of the investors.

2. The exercise of the activity of the agents is subject to the supervision of the National Securities Market Commission, which may establish additional requirements for the coverage of the risks arising from breaches or fraud arising from the its activity.

3. Any natural or legal person may act as an agent of an investment firm, with the exception of:

(a) Natural persons linked by an employment relationship to the institution itself or to any other person providing investment services on the instruments provided for in Article 3 of this Royal Decree.

(b) Natural or legal persons acting as agents of another investment firm or as agents of credit institutions providing investment services, unless both entities belong to the same group.

4. Action as an agent of legal persons shall be conditional upon the compatibility of such activity with its social object.

5. The agents of the investment firm must comply with the requirements laid down in paragraph (f) of the first paragraph of Article 14 of this Royal Decree, and, where they are legal persons, those provided for in paragraphs (d) and (e) of this Regulation. This paragraph shall be subject to the precise adaptations which, if necessary, the Minister for Economic Affairs shall determine for natural and legal persons.

Article 24. Regime of representation.

1. Investment services companies that grant representations shall be responsible for the compliance of their agents with all the rules of management and discipline of the securities market in the acts they perform, including all requirements laid down in this Chapter and in the rules which develop it.

2. Investment firms must also take measures to monitor the actions of their staff and, to this end, prior to the formalisation of the contract of representation, they will have to check the adequacy and adequacy of the the administrative and media organisation, the operational procedures, the internal and accounting procedures and, where appropriate, the IT systems to be used by those in the further development of their actions. In the event that the representation is to be granted to a legal person, the above checks shall be extended to their economic and financial situation. Investment firms shall condition the recruitment of the staff to the satisfactory verification of the aspects referred to in this paragraph.

In the same way, investment firms will impose on agents that their actions are carried out in accordance with the operational, internal control and accounting procedures that, to this effect, develop the companies to the they represent, in particular as regards cash or payment instruments, as well as to impose the use of computer systems to ensure the proper integration of the data and information between the agents and the company they represent. To this end, the operators must allow and collaborate in those operational audits, procedures and internal controls which, on such procedures and systems, carry out the undertakings to which they represent. Investment firms shall, where appropriate, condition the maintenance of the contract of representation to the compliance of their agents with these measures.

For the above purposes, investment firms must take measures to monitor the actions of their agents, in particular in the case of cash movements or payment instruments and, in any event, making their recruitment conditional on the effectiveness of such measures.

3. Representation contracts shall be concluded in writing and shall specify, in a comprehensive manner, the scope of the operations and services in which the agent may act, the system of charges and payments to customers, the system of invoicing, liquidation and recovery of the services of representation, and the exceptional scheme of operations on behalf of the staff member, in accordance with the rules of procedure of conduct pursuant to Article 3 of Royal Decree 629/1993 of 3 May 1993 on rules for action in respect of markets for mandatory securities and registers.

4. Any delivery or receipt of funds shall be carried out directly between the investment firm and the investor, without the funds being able to be in a transitional manner in power or in the account of the representative. Except for the receipt or delivery of funds by means of nominative effects, either in favour of the investment firm in favour of the investor, as appropriate.

5. In no case, the securities or financial instruments of the clients may, even temporarily, be in possession or deposit of the agents, and must be deposited directly in the name of the agents.

6. Mandates with powers for a single operation shall also be made in writing and shall specify, in a specific manner, the individual operation concerned and all the aspects referred to in paragraph 3 above. The signature of acceptance of the president shall also be given to the power received.

7. The agents of the investment firm shall not be able to replace the representation obtained.

Article 25. Communication and advertising of representation relations.

1. Investment firms that hire agents must communicate to the National Securities Market Commission in the manner in which they are determined. The communication, in any case, shall include an express mention by the investment firm that the agent complies with the requirements of suitability and good repute provided for in this chapter.

The National Securities Market Commission may collect from the investment services companies represented and its agents how much information it deems necessary on the matters related to the matters covered by it. competence.

2. Investment firms shall require their staff to make clear their status in terms of the relationship they establish with the customer, identifying the entity they represent and the scope of the power they receive. In this sense, agents are obliged to display such power to all customers who request it.

3. The formalization of the documents referred to in paragraphs 3 and 6 of the previous article, the registration of the corresponding powers in the Commercial Register and the communication to the National Commission of the Market of Securities of the agency shall be a prerequisite for the performance of the agents.

4. An investment firm must have a file whose content will be determined by the National Securities Market Commission, relating to the documentary support of established agency relations and the mandates given.

5. The National Securities Market Commission shall keep the register of agents acting on behalf of investment firms at the disposal of the public.

TITLE II

Other issues of the legal regime of investment services companies

CHAPTER I

Prudential requirements of investment services companies

Article 26. Liquidity ratio.

1. Investment firms, with the exception of portfolio management companies, shall at all times maintain the volume of investments in low-risk assets and high liquidity, which, as a percentage of their total liabilities, are For a period of less than one year, the amounts of the accretive accounts referred to in paragraph 2 shall be excluded

of article 29 of this Royal Decree, establish the Minister of Economy, with a minimum of 10 per 100.

2. The Minister of Economy and, with his express rating, the National Securities Market Commission, will establish:

(a) Assets eligible for liquidity ratio compliance, including cash and deposits in the view or a term of not more than one month in credit institutions, fixed income securities and shares and holdings in collective investment institutions under the conditions to be determined.

(b) The criteria for accounting and assessing the balances of the liabilities payable under that ratio.

(c) The procedures to be applied to monitor compliance with the liquidity ratio.

CHAPTER II

Regime of activities and operations developed by investment services companies

Article 27. Securities trading.

1. Securities companies may, on their own or in, negotiate any securities and instruments with any natural or legal person subject to the limits and requirements laid down in Law 24/1988 of 28 July of the Securities Market and in its implementing rules. When participating in the trading of securities admitted to an official secondary market, they shall comply with all relevant market rules.

2. The same rules laid down in the preceding paragraph shall apply to securities agencies in the trading of securities for hire or reward.

Article 28. Financial transactions with financial institutions.

1. Investment firms may obtain financing, including in the form of a loan or deposit, from Spanish or foreign entities which are entered in one of the registers relating to financial institutions held by the National Securities and Exchange Commission, the Banco de España or the Directorate-General for Insurance of the Ministry of Economy or in registers of the same nature as the European Union.

2. Investment firms may carry out active lending or deposit operations with the entities referred to in the preceding paragraph, to the extent and with the limitations which, in order to ensure their effective dedication to the activities that they are of their own, the Minister of Economy establishes.

Article 29. Financial operations with the public.

1. Investment firms shall not be able to receive funds from persons other than those referred to in the previous Article, except for:

a) Issue of actions.

b) subordinated financing.

(c) Issue of securities admitted to trading on an official secondary market.

2. By way of derogation from the provisions of the preceding paragraph, the instrument and transitional creditor accounts which the companies and securities agencies shall open to clients in connection with the execution of operations carried out on behalf of the them. The balances of these accounts shall be invested in those categories of liquid and low-risk assets that the Minister of Economic Affairs determines.

The maintenance of these balances will be conditional on the existence of the internal control mechanisms entity that, with the requirements that the National Securities Market Commission determines, ensure that such balances are met. as provided for in the preceding paragraph.

3. The Minister of Economy will determine the regime for the issuance of shares and debt issuance of investment services companies.

Article 30. Own-account transactions of securities agencies.

1. Securities agencies may negotiate on their own account in securities admitted to trading on an official secondary market for the exclusive purpose of renting their own resources up to the amount of their own resources, deducted from permanent investments or low liquidity that the National Securities Market Commission determines.

2. They may also acquire the following securities not admitted to trading on an official secondary market:

(a) The necessary to acquire the status of a member of a secondary market or of its clearing and settlement systems.

b) Participations in the management companies of the Investor Guarantee Fund or equivalent systems abroad.

(c) Participations in financial instruments that involve the extension of the business or the activity of which involves the provision to entities of the same group of ancillary services, such as holding of real estate or material assets, the provision of computer, assessment, representation, mediation or similar services.

d) Participations in financial institutions, as defined in Article 3 of Royal Decree 1343/1992 of 6 November 1992, implementing Law 13/1992 of 1 June 1992 on own resources and supervision on the basis of consolidated financial institutions, except in the entities referred to in paragraph (h) of that Article.

3. Investment in derivative financial instruments, whether or not they are admitted to trading on a secondary market, shall be limited exclusively to ensuring adequate coverage of the risks assumed in the remainder of the portfolio to which the Paragraph 1 above.

4. In their own-account trading, they may only offer, on an instrumental and transitional basis, their clients when it is essential to avoid non-compliance with obligations arising from the development of their business activities. (a) negotiation on behalf of others or in cases determined by the Minister for Economic Affairs.

Article 31. Records of operations.

1. An investment firm shall have an updated transaction log where each of the operations referred to in this Chapter shall be specified.

2. The trade repository shall also contain all the information on orders received from third parties on the investment services referred to in Article 2 of this Royal Decree.

3. Without prejudice to the rules on rules of conduct that may be applicable, the Minister of

Economy, and, with its express rating, the National Securities Market Commission, may approve specific rules on the registration of transactions according to the category and program of activities of each entity.

CHAPTER III

Portfolio management companies

Article 32. Arrangements for the holding companies of portfolios.

Portfolio management companies may not own or hold on their behalf the funds or financial instruments or securities placed at their disposal by their clients for their discretionary management or as a result of such management. management. This prohibition also applies to any other activity incorporated in its programme of activities.

Article 33. Own-account activity of the portfolio management companies.

Portfolio management companies may only acquire securities on their own account in the circumstances provided for in paragraphs 1, 2, with the exception of paragraphs (a) and (b), and 3 of Article 30 of this Royal Decree.

TITLE III

Legal framework for significant shareholdings and reporting obligations on the composition of social capital

Article 34. Arrangements for significant shareholdings.

1. Any natural or legal person who intends to acquire, directly or indirectly, a significant participation in an investment firm, as defined in Article 69.1 of Law 24/1988 of 28 July of the Market of Values, you must follow the procedures provided for in this Title.

For the purposes set out in this Title, the shares, shares or voting rights to be included in a significant holding shall include:

(a) Those acquired directly by a natural or legal person.

(b) Those acquired through companies controlled or engaged by a natural person.

c) Those acquired by companies incorporated in the same group as a legal person or participated by entities in the group.

d) Those acquired by other persons acting on their behalf or in concert with the acquirer or companies of their group.

A controlled company shall be considered to be those in which the holder holds the control within the meaning of Article 4 of Law 24/1988 of 28 July of the Stock Market, and those in which one of the securities is held. percentages provided for in Article 185 of the Royal Decree 1564/1989 of 22 December 1989 approving the recast of the Law on Limited Companies.

Indirect holdings shall be taken for their value, where the holder is in control of the holding company, and as a result of applying the percentage of participation in the holding, otherwise.

In cases where a significant share is held, in whole or in part, indirectly, changes in the persons or entities through which such participation is held shall be reported in advance to the National Securities Market Commission, which may object in accordance with the provisions of Article 69 of Law 24/1988 of 28 July of the Securities Market.

For these same purposes, in any event, the possibility of appointing or removing any member of the Board of Directors of the investment firm shall be understood as a notable influence.

2. Any natural or legal person seeking to acquire, directly or indirectly, a significant participation in an investment firm shall inform the National Securities Market Commission thereof.

3. The request addressed to the National Securities Market Commission shall expressly indicate the amount of the holding, the title and the mode of acquisition and the maximum period in which the transaction is intended.

4. It must also inform the National Securities Market Commission in advance, in the terms set out in the previous paragraph, who intends to increase, directly or indirectly, its significant participation in such a way as to capital or voting rights reach or exceed one of the following levels: 10 per 100, 15 per 100, 20 per 100, 25 per 100, 33 per 100, 40 per 100, 50 per 100, 66 per 100 or 75 per 100.

5. The National Securities Market Commission shall have a maximum period of two months, from the date on which it has been informed, to oppose the proposed acquisition. The opposition may be founded on not considering the acquirer as appropriate, as provided for in Article 67 of Law 24/1988 of 28 July of the Securities Market.

6. After two months without the National Commission of the Market of Securities expressly ruling, the claim may be deemed to be considered, in accordance with Article 43 of Law 30/1992 of 26 November 1992, of the Legal Regime of the Public administrations and the Common Administrative Procedure.

7. The express resolution of the National Securities Market Commission accepting the acquisition of a significant participation may set a time limit other than the one requested to make the acquisition or other additional requirements.

Article 35. Legal status of control units.

1. In the event that, as a result of the acquisition, the investment firm would be placed under some of the control procedures provided for in Article 66 (3) of the Law 24/1988 of 28 July 1988 on the market in Securities, the National Securities Market Commission shall consult the competent supervisory authority prior to the decision of the procedure.

2. Any natural or legal person who intends to increase, directly or indirectly, his participation in an investment firm in such a way that the company becomes controlled under the terms of Article 66.3 of Law 24/1988, of 28 The securities market shall report on the basis of the acquisition to the National Securities Market Commission in accordance with the terms of paragraph 3 of the previous article.

3. The procedure for the authorisation of the control units shall follow the procedures laid down in paragraphs 5, 6 and 7 of the previous Article.

4. Where an acquisition is made of the regulated in this article or in the preceding article without prior notification to the National Securities Market Commission, having informed him, but without the two months remaining Article 34 (5) of the first paragraph of Article 34 (5), or with the express opposition of the Commission, shall produce the effects provided for in Article 69.8 of Law 24/1988 of 28 July 1988 on the Securities Market.

Article 36. Participation of enterprises from non-EU Member States.

1. Any acquisition of a significant shareholding in a Spanish investment firm by persons or entities resident in non-Community States, where the investment firm is to be acquired by the acquisition of the investment firm be controlled by such persons or entities, shall be communicated by the National Securities Market Commission to the Commission of the European Union.

2. The National Securities Market Commission shall suspend its decision or limit the effects of its decision on significant shareholdings where the investment firm's acquisition is to be controlled by an investment firm by virtue of the acquisition. (a) an undertaking authorised in a non-Community State and the circumstances provided for in Article 66 (4) of the Law 24/1988 of 28 July 1988 on the Stock Market.

Article 37. Loss or reduction of shareholdings.

1. Any natural or legal person who, directly or indirectly, intends to cease to have a significant participation in an investment firm; who intends to reduce his or her participation in such a way as to transfer any of the planned levels in Article 34 (4) of this Royal Decree; or which, by virtue of the intended disposal, may lose control of the undertaking, must inform the National Securities Market Commission in advance, indicating the amount of the The proposed operation and the deadline for carrying it out.

2. Also, investment firms will comply with the obligations referred to in Article 69.10 of Law 24/1988 of 28 July of the Securities Market, with the formalities that, if necessary, determine the National Market Commission. values.

Article 38. Information on the capital structure of investment services companies.

1. Irrespective of the reporting obligations set out in the preceding Articles, the investment firm shall communicate to the National Securities Market Commission, as provided for in Article 70.1 (g) of the Law. 24/1988, of 28 July, of the Stock Market, and in the form that it establishes, the following information on the structure of its social capital:

(a) For the month following each calendar quarter, the composition of its share capital, relating to all the partners that at the end of that period have the consideration of financial institutions, and those that do not, subscribed to its name shares or shares representing a share of the share capital of the entity equal to or greater than 1 per 100, in the securities companies and agencies, or 3 per 100, in the case of the holding companies.

(b) As soon as the transfer of shares or units involving the acquisition by a person or group, within the meaning of Article 4 of Law 24/1988, of 28 January 1988, is known to the investment firm, In July, the Stock Market, of a percentage equal to or greater than 1 per 100 of the company's share capital.

2. The National Securities Market Commission shall make available to the public the relation of persons or entities which, by itself or by person, have a share in the share capital of the investment services companies of 5%. 100, as well as those of those which, irrespective of their participation, have the status of a financial institution.

3. Investment firms shall include in their annual report information on holdings exceeding 5 per 100 of the share capital.

TITLE IV

Cross-border performance of investment services companies

CHAPTER I

Opening of branches and freedom to provide services in Spain by foreign investment services companies

Article 39. Scheme of branches of foreign investment firms.

For the purposes of this Title, a branch shall be defined as a branch of a holding which constitutes a party, devoid of legal personality, of an investment firm, which carries out directly, in a total or (a) the operations inherent in the business of an investment firm. A branch shall be considered to be all operating premises created in the same State by an investment firm which has its registered office in another State.

Article 40. Authorization of branches of foreign entities.

1. The opening in Spain of branches of entities of non-EU Member States which do not have the status of investment firms under Directive 93 /22/EEC, but which, however, provide an investment service will require the authorisation of the Minister for Economic Affairs, on a proposal from the National Securities Market Commission, without prejudice to Article 5.2. The above articles of this Royal Decree will be observed in the application, with the following particularities:

(a) By minimum social capital, the amount held by the institution in Spain of permanent and indefinite-duration funds, available for the coverage of losses of the branch, shall be understood.

(b) paragraphs (a), (b), (c) and (e) of Article 14 (1) of this Royal Decree shall not apply.

The reference to the draft Statute referred to in paragraph (a) of Article 16 of this Royal Decree shall be understood as referring to the draft constitution of the branch and to the existing Statutes of the branch. entity, it is necessary to inform the National Securities Market Commission of the changes that subsequently occur in both.

(c) You must have at least two persons who effectively determine the orientation of the branch and are directly responsible for the management. Both the good repute, knowledge and experience referred to in Article 14 shall be required.

(d) The social object of the branch may not contain activities not permitted to the institution in its country of origin.

(e) The documentation accompanying the application shall contain the information necessary for the accuracy of the legal and management characteristics of the requesting foreign entity, as well as its financial situation. A description of the organisational structure of the entity and of the group in which it is eventually integrated shall also be included. It shall also be established that it is in possession of the authorisations of its country of origin to open the branch, where it requires them, or the negative certification, if they are not accurate.

2. The authorization referred to in the preceding paragraph may also be refused or conditional on prudential grounds for not giving equivalent treatment to Spanish entities in the country of origin or for failure to ensure compliance with the requirements of the Directive. rules for the management and discipline of the Spanish stock markets.

Article 41. Communication on the opening of branches of investment firms authorised in other Member States of the European Union.

1. The opening in Spain of branches of investment firms authorised in another Member State of the European Union shall not require prior authorisation or be subject to the provisions of the preceding Articles of this Royal Decree. However, it shall be conditional on the National Securities Market Commission receiving a communication from the supervisory authority of the investment firm containing at least the following information:

(a) A programme of activities indicating, in particular, the operations it intends to carry out and the structure of the organisation of the branch and the establishments through which it will operate; where all necessary information may be required from the branch; (c) the name and history of the managers responsible for the branch; (d) Detailed information on any investor guarantee scheme which is intended to ensure the protection of the investors of the branch to which the institution is attached and) Statement that its Central administration is located in the Member State which has issued its authorisation and in which it actually exercises its activities.

2. Received the communication mentioned in the previous section, the National Commission of the Market of Securities will proceed to give account of its receipt to the company of investment services and this, then, will proceed to register the branch in the Registry Mercantile, and then in the Register of the National Securities Market Commission, communicating to this date the effective start of its activities.

The National Securities Market Commission may set a waiting period, not exceeding two months from the receipt of the communication from the supervisory authority of the investment firm, for the initiation of the activities of the branch in order to organise its supervision. It may also indicate, where appropriate, the conditions under which, for reasons of general interest, it must carry out its activity in Spain. In the event that any of the activities communicated there is one that is not among those related to Article 2 of this Royal Decree and is a prohibited or limited activity for the investment services companies, the National Commission the Securities Market will notify the investment firm and its supervisory authority of this.

Elapsed one year after the investment firm has been notified of the receipt of the communication by its supervisory authority, or since the end of the waiting period set by the Commission National of the Securities Market, without the institution having opened the branch, the procedure must be started again.

3. If, once the branch is opened, the foreign investment firm intends to amend the content of any of the information referred to in paragraph 1 (a), (b), (c) or (d) of this Article, it shall inform the National Securities and Exchange Commission, without prejudice to the communication from its supervisory authority, at least one month before making the change, in order to enable the National Securities Market Commission to act and act in accordance with as provided for in the preceding paragraphs.

The National Securities Market Commission must also be notified of the closure of the branch, at least three months in advance of the date provided for.

Article 42. Provision of services without a branch by a foreign investment firm.

1. The implementation in Spain, for the first time, of activities under the freedom to provide services, by investment firms authorised in another Member State of the European Union, may be initiated once the National Commission of the The Securities Market receives a communication from its supervisory authority indicating the activities to be carried out. Such a scheme shall apply provided that the investment firm intends, for the first time, to carry out an activity in Spain other than those contained in that communication.

The National Securities Market Commission will notify companies of the conditions and rules of conduct to be met by investment service providers in Spain.

2. Where an entity not authorised in another European Union Member State intends to provide investment services without a branch in Spain, it shall first request the National Securities Market Commission, indicating the activities to be carried out be carried out and obtain the corresponding authorisation. The National Securities Market Commission may request an extension of the information provided, as well as condition the exercise of those activities to the fulfilment of certain requirements as a guarantee of compliance with the markets in which it is intended to operate or to be issued for reasons of general interest.

The authorization referred to in this paragraph may be refused or conditioned for prudential reasons, for not giving equivalent treatment to Spanish entities in the country of origin, or for not being assured of compliance with the rules for the management and discipline of the Spanish stock markets.

CHAPTER II

Opening of branches and freedom to provide services abroad by Spanish investment services companies

Article 43. Opening of branches abroad by companies of Spanish investment services.

1. The Spanish investment firm which intends to open a branch abroad must first apply to the National Securities Market Commission, accompanied by the information of the State in whose territory they intend to establish the branch and the address provided for it, as provided for in paragraphs (a) and (c) of Article 41 (1) of this Royal Decree.

2. The National Securities Market Commission shall give a reasoned decision and notify it within three months of the receipt of the request. Where the decision is not notified within the time limit laid down, it may be deemed, in accordance with Article 43 of Law No 30/1992, of 26 November 1992, of the Legal Regime of the General Administration and of the Joint Administrative.

3. The application may be refused only by the National Securities Market Commission when it has reason to doubt, in view of the project in question, the adequacy of the administrative structures or the financial situation of the company investment services, or where activities not authorised to the institution are included in the programme of activities presented.

4. Where the branch of a Spanish investment firm is to be established in another Member State of the European Union, the National Securities Market Commission shall, within the period of three months referred to above, give the their case, of the authorization to the competent authority of that State, accompanying their communication the information contained in Article 41 (1) of this Royal Decree. Such communication shall be transferred to the requesting entity.

5. Where the branch of the Spanish investment firm is intended to be opened in a non-member State of the European Union, the National Securities Market Commission may refuse the application, in addition to the reasons set out above, to consider that the activity of the branch is not to be subject to effective control by the supervisory authority of the host country, or by the existence of legal or other obstacles preventing or hindering the control and inspection of the branch by the National Securities Market Commission.

6. Any modification of the information referred to in paragraph 1 of this Article shall be communicated by the investment firm, at least one month before it is made, to the National Securities Market Commission.

A relevant modification may not be made in the branch's program of activities if the National Securities Market Commission, within a period of one month, objects to it, by means of a reasoned resolution that will be notified to the entity. Such opposition shall be based on the causes provided for in this Article, which shall apply in each case.

Article 44. Action by other investment firms.

1. The creation by an investment firm or a group of Spanish investment services companies of a foreign investment firm shall be subject to the prior authorisation of the National Securities Market Commission. the direct or indirect acquisition of a holding in an existing undertaking, where that foreign investment firm is to be incorporated or is domiciled in a State other than a Member of the European Union.

2. In the case of the creation of an undertaking, the application for authorisation submitted to the National Securities Market Commission shall, at least, accompany the following information:

a) Amount of the investment and the percentage that represents the participation in the capital and the voting rights of the entity to be created. Indication, where appropriate, of the entities through which the investment will be made.

(b) The provisions of paragraphs (a), (b), (c) and (e) of the first paragraph of Article 16 of this Royal Decree. The list referred to in paragraph (d) shall be replaced by a list of the partners that will have significant holdings.

c) A complete description of the securities market rules applicable to investment firms in the State in which the new company is to be established, as well as the rules in force in the field of taxation and prevention of money laundering.

3. Where a holding is to be acquired in an investment firm, the latter being understood to be of a significant nature, as provided for in Article 69 of Law No 24/1988, or to increase the participation of an investment firm. significant, reaching or exceeding one of the percentages referred to in paragraph 4 of that Article 69, the information referred to in the preceding paragraph shall be submitted, but the information referred to in subparagraph (b) may be limited to that data. which have a public character.

The time limit for the realisation of the investment, the annual accounts of the last two financial years of the investee entity and, where applicable, the rights of the institution in order to designate representatives in the the administrative and management bodies of the latter.

4. In any event, it shall be appropriate for applicants to require all data, reports or records to be deemed appropriate for the National Securities Market Commission to be able to give an appropriate opinion and, in particular, to assess the possibility to exercise the consolidated supervision of the group.

Article 45. Provision of services without a branch abroad.

1. For the first time, Spanish investment firms intending to carry out their activities under the freedom to provide services in a non-Member State of the European Union must first apply to the National Commission of the Stock Market, indicating the activities for which it is proposed to carry out. The procedure laid down in Article 43 (2), (3) and (5) shall apply to the authorisation procedure.

2. The provision of services without a branch in another Member State shall only be communicated to the National Securities Market Commission in advance, specifying the activities to be carried out from among those authorised to the institution. The National Commission shall forward that information to the competent authority of that State within a period of not more than one month from its receipt, giving notice of such communication to the institution itself.

Additional disposition first. Forms of materialization of the bond with the Securities Clearing and Settlement Service.

A new paragraph is created in the third paragraph of Article 61 of Royal Decree 116/1992, of 14 of

February, on representation of securities by means of accounting and clearing and settlement of stock trades, with the following wording:

" (e) By means of a pledge or other financial transaction on any negotiable value accepted by the European Central Bank and the Bank of Spain as collateral in monetary policy operations, with the same valuation criteria the establishment of such operations. "

Additional provision second. Competitive ratings.

This Royal Decree is of a basic nature in accordance with the provisions of Article 149.1.6.a and 11.a of the Constitution.

Single transient arrangement. Adaptation of registered entities.

Securities companies, securities agencies and holding companies registered in the Register of the National Securities Market Commission for the entry into force of this Royal Decree shall be adapted to the established within six months of the entry into force of this Royal Decree.

Single repeal provision. Repeal clause.

Royal Decree 276/1989 of 22 March 1989 on companies and securities agencies, and Title IV of Royal Decree 1393/1990 of 2 November 1990 on the adoption of the Regulation of Law 46/1984 of 26 December 1989, are hereby repealed. (a) the rules governing collective investment institutions, as well as any rules of equal or lower rank which are contrary to the provisions of this Royal Decree.

Single end disposition. Regulatory enablement.

The Minister of Economy and, with his express rating, the National Securities Market Commission will be able to dictate the precise provisions for the proper execution of this Royal Decree.

Given in Palma de Mallorca to July 20, 2001.

JOHN CARLOS R.

The Second Vice President of the Government for Economic Affairs and Minister of Economy,

RODRIGO DE RATO Y FIGAREDO