Last week we saw further regulatory changes made by Spain and Germany in light of the Covid-19 pandemic.
In unison with the reduced ESMA reporting thresholds and outright short-selling bans seen across Europe, it is arguable that Covid-19 is acting as the largest regulatory stimulant since the 2008 Global Financial Crisis. You can find more about the ESMA reporting threshold reductions and outright short selling bans here.
The Spanish regulator imposed its third set of measures in response to Covid-19 by widening the scope of their ‘foreign direct investment’ (“FDI”) definition. The definition now widens the pool of transactions that require authorisation from the regulator and depending on the regime, may even include transactions already agreed and pending execution. Covid-19 has also elbowed its way into already ongoing legislative developments.
The German government has begun the legislative process to the German Foreign Trade and Payment Act which governs the country’s FDI regulations. The pandemic has introduced a new dynamic to those discussions which has resulted in the current restrictions on FDI in defence and encryption sectors, being extended to cover ‘critical infrastructure’.
Referencing the ‘critical infrastructure’ definition provided by BAFIN, this would include more onerous FDI regulations in energy, information technology and telecommunications, transport, health, water, food, finance and insurance sectors.
It is clear that the purposive approach of restricting foreign direct investment relates to the protection of national interest in these turbulent times. With regulators becoming increasingly responsive to global events in both turnaround time and specificity, the importance of a managed compliance service is evident.
FundApps’ Sensitive Industry subscribers can rest assured that their regulatory rules and daily checks are fully up to date with the latest changes, including those published recently by Spain. As responsible asset managers, they can demonstrably and unequivocally show that they are doing all they can to ensure compliance with the ever changing regulatory environment.
Please do not hesitate to get in touch should you have any questions regarding the rapidly changing regulatory situation or how FundApps can help you to manage your obligations.