The Shareholder Rights Directive (SRD) should be made a regulation rather than remaining as a directive, according to a panellist at this year’s CorpActions conference in London.
The comment came from Michael Collier, executive director of product management at JP Morgan, during a panel entitled ‘Regulation - Demands and Opportunities: A Review’. Collier urged firms to push The European Securities and Markets Authority (ESMA) to make this change during their upcoming SRD review, the call for evidence of which is ongoing.
This need for standardisation in regulation was echoed by other speakers, with Paola Deantoni, public affairs officer at Société Générale Securities Services, stating that corporate actions are not standardised enough — and that shareholders are now demanding it.
SRD II has given retail shareholders a greater platform, said Paul Nolan, senior director of product management at Broadridge. However if they do not feel that their voices are being heard and are not able to exercise their shareholder rights, then thanks to social media, online networks and forums there is an increased potential for reputational damage to the retail provider. It is therefore essential for regulation around shareholder rights to be clear and standardised.
Deantoni commented that there is currently a lack of transparency around SRD II, with no common understanding of how the regulation works across countries. She highlighted the need for firms to share their experiences with the regulation through ESMA’s review and propose adjustments.
Nolan emphasised the much-needed requirement to address the lack of clarity around the definition of ‘shareholder’, an issue that appears continually throughout SRD discussions. In some markets the shareholder is defined at a registered, nominee level, whereas in others the shareholder is deemed to be the beneficial owner.
Gary McNamara from the European Central Bank provided three key areas that an update to SRD should aim to address: availability of common standardised data, provided without undue delay, and communicated exclusively using a standardised ISO 20022 message. He proposed the idea of a ‘corporate event rulebook’ to encourage consistency and work towards standardisation.
Concluding the panel, the speakers agreed that SRD still has a way to go before it is truly effective. However, they were optimistic about the results of ESMA’s review and restated the importance of industry engagement to provoke meaningful regulatory change.
