Ministry says late MIFID II transposition had no major consequences

Gavel and european union flag

Ljubljana – Responding to the EU Court of Justice ordering Slovenia pay a fine for failing to transpose changes to the EU directive on markets in financial instruments in due time, the Finance Ministry said the delay had not affected private and public interests. It added that the European Commission had been informed about the transposition.

Slovenia has been ordered to pay EUR 750,000 for failing to transpose the changes or failing to notify the European Commission about this, according to the judgement published on Wednesday.

The European Commission sued Slovenia over the matter in 2018, the year when the relevant changes to the Markets in Financial Instruments Directive (MIFID) entered into force.

The Finance Ministry told the STA on Thursday that the failure to transpose MIFID II in due time had no consequences, as a law that had transposed the first directive, which was later upgraded, had been in force all that time.

For this reason, “it was not possible to speak about the complete absence of regulation of the functioning and supervision of capital markets”.

The changes relate to the protection of financial instruments and assets of clients, which is, as the EU Court of Justice summarised the Commission’s arguments, an important part of the system.

Investment companies must adopt certain regulations to protect the assets and rights of investors when it comes to securities and assets entrusted to them, the court added.

The Finance Ministry assessed that, considering the structure, lack of complexity and small size of the Slovenian capital market, the amendments that had been incorporated into MIFID II had no significant impact on its functioning.

EU member states had until 3 July 2017 to transpose the amended directive and notify the European Commission thereof.

Since the Commission had not received any information from Slovenia until then, it issued a warning in September 2017. At the time, Slovenia said that measures for the transposition were being prepared and that they should be adopted by April 2018.

However, Slovenia informed the Commission in August 2018 that an early election had been held in Slovenia, asking for understanding for the delay.

In October 2018, the Commission assessed that Slovenia did not notify national measures for the transposition of the directive and filed a lawsuit at the EU Court of Justice.

“In the lawsuit, the European Commission also proposed that a high flat-rate fine is paid, which Slovenia objected on the basis of the mentioned arguments,” the ministry said today.

“For this reason, Slovenia proposed to the court that the amount of the fine proposed by the Commission is disregarded. The EU Court of Justice partially accepted Slovenia’s arguments and reduced the proposed amount of the flat-rate fine.”

The ministry added that the court had considered the fact that the practical consequences of the later transposition were relatively small, and that it had based its judgment mostly from the aspect of preventing possible repeated violations.