Institutional Framework of Investment Services
2nd Semester, Course Code: ΜΕΧΘ18
Credits: 7
Learning Outcomes
- They have a high level of specialised knowledge of capital market law that provides the basis for original thinking, research and professional activity.
- They apply the knowledge acquired in research, analysis and the development of innovative solutions to complex, interdisciplinary and innovative issues with originality.
- Gain an increased critical understanding of the evolutionary dynamics and cutting-edge issues of the institutional framework of the capital market, both EU and Greek.
General Competences
- – Search, analysis and synthesis of data and information, using the necessary technologies
- – Adapting to new situations
- – Autonomous work
- – Teamwork
- – Decision-making
- – Working in an international and interdisciplinary environment
- – Promoting free, creative and deductive thinking
Course Content
The course will cover the following topics:
Ι. The development of modern capital market law in parallel with the evolution of European financial law.
- The influence of the derivative EU financial services law on the development of Greek capital market law / stock exchange law over the last 40 years.
- Primary and secondary capital markets
- From stock exchange law to investment services law
- Single Internal Market and Financial Services Action Plan
- The relationship between public/private financial services law (banking law, capital market law and insurance law) and private law.
II. Investment services and markets in financial instruments
1.The law governing the provision of investment services: Law no. The law on investment services is governed by the law on investment funds. Law 2396/1996, Law 3606/2007 and Law 4514/2018. From ISD 93/22/EEC, to MiFID 2004/39/EC and MiFID II (EU) 2014/59.
2.Prerequisite for the application of the specific provisions of the legislation on the provision of investment services
- Investment and ancillary services
3.1 The receipt and transmission of an order and the execution of an order to effect a transaction in a financial instrument
3.2 The direct sale and purchase of financial instruments in the course of the activity of a securities dealer
3.3. Portfolio management
3.4. The provision of investment advice
3.5. Contractor services
3.6. provision of credit for the purpose of effecting transactions in financial instruments
- Financial instruments
- Investment service providers (investment firms, credit institutions, financial institutions, AIFMs, AIFMs, Tied Agents)
- The operating licence
6.1 Conditions for authorisation
6.2 Cross-border provision of services
6.3. Withdrawal of authorisation and special winding-up
- Capital adequacy rules.
- Organisational rules for investment service providers (“ISPs”)
8.1 Obligations under the organisational rules to create conditions for the proper performance of the provision of
8.2 The obligation to segregate assets to protect the interests of the client – preventive measures to address the risk of loss of assets
8.3 Organisational rules as a measure to avoid conflicts of interest
8.4 Record keeping by investment firms as a condition for accountability
8.5. Post-provision information obligations as a condition for monitoring the proper fulfilment of the investment service provider’s obligations and for ensuring proper accountability
- Rules of professional conduct and investor protection
9.1 Pre-contractual information to the client: Appropriate information to investors about the investment service provider, the services provided by the investment service provider and the services that will be the subject of the contract and, indicatively:
(a) for the command execution policy (“best execution”)
(b) for inducements: commissions, fees and expenses
(c) for clearing and settlement of transactions and custody of securities
9.2 Obligations prior to the provision of the investment service
9.2.1 Obligation of the investment service provider to obtain information from the client and to inform the client as a prerequisite for the proper performance of the investment service provider’s service
9.2.2 Assessment of the client’s compatibility and suitability
9.3 Client categorisation and due diligence in the provision of private investment services
9.4 Obligations of the investment service provider and due performance per investment service
9.5. The receipt and transmission of an order and the execution of an order to enter into a transaction in a financial instrument
9.5.1 Differentiation of the reception and transmission of an order from the execution of an order
9.5.2 Rules for handling client orders
9.5.3. The manner and ‘place’ of execution of the order
9.5.4. Conditions for OTC trade execution
9.6. Direct execution of a transaction with a client in a financial instrument (execution of transactions by the investment service provider for its own account with a counterparty client)
9.7. Portfolio management
9.8. The provision of investment advice
9.9. Differentiation of the liability of the investment service provider in relation to the issuer of the financial instruments depending on the investment service provided
- Obligations of the investment firm when providing ancillary services
10.1 The safekeeping of financial instruments when providing custodian services: The obligations of the depositary
10.2 The provision of credit to the counterparty of an investor for the purpose of carrying out a transaction in a financial instrument through the investment firm
10.3 Investment research, financial analysis and other forms of general recommendations relating to transactions in financial instruments
10.4. Underwriting-related services
- Obligation of continuous compliance with internal organisation and conduct of business rules: relevance for private law relations with counterparties
- Conditions of intra-contractual and extra-contractual (tort) liability in the provision of investment and ancillary services – Liability of the provider of investment services
12.1 The impact on the law of compensation of the rules of internal organisation of investment firms as mandatory provisions linked to ensuring the proper functioning of the market, the proper provision of services and the safeguarding of the interests of traders
12.2 Determination of the obligations and liability of the investment firm on the basis of the investment service actually provided – De facto/implicit contracting
- Case law
- Investor Compensation Schemes
III. Central Securities Registries and the rules for clearing and settlement of transactions
- Central Securities Registries and Central Securities Depositories
- Immobilisation and dematerialisation of securities
- Clearing and settlement rules for securities transactions / Post trading rules
IV. Primary Capital Markets
- Public offer of securities / invitation to the public
- Public offer versus private placement
- The prospectus (Regulation (EU) 2017/1129 and Law No. 4706/2020)
- The obligation to provide information about the issuer and the financial instruments when placing – offering financial instruments
- The underwriter and its responsibility to provide proper information to the investor when placing financial instruments in the context of an underwriting or “placing” of financial instruments with or without an underwriting commitment
- Appropriate information to the investor: The prospectus and the responsibility of the underwriter.
- Liability of the issuer and liability of directors and third parties editing the prospectus
V. The Secondary Capital Market: Regulated/regulated markets, Multilateral Trading Facilities and Regulated Trading Facilities
- Concept and rules for the operation and authorisation of organised/regulated markets and MTFs
1.1 Transparency rules in regulated markets as regards issuers of securities traded on a regulated market and corporate governance rules
1.2 Suspension of trading and deletion of securities from a regulated market
1.3 Rules for the conduct of stock exchange transactions
1.4 The stock exchange sale and the stock exchange order
- Public takeover offer
- Organised market operator – MTF
- Multilateral trading facilities
- Regulated trading mechanism
VI. Market abuse (Law 4443/2016 – Regulation 596/2014/EU – MAR)
- The legislative framework for “market abuse” transactions
- Ensuring the proper functioning of the capital market as an institution: the generally protected legal interest
- Key differences between Law 4443/2016 and Regulation 596/2014/EU on market abuse compared to Law 3340/2005
- Abuse of privileged information
- Manipulation in the capital market
Student Performance Evaluation
Optional assignments will be given, which will be taken into account in the final evaluation of the students to improve the grade. Students will be given the opportunity to present their assignments orally and with slides and, based on the presentations, there will be a discussion of the topics of the presentations.
The examinations will be written. The questions will cover a wide range of material so that students will be able to demonstrate their ability to deal with a variety of issues in capital markets law. In the examination students will be entitled to refer to legislation, bibliography and notes.
Students will be assessed and graded 70% through written examinations.
Assignments, as well as participation in class discussions and active presence in class will be taken into account at a rate of 30% in the final assessment and marking of students.
Bibliography
Suggested Bibliography
- D. Avgitidis, Capital Market Law, 2nd edition, 2019, and
- B. Tountopoulos, Capital Market Law, 2nd edition, 2021.
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