B2B Payments

Spain: The Regulatory Times Are A’Changin’

For the last several years, Spain has struggled to regain economic strength. However, the European nation could be nearing positive change as it works to make regulatory changes in an effort to join in on the pan-European TARGET2 Securities transformation.

The International Monetary Fund (IMF) recently investigated Spain’s economic management and said that while “Spain has turned a corner,” the nation’s lack of regulatory reform to help small businesses must change. The IMF said that raising more tax revenue could help make that possible.

According to a recent article in The Spain Report, the IMF says that the Spanish government should push through more employment reform and allow Spanish companies to slash wages in order to stay afloat.

“Further efforts would make Spain’s labor market more dynamic and inclusive,” the IMF told the news source. “Further enhancing the ability of individual firms to adapt remuneration to their specific conditions would better align productivity to wages and help struggling firms stay in business. These changes would help ensure any future downturns result in fewer job losses.

Spain And The T2S Initiative

Spain’s goal is to join the pan – European TARGET2 Securities (T2S) by 2017. The T2S is a European initiative to establish a single platform for the settlement of securities. Headed by the European Central Bank (ECB), the T2S movement will also improve the efficiency and safety of securities settlement through a harmonized Delivery-versus-Payment (DvP) settlement in central bank money on a real-time gross basis.

However, according to a recent Bobs Guide blog post by Noemi Domenech, Spain must first undergo a preliminary process to harmonize its rules and procedures.

Domenech outlined several areas that will be affected by Spain’s regulatory reform, and the main changes that will occur in the different areas. Included in that outline was Spain’s Trading Area, where changes in the communication details will soon be introduced. According to Domenech, this will allow for the new Central Counterparty (CCP) requirements, such as the existence of clearing members, account numbers at CCP level and others.

Additionally, the CCP will implement fail management procedures and relevant penalties that will minimize failed trades. However, should failures still occur, an automatic borrow process will be in place to be carried out by the CCP.

“In conclusion the reform will certainly ease the access to T2S for the Spanish market,” Domenech wrote. “But before we reach this point (Spain is anticipated to be joining T2S in 2017), all market participants will have to find the right answers to a number of challenges and changes, and due to the current business situation these decisions are not easy ones to take.”

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