SPAIN Law and Practice Contributed by: Miguel Cases and Claudi Rossell, Cases & Lacambra
ter Securities Lending Agreements (MSLAs) are exclu - sively used in connection with international repo and securities lending transactions. In Spain, it was quite common to use the EMA, sponsored by the European Banking Federation (EBF), the European Savings Bank Group and the European Association of Co-opera - tive Banks, to document repos and securities lend - ing agreements. Only the 2001 version of the EMA was drafted in Spanish, and the updated versions have therefore never been used for such purposes. It is worth noting that the parties commonly elect to use Spanish law to govern the EMA when applied in domestic transactions. 4.2 Clearing Documentation In connection with ISDA master agreements, the standards sponsored by the Futures Industry Associa - tion (FIA; formerly the Futures and Options Associa - tion (FOA)) and ISDA are generally used in connection with peer-to-peer (P2P) transactions to be cleared in a CCP. When the services of a clearing member are needed, it is customary in Spain to sign and execute a bespoke tailor-made agency agreement, coupled with an ISDA Master Agreement between the client and the clearing member, with an addendum to deal with cleared transactions governed by the CCP’s rule - book and the opening of a segregated account. In Spain, the 2020 CMOF includes an Annex IV, in line with ISDA/FIA-sponsored standards for P2P transac - tions within the EU. In respect of derivatives traded on a trading venue, CCPs use the agency model instead of the principal model used in Europe. The most common concerns arising from the negotia - tions between brokers and clients to clear standard derivatives are as follows: • the use of electronic platforms to enter orders; • collateral posting and its transformation when margin obligations are funded with non-eligible assets in the event the clearing member provides this service; and • portability and default provisions. 4.3 Opinions and Other Documentation Issues At the level of the EU, Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26
June 2013 on prudential requirements for credit insti - tutions and investment firms, and amending Regula - tion (EU) No 648/2012 (Capital Requirements Regu - lation (CRR)), require that credit entities obtain legal opinions in respect of regulatory capital obligations on OTC derivatives, as follows. • Article 194 (1) and (2) subject the recognition of credit-risk-mitigation techniques to reduce the consumption of regulatory capital to the prior obtention of legal opinions on the legal effective - ness and enforceability in all relevant jurisdictions of such techniques. Consequently, close-out netting (covering both the applicable law and the counterparty’s residence jurisdiction) and collateral opinions (covering the legal status of collateral tak - ers and givers) are needed. • Article 305 (2) also requires that the client of a clearing member has the legal opinion that it would bear “no losses” on account of the insolvency of its clearing member, or any of the clearing member’s clients, under the laws of the jurisdiction of various related entities. This is the reason why ISDA’s legal opinions on these subjects have an architecture based on three modules. 5. Enforcement Trends 5.1 Regulator Priorities and Enforcement Trends According to the CNMV’s 2025 Activity Plan, its main enforcing actions are to be focused on the following areas. • Effective supervision as the key to ensuring the smooth operation of capital markets and protecting investors: the CNMV is in the process of devel - oping supervisory technology (SupTech) tools to improve these efforts and sharing them across various supervisory bodies. Likewise, the CNMV plans to gradually increase the sanctions imposed for infringements that severely undermine any of its three core objectives, ie, investor protection, trans - parency of information, and orderly functioning of the market. In this area: (a) the supervisory model is to be aligned with ESMA’s principles for risk-based and data-
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