SRD II Positive but Inconsistent Across Europe

The updated Shareholder Rights Directive (SRD II) has been a “positive step” for increasing transparency to investors, but implementations across Europe vary, according to a new report. The white paper, sponsored by financial technology firm Broadridge Financial Solutions, shows that the digitalisation of proxy voting in Europe has positively impacted transparency and engagement between issuers and investors. However, the varying levels of SRD II adoption across European states means there is still an opportunity for significant further progress. As SRD II was a directive rather than a regulation, each member state had discretion on how rules within the directive were transposed into local laws, a process initially scheduled to be completed by June 2019. Due to different interpretations, 75% of eligible intermediaries with holdings in SRD II markets are yet to fully adopt the Securities Market Practice Group recommended messaging required by the directive. Demi Derem, Broadridge’s general manager of International Investor Communication Solutions, said “The market can expect the volume of voting at general meetings to increase year on year. This will require intermediaries – banks, brokers, wealth managers and CSDs – to further automate processes for all markets, locally and internationally, through a robust end to end service for the proxy voting lifecycle”. 

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