On May 28, ISDA and the Association for Financial Markets in Europe (AFME) responded to the Dutch Ministry of Finance’s consultation on additional anti-dividend stripping measures, urging that the proposed rules should target only abusive arrangements and not ordinary, commercially driven capital markets transactions.

The associations argue that some proposed measures would add uncertainty, duplicate existing protections and risk harming liquidity and efficiency in the Dutch equity market. The proposed measures should not inadvertently capture ordinary derivatives-based hedging arrangements where Dutch shares are held to hedge client-facing or market risk positions. In these cases, the economic exposure to the shares may be reduced or offset as part of prudent risk management, but that does not mean the arrangement is artificial or tax driven. Treating standard hedging activity as indicative of dividend stripping would create uncertainty for legitimate derivatives and capital markets transactions.