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LEGISLATIVE TRAIN 10.20164C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENEDINDUSTRIAL BASE / FINANCIAL SERVICES / UP TO €82BN
INSURANCE GUARANTEESCHEMES
DEPARTURE DEMANDS 1
JD - RECOVERY ANDRESOLUTION OF FINANCIALINSTITUTIONS OTHER THANBANKS
FRAMEWORK FOR HIGH-QUALITY SECURITISATION
PROSPECTUS REGULATION STRONGER EU-WIDESUPERVISION
REVIEW OF REGULATORYBARRIERS FOR SME ACCESSTO PUBLIC MARKETS
REVIEW OF EUVECA ANDEUSEF LEGISLATION
PAN-EUROPEAN CAPITALFUND-OF-FUNDS ANDMULTICOUNTRY FUNDS
REVISION OF SOLVENCY II -CALIBRATIONS
AMENDING THE PRUDENTIALREQUIREMENTS (CRR) FORSECURITISATIONS
CROSS-BORDERDISTRIBUTION OFINVESTMENT FUNDS
BUSINESS INSOLVENCY CRD / CRR | AMENDINGCAPITAL REQUIREMENTS
DEPARTURES 12
OCCUPATIONAL PENSIONS MONEY MARKET FUNDS
EXPECTED ARRIVALS 2
BANKING STRUCTURALREFORM
LONG-TERM SHAREHOLDERENGAGEMENT; CORPORATEGOVERNANCE STATEMENT
ON HOLD 2
1/3
INTERCHANGE FEES FORCARD-BASED TRANSACTIONS -PAYMENTS LEGISLATIVEPACKAGE
SINGLE RULEBOOK FORBANKS
PAYMENT SERVICES IN THEINTERNAL MARKET
REPORTING AND FINANCINGOF SECURITIES TRANSACTIONS
INDICES AND BENCHMARKSIN FINANCIAL INSTRUMENTSAND FINANCIAL CONTRACTS
MARKETS IN FINANCIALINSTRUMENTS(MIFID2/MIFIR)
EUROPEAN LONG-TERMINVESTMENT FUNDS
INFORMATIONACCOMPANYING TRANSFERSOF FUNDS
ARRIVED 8
INVESTOR COMPENSATIONSCHEMES
DERAILED 1
LEGEND
ACTION PLAN FOR CAPITAL MARKETS UNION DEPARTED
EUROPARL
EUROPEAN COURT OF JUSTICE
COUNCIL
COMMISSION
JOINT DECLARATION ON THE EU'S
LEGISLATIVE PRIORITIES FOR 2018-19
MULTIANNUAL FINANCIAL FRAMEWORK
2021-2027
GLOSSARY
DEPARTURE DEMANDS
European Parliament legislative initiative reports in the fields covered by the Ten-Point Juncker Agenda
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 2/3
DEPARTURES
Initiatives announced by the European Commission in its annual Work Programme; legislative proposals submitted by the
Commission to the Parliament and the Council; the files are considered departed when the Co-Legislators have started
legislative work
EXPECTED ARRIVALS
Legislative proposals close to be finalised
ON HOLD
Initiative blocked by one institution or under negotiations for more than 2 years; announced legislative initiatives or legislativeproposals by the European Commission with no follow-up for more than 9 months
ARRIVED
Legislative proposals finalised and adopted by the two Co-Legislators: the European Parliament and the Council of theEuropean Union
DERAILED
Proposals withdrawn by the European Commission
DISCLAIMER
The content of this document is the sole responsibility of the authors and any opinions expressed therein do not necessarily represent
the official position of the European Parliament. It is addressed to the Members and staff of the EP for their parliamentary work.
Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European
Parliament is given prior notice and sent a copy.
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 3/3
LEGISLATIVE TRAIN 10.20164C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENEDINDUSTRIAL BASE / FINANCIAL SERVICES / UP TO €82BN
CONTENT
The untapped potential of the EU Single market is estimated at a possible increase of the EU GDP by 4.4% per year which is equivalent
of €615 billion per year. It is still incomplete due to the fragmentation and barriers, implementation of existing legislation lagging
behind or the ineffectiveness of policy instruments in some sectors.
As for transport, despite its key role in the EU economy as a common EU policy and important source of jobs, it remains incomplete
and vulnerable to external shocks. The potential gains coming from solving remaining problems and addressing existing barriers are
estimated by the EP at €8 billion per year. To achieve this main toolbox is the Single European Transport Area with technical, social and
legal aspects addressed.
The reform of the cross-border mobility of company seats could also contribute to completing the freedom of services. The EP
estimates that the potential benefits would amount to €440 million per year if 11% of firms were to move within the Single Market.
The potential benefits from a fully integrated and actively regulated EU-wide financial services sector could, on the basis of research
conducted by the European Parliament, be of the order of €82 billion per year. Completing and implementing financial regulatory
framework would bring up to €63 billion a year of gain and the implementation of measures on derivatives trade would add to this
figure €19 billion. Further phasing in of the EP resolution 2012/029(COD) on Financial markets: improving securities settlement in the EU;
central securities depositories (CSDs) adopted in July 2014 is already to bring in part of the above evaluation.
Source for the financial potential evaluation: The economic potential of the ten-point Juncker Plan for growth without debt,
European Parliament, DG EPRS study (PE543.844), Brussels 2014 and Mapping the Cost of Non-Europe 2014-19, European
Parliament, DG EPRS study (PE536.364), Brussels 2015.
References:
• European Parliament, Financial markets: improving securities settlement in the EU; central securities depositories (CSDs), Legislative
Observatory, COD/2012/029
1/1
LEGISLATIVE TRAIN 10.20164C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENEDINDUSTRIAL BASE / FINANCIAL SERVICES / UP TO €82BN
INSURANCE GUARANTEE SCHEMES [ DEPARTURE DEMANDS ]
CONTENT
Insurance Guarantee Schemes (IGS) provide last-resort protection to consumers when insurance companies are unable to fulfil their
contractual commitments. They protect against the risk that claims will not be met if an insurer becomes insolvent.
Only a few EU countries have insurance guarantee schemes in place, although there are specific EU directives for the banking and
securities sectors, such as Directive 2014/49/EU for deposit-guarantee schemes and EU directive 97/9/EC for investor-compensation
schemes.
To address the regulatory loopholes and inconsistencies, the Commission has carried out a thorough review (in 2009) of the adequacy
of existing insurance guarantee schemes in order to make appropriate legislative proposals, and produced a White Paper on this
issue.
In its resolution 2013/2658(RSP) adopted on 13 June 2013 (7th EP legislature) on Financial services: lack of progress in CCouncil and
Commission's delay in the adoption of certain proposals the European Parliament called on the Commission to come forward with
proposals for a cross-border standardisation directive establishing a coherent and consistent cross-border framework for IGS across
Member States, as some of them experienced extreme difficulties when facing serious stress.
The EP also asked to put forward the proposal for a directive on Insurance Guarantee Schemes to complement the existing Deposit
Guarantee Schemes, Investor Compensation Schemes and Solvency II, applying to the banking sector. So far no legislative proposal
was made as far as the Insurance Guarantee Schemes demand is concerned.
References:
• Legislative act, Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes
• Legislative act, Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes
• EP Legislative Observatory, Procedure file on a Resolution on financial services: lack of progress in Council and Commission's delay in the
adoption of certain proposals, 2013/2658(RSP)
1/46
For further information: Andrej Stuchlik, [email protected]
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32014L0049
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31997L0009
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2013/2658(RSP)&l=en
• mailto:[email protected]
JD - RECOVERY AND RESOLUTION OF FINANCIAL INSTITUTIONS OTHER THAN BANKS/ CENTRAL COUNTERPARTIES / BEFORE 2016 [ DEPARTURES ]
CONTENT
Expected potential gains after full phasing in of a large number of different initiatives: €63 billion
Financial institutions other than banks - which include clearing and settlement, asset management, insurance and trading of various
financial instruments - offer a range of essential services which constitute vital components for the orderly functioning of the financial
system. The financial crisis has shown that the sources and channels of contagion of systemic risk can vary.
As a result, the Commission promised in a 2010 Communication to investigate ‘what crisis management and resolution arrangements,
if any, are necessary and appropriate for (...) financial institutions’ other than banks. Following that Communication, the European
Commission launched in 2012 a consultation on the possible framework for the recovery and resolution of nonbank financial
institutions.
The European Parliament picked up and, in a 2013 owwn initiative report, called on the Commission to prioritise the recovery and
resolution of CCPs (central counterparties) and of those CSDs (central securities depositories) which are exposed to credit risk, and to
consider whether it is appropriate to develop similar legislation for other financial institutions - in the areas of insurance undertakings,
asset management and payment systems.
In this context, the Commission is expected to publish in the 3rd quarter of 2016 a proposal for a Regulation on the recovery and
resolution of central counterparties.
References:
• European Commission, Consultation on a possible recovery and resolution framework for financial institutions other than banks,
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 2/46
consultation website
• European Commission, Communication on An EU Framework for Crisis Management in the Financial Sector, COM(2010)0579
• European Parliament, Resolution of 10 December 2013 on recovery and resolution framework for non-bank institutions,
2013/2047(INI)
• EP Legislative Observatory, Procedure file on Recovery and resolution framework for non-bank institutions, 2013/2047(INI)
For further information: Angelos Delivorias, [email protected]
HYPERLINK REFERENCES
• http://ec.europa.eu/finance/consultations/2012/nonbanks/docs/consultation-document_en.pdf
• http://ec.europa.eu/internal_market/bank/docs/crisis-management/framework/com2010_579_en.pdf
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2013-0533
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2013/2047(INI)&l=en
• mailto:[email protected]
FRAMEWORK FOR HIGH-QUALITY SECURITISATION [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
Expected potential gains after full phasing of initiative on post-trading consolidation and better information
of securities traded: €19 billion
Securitisation is a financing technique by which homogeneous income-generating assets - which on their own may be difficult to
trade - are pooled and sold to a specially created third party, which uses them as collateral to issue securities and sell them in financial
markets. It is an important element of well-functioning financial markets with potential benefits for business (including SMEs) and
households. Nevertheless, in contrast to US markets that recovered rapidly from the subprime crisis, European securitisation markets
remain subdued, despite the fact that far fewer European securitised products defaulted. To remedy this, the Commission launched a
consultation (18 February - 13 May 2015), with the aim to gather information and views from stakeholders on how the EU legal
frramework can be improved to create a sustainable market for high-quality securitisation.
On 30 September 2015, the European Commission published two legislative proposals: a Regulation laying down common rules on
securitisation and creating a European framework for simple, transparent and standardised securitisation (COM(2015)0472 final) and
a Regulation amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms
(COM(2015)0473 final). The aim of the two proposals is to restart European securitisation markets in a sustainable way, in order to
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 3/46
the financing of the EU economy, while ensuring financial stability and investor protection, and to revise accordingly the regulatory
framework on capital charges for exposures to securitisations.
On 30 November 2015, the Council has published its compromise proposals for the Commission proposals (framework for STS and
prudential requirements).
On 6 June 2016, the European Parliament has published its draft reports on the Commission proposals (framework for STS and
prudential requirements). It plans to vote on them in plenary on 13 December 2016.
The rapporteur proposes to insert, among other things:
• the obligation for investors to be institutional investors, and for originators and original lenders to be regulated entities;
• the prohibition for SSPEs to be established in some 3rd countries with particular characteristics (e.g. off-shore financial centres);
• a 20% risk retention requirement;
• the extension of article 5 transparency requirements to investors;
• the change of the necessary information, from a specific list to all underlying documentation, essential to understand the
transaction;
• the addition to the information to be made available of information about the credit granting process for the underlying
assets/about the investors in the securitisation, the size of their investment and the securitisation tranche;
• the obligation for originator, sponsor and SSPE of a securitisation to provide the information of the aforementioned list to ESMA;
• the establishment by ESMA of a dedicated webpage, the 'European Securitisation Data Repository', where information on
underlying loans will be stored;
• the prohibition of arbitrage synthetic transactions to qualify as STS;
• the obligation of the originator, sponsor and SSPE to publish information on the long-term sustainable nature of the securitisation
for investors;
• the obligation of the originator or the original lender to disclose and publish an explanation of how the capital relief attained
through STS securitisation helped to fund new lending; and finally,
• with regards to Asset Backed Commercial Paper (ABCP) STS securitisation, the addition of requirements relating to the sponsor of
an ABCP Programme.
Reference:
• European Commission, Public consultation on securitisation, consultation website
• European Commission, Proposal for a Regulation laying down common rules on securitisation and creating a European framework for STS
securitisation, COM(2015)0472
• European Commission, Proposal for a Regulation amending Regulation (EU) No 575/2013 on prudential requirements for credit
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institutions and investment firms, COM(2015)0473
• Council, Presidency compromise proposals for framework for STS, 30 November 2015
• Council, Presidency compromise proposals for prudential requirements, 30 November 2015
• European Parliament, Committee on Economic and Monetary Affairs draft report on simple, transparent and standardised securitisaion,
2015/0226(COD)
• European Parliament, Committee on Economic and Monetary Affairs draft report on prudential requirements for credit institutions and
investment firms, 2015/0225(COD)
• EP Legislative Observatory, Procedure file on Prudential requirements, 2015/0225(COD)
• EP Legislative Observatory, Procedure file on Common rules and European framework for STS, 2015/0226(COD)
Further reading:
• European Parliament, EPRS, Understanding securitisation background − benefits − risks, In-depth Analysis, October 2015
For further information: Angelos Delivorias, [email protected]
RAPPORTEURPaul TANG
HYPERLINK REFERENCES
• http://ec.europa.eu/finance/consultations/2015/securitisation/index_en.htm
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:52015PC0472R(01)
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52015PC0473
• http://data.consilium.europa.eu/doc/document/ST-14537-2015-INIT/en/pdf
• http://data.consilium.europa.eu/doc/document/ST-14536-2015-INIT/en/pdf
• http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML COMPARL PE-583.961 01 DOC PDFV0//EN&language=EN
• http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML COMPARL PE-583.904 01 DOC PDFV0//EN&language=EN
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2015/0225(COD)&l=en
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2015/0226(COD)&l=en
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• http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/569017/EPRS_IDA(2015)569017_EN.pdf
• mailto:[email protected]
REGULATION ON THE PROSPECTUS TO BE PUBLISHED WHEN SECURITIES AREOFFERED TO THE PUBLIC OR ADMITTED TO TRADING / 2015 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
Prospectuses are legally required documents presenting the information necessary to enable investors to make an informed
assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer and of any guarantor of
investment products, as well as the rights attached to them.
Directive 2003/71/EC, as amended in 2010, together with its Implementing Regulation No 809/2004 make up the current EU
prospectus regime. While this regime functions well, it was thought that certain of its requirements could still be improved to alleviate
administrative burden for companies (especially SMEs) and to make it a better information tool for investors. That is why the
Commission launched a consultation on the Prospectus Directive (18 February - 13 May 2015) asking for stakeholders’ views on issues
such as the scope of the prospectus requirement, the appropriate level of investor protection, possible ways to reduce administrative
burdden and costs, and the possibility to tailor the regime to the needs of SMEs.
Following the consultation, the Commission proposed on 30 November 2015 a Regulation (COM(2015)0583), which focuses among
other things on creating a lighter prospectus for smaller companies, shortening the length of the document and focusing on
information that is more pertinent to investors, simplifying secondary issuance for listed firms, fast-tracking the regime for frequent
issuers and providing, through ESMA, a single access point for all EU prospectuses.
On 8 June 2016, the Council agreed its most recent compromise proposal on new rules on prospectuses. On 16 March 2016, the
European Parliament published its draft report on the Commission’s proposal.
In his draft report, the rapporteur suggests the following amendments:
• to allow issuers located in the EU to choose their home Member State for both equity and non-equity securities in order to create
a level playing field and further promote cross-border activities;
• to increase the 'fewer than 150-person' limit exemption to the requirement to publish a prospectus, to 'fewer than 500' natural or
legal persons, excluding existing shareholders and employees;
• to delete the 'EUR 100 000 total consideration' exemption;
• to increase the monetary amount calculated over 12 months in the 'total consideration of the offer' exemption from €10 million to
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 6/46
€20 million;
• to define 'mid-cap enterprises' as companies that had an average market capitalisation of between €200 million and €1 billion on
the basis of end-year quotes for the previous three calendar years;
• to provide an exemption from the summary obligation, whenever the prospectus relates to non-equity securities offered solely to
qualified investors;
• to delete the obligation for third-country issuers to designate a representative established in its home Member State.
On 3 May, the rapporteur, Philippe De Backer (ALDE), left the European Parliament to join the Belgian government and was replaced,
in this file, by MEP Petr Je�ek (ALDE).
References:
• Legislative act, European Parliament and Council Directive 2003/71/EC of 4 November 2003 on the prospectus to be published when
securities are offered to the public or admitted to trading
• Legislative act, Commission regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC
• Legislative act, European Parliament and Council Directive 2010/73/EU of 24 November 2010 amending Directives 2003/71/EC and
2004/109/EC
• European Commission, Consultation on the Review of the Prospectus Directive, dedicated website
• European Commission, Proposal for a Regulation on the prospectus to be published when securities are offered to the public or admitted to
trading - Prospectus Regulation, COM(2015)583
• Council, Proposal for a general approach on the Commission Prospectus proposal, 3 June 2016
• EP Legislative Observatory, Procedure file on Prospectus Regulation - Prospectus to be published when securities are offered to the public
or admitted to trading, 2015/0268(COD)
Further reading:
• European Parliament, EPRS, Prospectuses for investors, Briefing, May 2016
For further information: Angelos Delivorias, [email protected]
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 7/46
RAPPORTEURPetr JEŽEK
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:32003L0071
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02004R0809-20130828
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32010L0073
• http://ec.europa.eu/finance/consultations/2015/prospectus-directive/index_en.htm
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52015PC0583
• http://data.consilium.europa.eu/doc/document/ST-9801-2016-INIT/en/pdf
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2015/0268(COD)&l=en
• http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/582019/EPRS_BRI(2016)582019_EN.pdf
• mailto:[email protected]
STRONGER EU-WIDE SUPERVISION / BEFORE 2016 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
The European Commission in its Work Programme 2015 announced its willingness to strengthen banking supervision in its EU-wide
dimension. The completion and implementation of the significant overhaul of the financial regulatory framework in response to the
financial crisis, including the implementation of the new banking supervisory and resolution rules, remains a major area of the
Commission's work. On 30 September 2015, the Commission presented its Capital Markets Union (CMU) action plan
(COM(2015)0468) and, among others, announced to promote financial stability and increase supervisory convergence. To increase
financial stability, the Commission is currently preparing an impact assessment to prepare the review of the EU macroprudential
framework, scheduled for 2017. This will include an assessment of possible risks to financial stability arising from market-based
finance, the enhanced monitoring of such risks and expanding the macro-prudential toolkit accordingly. Supervisory convvergence is
expected to be addressed in a White Paper on funding and governance of the European Supervisory Agencies (ESAs). The document
was originally expected for Q2/2016. The Commission states that first preparatory work is underway.
In its resolution 2015/2634(RSP) on building a Capital Markets Union of 9 July 2015, the European Parliament emphasises that the
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 8/46
legal and supervisory frameworks will play a fundamental role to avoid excessive risk taking and excessive activism in financial markets;
it underlines that a strong Capital Markets Union project needs to be accompanied by a strong EU-wide and national supervision,
including adequate macro-prudential instruments. The EP believes that among possible options, a stronger role could be attributed to
ESMA for improving supervisory convergence.
References:
• European Commission, Action Plan on building a Capital Markets Union, dedicated website
• European Commission, Communication on an Action Plan on Building a Capital Markets Union, COM(2015)0468
• EP Legislative Observatory, Procedure file on a Resolution on Building a Capital Markets Union, 2015/2634(RPS)
Further reading:
• European Parliament, EPRS, The Capital Markets Union package, Plenary at a glance, October 2015
For further information: Andrej Stuchlik, [email protected]
HYPERLINK REFERENCES
• http://ec.europa.eu/finance/capital-markets-union/index_en.htm#action-plan
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52015DC0468
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2015/2634(RSP)&l=en
• http://www.europarl.europa.eu/RegData/etudes/ATAG/2015/568353/EPRS_ATA(2015)568353_EN.pdf
• mailto:[email protected]
REVIEW OF REGULATORY BARRIERS FOR SME ACCESS TO PUBLIC MARKETS / 2017 /2017 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
According to the Action Plan on building a Capital Markets Union (COM(2015)0468) the Commission will review the regulatory barriers
to small firms for their admission to trading on public markets in a number of pieces of EU legislation. The Commission will make use
of the new SME Growth Markets to ensure that the revised regulatory environment for SMEs will be taken into account in other pieces
of legislation.
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SME Growth Markets were introduced by MiFID II. They are a new sub-category of the Multilateral Trading Facility (MFT) tailored to
the specific needs of SMEs. From 2017 on they will provide the opportunity for new companies to ready themselves for a listing on a
larger exchange. Administrative burdens will be reduced. SMEs will have the opportunity to more easily access capital markets.
Still according to the Action Plan, the Commission will explore together with the International Accounting Standards Board (IASB) the
possibility of developing a voluuntary tailor-made accounting solution, which could be used for companies admitted to trading on SME
Growth Markets.
References:
• European Commission, Communication from the Commission on an Action Plan on Building a Capital Marktes Union, COM(2015)0468
• European Commission, Updated rules for markets in financial instruments: MiFID II, decicated website
• International Standards Board (IASB) homepage
Further reading:
• European Parliament, EPRS, Barriers to SME growth in Europe, Briefing, May 2016
For further information: Christian Scheinert, [email protected]
HYPERLINK REFERENCES
• http://ec.europa.eu/finance/capital-markets-union/docs/building-cmu-action-plan_en.pdf
• http://ec.europa.eu/finance/securities/isd/mifid2/index_en.htm
• http://www.ifrs.org/Pages/default.aspx
• http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/583788/EPRS_BRI(2016)583788_EN.pdf
• mailto:[email protected]
REVIEW OF EUVECA AND EUSEF LEGISLATION / BEFORE 2016-7 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
Venture capital relates to the taking of ownership interest in a company, which is at an early stage (‘start-up’). While venture capital
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 10/46
can be supplied in a number of ways, the majority of such investments in Europe come from independent investors, usually funds.
Social businesses are companies that have a positive social impact and aim to address social objectives, while making a profit (i.e. they
are not charities). Funds dedicated to investing in such businesses suffered from two main hurdles: they could be costly and difficult to
set up and gather investments, and they were not always easy to identify or distinguish from other funds.
As a result, in 2013, two Regulations were published (Regulation (EU) No 345/2013 on European venture capital funds and Regulation
(EU) No 346/2013 on European social entrepreneurship funds), which set two ‘brands’ and laid down uniform requirements and
conditions for managers of collective investment undertakinggs that wished to use the designation ‘EuVECA’ or ‘EuSEF’ in relation to the
marketing of such funds in the EU. The rules relate to the marketing of EuVECA/EuSEF to investors across the EU, the portfolio
composition of these funds, the eligible investment instruments and techniques to be used by them, as well as organisation, conduct
and transparency rules for managers that market these funds across the EU.
While the review of the Regulations was only planned for 2017, the Commission decided to bring it forward, to increase their take-up
(only a small number EuVECa and EuSEF have so far been launched), while guaranteeing an adequate level of investor protection. As a
result, it launched a consultation on the review of the regulations on 30 September 2015. The consultation closed on 6 January 2016.
On 14 July 2016, the Commission published a proposal for a Regulation amending Regulations (EU) No 345/2013 and (EU) No
346/2013. The proposed amendments aim to allow managers authorised under the Alternative Investment Fund Managers Directive
(2011/61/EU) to use the ‘EuVECA’ and ‘EuSEF’ designations respectively in relation to the marketing of those funds in the Union; to
increase the size of SMEs accepted as qualifying undertakings; and to reduce the costs those funds incur, by ensuring that competent
authorities cannot impose fees and other charges on them and by ensuring that they cannot interpret ‘sufficient own funds’ in different
ways.
References:
• Legislative act, European Parliament and Council Regulation (EU) No 345/2013 of 17 April 2013 on European venture capital funds
• Legislative act, European Parliament and Council Regulation (EU) No 346/2013 of 17 April 2013 on European social entrepreneurship funds
• European Commission, Proposal for a Regulation amending Regulation (EU) No 345/2013 on European venture capital funds and
Regulation (EU) No 346/2013 on European social entrepreneurship funds, COM(2016)0461
• EP Legislative Observatory, Procedural file on European venture capital funds and European social entrepreneurship funds,
2016/0221(COD)
For further information: Angelos Delivorias, [email protected]
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32013R0345
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• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32013R0346
• http://www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2016/0461/COM_COM(2016)0461_EN.pdf
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2016/0221(COD)&l=en
• mailto:[email protected]
PAN-EUROPEAN CAPITAL FUND-OF-FUNDS AND MULTICOUNTRY FUNDS / 2016 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
EU venture capital funds are half the size (average ≈ €60 million) of the ones operating in the US. This limits their ability to make larger
investments, so that they can follow companies, as they scale-up. Furthermore, an important part of the financing of the sector is done
by the public sector, instead of institutional investors (€5 billion market in the EU compared to €26 billion in the US). Finally, European
VC funds still face many trans-national barriers.
This is why the Commission intends to accompany the review of the EuVECA Regulation with a call to create a Pan-European venture
capital fund-of-funds. This fund-of-funds, with a size of at least €500 million, will combine public finance with greater volumes of
private capital, to bring additional scale and stimulus for the support of the most promising new enterprises. Specifically, the fund will
invest in a combination of early-stage, later stage and expansion stage venture capital funds; tthus it will be attractive to major
investors and will attract more private investment to the European venture capital market.
The Commission currently works with the European Investment Fund and intends to launch a call this summer for the creation of this
fund-of-funds. Both the European Commission and the European Investment Fund have not published any proposal so far. The role of
the European Parliament is non-existent at this stage.
References:
• European Commission, Financing ideas from Europe, speech by Commissioner Moedas, 31 March 2016
For further information: Angelos Delivorias, [email protected]
HYPERLINK REFERENCES
• https://ec.europa.eu/commission/2014-2019/moedas/announcements/financing-ideas-europe_en
• mailto:[email protected]
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REVISION OF SOLVENCY II - CALIBRATIONS / BEFORE 2018 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
Solvency II (Directive 2009/138/EC - as amended by Directive 2014/51/EU known as 'Omnibus II') is the EU level regime regulating
insurance and reinsurance. It replaces the previous regime (Solvency I) which consisted of 14 Directives.
Solvency II applied from 1 January 2016 and according to the EC, introduced for the first time ‘a harmonised sound and robust
prudential framework for insurance firms in the EU.’ It seeks to promote comparability, transparency and competitiveness whilst
providing an individual risk profile for each insurance company. Very broadly, the Solvency II rules cover requirements in three areas:
(1) quantitative rules (i.e. solvency capital requirements - the amount of capital insurers must hold so they can pay claims); (2)
governance, risk management and supervision of insurers; and (3) disclosure and transparency rules.
The EC’s Capital Markets Union (CMU) action plan published on 30 September 2015 noted that, whilst life insurrance companies are
natural long-term investors, they have been retreating from investments in long term projects and companies. Clearly the way different
types of investments are treated under Solvency II capital requirements rules influences insurance companies’ investment decisions.
Hence, alongside the plan, the EC made immediate amendments to the Solvency II delegated regulation to introduce more risk
sensitive calibrations for infrastructure and European long term investment funds (ELTIFs). These changes facilitate the funding of
infrastructure and sustainable long term investment in Europe.
The CMU plan also committed to new prudential calibrations in solvency II (through amendment to the Delegated Act) for simple,
transparent and standardised (STS) securitisation products, once the STS securitisation products framework is in place. Also, noting
consultation feedback that prudential treatment of private equity and privately placed debt in Solvency II was considered an
impediment to investing in these asset classes, the EC will consider what changes are necessary here. These could then be taken
forward in the context of the review of Solvency II.
References:
• Legislative act, European Parliament and Council Directive 2009/138/EC of 25 November 2009 on Insurance and Reinsurance (Solvency II)
• Legislative act, European Parliament and Council Directive 2014/51/EU of 16 April 2014 on Insurance and Reinsurance (Omnibus II)
• European Commission, Communication on the Capital Markets Union, COM(2015)0468
• European Commission, Solvency II and Omnibus II, dedicated website
• European Commission, European long term investment funds, dedicated website
• European Commission, Fact sheet on securitisation, dedicated website
• EP Legislative Observatory, Procedure file on Common rules on securitisation, 2015/0226(COD)
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For further information: David Eatock, [email protected]
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32009L0138&from=EN
• http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0051&from=EN
• http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0468&from=EN
• http://ec.europa.eu/finance/insurance/solvency/
• http://ec.europa.eu/finance/investment/index_en.htm
• http://europa.eu/rapid/press-release_MEMO-15-5733_en.htm
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2015/0226(COD)&l=en
• mailto:[email protected]
AMENDING THE PRUDENTIAL REQUIREMENTS (CRR) FOR SECURITISATIONS [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
As part of its ambition to create a Capital Markets Union, the European Commission wants to revive the securitisation market in the EU,
in order to offer new financing tools and ease credit provision, especially for small and medium-sized enterprises. Its 'securitisation
initiative', set out in a proposed regulation on 30 September 2015, would establish a new framework for 'simple, transparent, and
standardised' (STS) securitisations.
This new initiative also has implications for the overall prudential framework for credit institutions and investment firms, therefore the
Commission proposed (COM(2015)0473) to amend the Capital Requirements Regulation (CRR) (EU) No 575/2013 accordingly. The
proposed amendments would adjust risk retention profiles to reflect properly the specific features of STS securitisations. The overall
aim of amending the CRR provisions, as a consequence of the securitisation proposal, is to recalibrate the prudential requirements for
credit institutions aand investment firms either issuing or purchasing securitisations. The Commission provided an impact assessment
(SWD(2015)0185) for both proposals.
The most significant changes are: a new hierarchy of risk calculation methods and lower capital requirements for STS in order to lower
costs for credit provision and unlock additional sources for long-term finance, especially to SMEs. The Council agreed on a general
approach on 7 December 2015.
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On 6 June 2016, the rapporteur Pablo Zalba Bidegain (EPP, Spain) presented his draft report to the Parliamentary Committee of
Economic and Monetary Affairs (ECON). In his draft report, the rapporteur addresses two main points: (i) to amend the hierarchy of
approaches and (ii) to ease access to securitisation instruments for SMEs. In his view, ‘even after rescaling for STS securitisations’,
using external ratings ‘can lead to substantially higher capital requirements than the approaches SEC-IRBA or SEC-SA. ... Therefore the
External Ratings-Based approach (SEC-ERBA) should be eliminated from the hierarchy of approaches for STS securitisation’. As to
SMEs, the rapporteur supports the use, for certain senior tranches of synthetic securitisations of SMEs loans, of the same reduced
capital charges as STS securitisations. A first debate in the Committee took place on 21 June 2016 with an expected Committee vote in
November. The vote in plenary is scheduled for January 2017.
References:
• EP Legislative Observatory, Procedural file on Prudential requirements for credit institutions and investment firms, 2015/0225(COD)
• European Commission, Proposal for a Regulation laying down common rules on securitisation and creating a European framework for
simple, transparent and standardised securitisation and amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and Regulations (EC) No
1060/2009 and (EU) No 648/2012, COM(2015)0472
• European Commission, Proposal for a Regulation amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions
and investment firms, COM(2015)0473
• Legislative act, European Parliament and Council Regulation (EU) No 575/2013 of 27 June 2016 on prudential requirements for credit
institutions and investment firms and amending Regulation (EU) No 648/2012
• European Commission, Impact Assessment accompanying the documents COM(2015)0472 and COM(2015)0473, SWD(2015)0185
• Council, General approach, ST 14701 2015 REV 1 - 2015/0225 (OLP), 7 December 2015
• European Parliament, Draft Economic and Monetary Affairs Committee report on the proposal for a regulation amending Regulation (EU)
No 575/2013 on prudential requirements for credit institutions and investment firms, 2016/0225(COD)
For further information: Andrej Stuchlik, [email protected]
RAPPORTEURPablo ZALBA BIDEGAIN
HYPERLINK REFERENCES
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=&reference=2015/0225(COD)
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1452173966407&uri=CELEX:52015PC0472
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• http://www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2015/0473/COM_COM(2015)0473_EN.pdf
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32013R0575
• http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SWD:2015:0185:FIN:EN:PDF
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=consil:ST_14701_2015_REV_1
• http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE583.904
• mailto:[email protected]
CROSS-BORDER DISTRIBUTION OF INVESTMENT FUNDS / 2017 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
Cross-border investment funds have an important role to play in achieving the Capital Markets Union: if funds can do business
more easily cross-border, they can grow and become more efficient, allocate capital efficiently across the EU, and compete within
national markets to deliver better value and greater innovation for consumers.
The EU has been promoting the cross-border distribution of funds for at least 30 years (since directive 85/611/CEE). The main
legislative tools have been the UCITS Directives and the Alternative Investment Fund Managers Directive. On 2 June 2016, in the context
of the CMU, it has launched a consultation on cross-border distribution of funds (UCITS, AIF, ELTIF, EuVECA and EuSEF) across the EU
to get stakeholders’ opinions on where and how the cross-border distribution of funds could be improved. The consultation
specifically focuses on the following possible impediments: marketing restrictions, distribution costs and regulatoory fees,
administrative arrangements, distribution networks, notification processes and taxation. The consultation will close on 9 October 2016.
References:
• European Commission, Consultation on cross-border distribution of funds across the EU, consultation website
For further information: Angelos Delivorias, [email protected]
HYPERLINK REFERENCES
• http://ec.europa.eu/finance/consultations/2016/cross-borders-investment-funds/docs/consultation-document_en.pdf
• mailto:[email protected]
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BUSINESS INSOLVENCY / 2016 [ DEPARTURES ]
> ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
In 2014 the Commission published a Recommendation COM(2014)1500 on a new approach to business failure and insolvency which
encourages Member States to implement early restructuring procedures and gives a "second chance" to entrepreneurs. The
Recommendation sets out common principles for national insolvency procedures for businesses as well as measures aimed at
reducing the lengths and costs of proceedings for SMEs. While it is clear that the Recommendation has provided a useful focus for
those Member States undertaking reforms in the area of insolvency, an assessment undertaken by the Commission shows that it has
only been implemented partially, including in those Member States that have launched some reforms.
In parallel, the Commission proposed, back in 2012, a reform of the Insolvency Regulation (dating from 2000) which addresses the
cross-border aspects of insolvency in the EU (but does not seek to harmonise national insolvency laws). The proposal was enacted into
law in May 2015 as a recast regulation. In line with the ‘second-chance approach’, the Regulation now covers not only bankruptcy
proceedings, but hybrid and pre-insolvency proceedings, as well as debt discharges and debt adjustments for natural persons
(consumers and sole traders). Further modifications include greater legal certainty regarding the determination of the business’s
‘centre of main interests’ in order to prevent abusive forum-shopping practices. Courts must now be proactive in checking whether
they really have jurisdiction to open insolvency proceedings for a given company, taking into account the actual perception of creditors
as to where the business is administered from. In order to promote transparency, all Member States will be obliged to establish
insolvency registers that will be interconnected via the e-Justice portal. There are also new rules on group insolvency and rules allowing
for the coordination of proceedings regarding the companies within the group.
As follow-up to the 2014 recommendation, the Commission is currently working on an “insolvency initiative” aimed at providing new
legal tools for viable businesses in distress and honest but bankrupt individuals. A legislative proposal – presumably addressing not
only cross-border issues (as per the Insolvency Regulation), but also seeking to harmonise national laws – is due to be presented by
the end of 2016. A public consultation on the insolvency initiative lasted from March until mid-June 2016.
The Commission’s insolvency initiative should be seen in the context of an earlier own-initiative resolution of the Parliament from 2011
where it pointed out that:
• disparities between national insolvency laws create competitive advantages or disadvantages and difficulties for companies with
cross-border activities and favour forum-shopping
• steps must be taken to prevent forum shopping
• even if the creation of a body of substantive insolvency law at EU level is not possible, there are certain areas of insolvency law
where harmonisation is worthwhile and achievable;
• insolvency law should be a tool for the rescue of companies at Union level
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• insolvency proceedings should not be used abusively by a creditor
• Member States should ensure that their insolvency laws include adequate provisions allowing special arrangements at EU level
for separation of insolvent cross-border conglomerates into viable units
• the issue of insolvency needs to be considered from an employment-law perspective, as differing definitions of ‘employment’ and
‘employee’ in Member States should not undermine the rights of employees in the event of insolvency;
• lack of harmonisation with regard to the ranking of creditors reduces predictability of outcomes of judicial proceedings;
• it is necessary to increase the priority of employees' claims relative to other creditors' claims.
References:
• European Commission, Commission Recommendation of 12 March 2014 on a new approach to business failure and insolvency,
COM(2014)1500
• Legislative act, European Parliament and Council Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings
• EP Legislative Observatory, Procedural file on Insolvency proceedings, 2012/0360(COD)
Further reading:
• European Parliament, Policy Department C, Harmonisation of Insolvency Law at EU Level, Note, 2010
• European Parliament, EP Library, Cross-border insolvency law in the EU, Briefing, February 2013
• European Parliament, EPRS, Reform of the EU Insolvency Regulation, Briefing, January 2014
• European Parliament, EPRS, Finalising reform of cross-border insolvency rules, At a glance, May 2015
• European Parliament, DG IPOL, Harmonizing insolvency laws in the Euro area: rationale, stock taking and challenges. What role for the
Euro group?, Study, July 2016
• European Commission, DG JUST, Study on a new approach to business failure and insolvency: Comparative legal analysis of the Member
States’ relevant provisions and practices, January 2016
•
For further information: Rafal Manko, [email protected]
HYPERLINK REFERENCES
• http://ec.europa.eu/justice/civil/files/c_2014_1500_en.pdf
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R0848
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2012/0360(COD)
• http://www.europarl.europa.eu/meetdocs/2009_2014/documents/empl/dv/empl_study_insolvencyproceedings_/empl_study_insolvencyproceedings_en.pdf
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• http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2013/130476/LDM_BRI(2013)130476_REV1_EN.pdf
• http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2014/140736/LDM_BRI(2014)140736_REV1_EN.pdf
• http://www.europarl.europa.eu/RegData/etudes/ATAG/2015/556989/EPRS_ATA(2015)556989_EN.pdf
• http://www.europarl.europa.eu/RegData/etudes/STUD/2016/574428/IPOL_STU(2016)574428_EN.pdf
• http://ec.europa.eu/justice/civil/files/insolvency/insolvency_study_2016_final_en.pdf
• mailto:[email protected]
AMENDMENTS OF THE CAPITAL REQUIREMENTS DIRECTIVE/CAPITALREQUIREMENTS REGULATION / 2016 [ DEPARTURES ]
CONTENT
The completion and implementation of the significant overhaul of the financial regulatory framework in response to the financial crisis,
including the revision the prudential requirements for financial institutions and investment firms, remains a major area of the
Commission's work.
The Commission is currently preparing its review of capital requirements (CR) provisions, and should publish proposals before the
end of 2016. This review will explore lowering the risk weights for infrastructure projects for banks as well as the possibility for all
Member States to authorise credit unions outside the EU's capital requirements rules for banks. An impact assessment on the revision
of the capital requirement legislation is in preparation.
In addition, the Commission announced to collect evidence on the cumulative impact of the current regulatory framework. A call for
evidence on the impact on financial services was concluded in January 2016.
The European Parlliament addressed the topic of capital requirements in its annual report on the Banking Union in March 2016: The
report notes that CR 'beyond a certain threshold may in the short term create unintended consequences, limiting banks’ lending
capacity'. For financing of SMEs, the European supervisory authorities should 'conduct a comprehensive assessment of CR embedded
in current and future legislation' as well as take into account 'the balance between short-term and long-term impact of CR'. Since the
EU's prudential requirements framework (CRD-IV/CRR) already existed, the report 'encourages' the Commission to align it with the
Banking Union framework. It calls for flexibility on the Maximum Distributable Amount (MDA), to avoid being 'too rigid' and 'negatively
affect[ing] the Additional Tier 1 bond market and the level playing field'. The report pushes for regulations rather than directives.
References:
• European Parliament, Resolution of 10 March 2016 on the Banking Union – Annual Report 2015, 2015/2221(INI)
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• EP Legislative Observatory, Procedural file on Banking Union - 2015 Annual Report, 2015/2221(INI)
• European Commission, Capital requirements regulation and directive – CRR/CRD IV, dedicated website
Further reading:
• European Commission, Call for evidence: regulatory framework for financial services, consultation website
For further information: Andrej Stuchlik, [email protected]
HYPERLINK REFERENCES
• http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT TA P8-TA-2016-0093 0 DOC XML V0//EN
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2015/2221(INI)
• http://ec.europa.eu/finance/bank/regcapital/legislation-in-force/index_en.htm
• http://ec.europa.eu/finance/consultations/2015/financial-regulatory-framework-review/index_en.htm
• mailto:[email protected]
OCCUPATIONAL PENSIONS [ EXPECTED ARRIVALS ]
CONTENT
Europe’s population is ageing, and we are moving from having around four people of working age (15-64) for every person aged over
65 years, to just two by 2060. This has put increased pressure on pension systems and led to reforms to make them more sustainable
for the future. As a result, pay-as-you-go public pensions are, in general, expected to become less generous in future. To support
retirement incomes, the EC’s 2012 pensions White Paper called for more opportunities for citizens to be able to save in safe and good
value funded pensions. In response to the White Paper, the EP’s 2013 resolution Adequate, safe and sustainable pensions: ‘stresses the
urgent need to promote efforts to build up [...] complementary occupational pension systems.’
In 27th March 2014, the European Commission proposed a revision (‘IORP II’) of the existing Institutions for Occupational Retirement
Provisionn (IORP) Directive of 2003, which covers certain occupational pension savings. Currently, these are overwhelmingly in the
United Kingdom (55.9% of IORP assets) and the Netherlands (30.7%). The proposed revision aims to improve the governance, risk
management, transparency and information provision of IORPs and help increase cross-border (broadly, IORPs with a sponsoring
employer in another Member State) IORP activity, strengthening the single market. The proposal did not include new capital
requirements for IORPs following a long and controversial debate.
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The EP's ECON Committee considered the matter and voted on its report and mandate for negotiations on 25 January 2016. Trilogue
discussions began on 29th February 2016 with the Council and European Commission and concluded in late June.
The compromise text contains a number of aspects proposed by the EP, including: recognition of the need for intergenerational
balance of risks and benefits in IORPs; the need for IORPs to take account of environmental, social, governance and ethical factors
(often called ‘ESG’ for short) when IORPs make and review investment decisions and set investment policies; and changes to rules
governing IORPs operating across borders to encourage their development.
A plenary vote in the EP is provisionally scheduled for November 2016.
References:
• European Commission, White Paper on pensions, dedicated website
• European Parliament, Resolution of 21 May 2013 on an Agenda for Adequate, Safe and Sustainable Pensions, 2012/2234(INI)
• European Commission, Proposal for a Directive on the activities and supervision of institutions for occupational retirement provision
(recast), COM(2014)0167
• European Parliament, Economic and Monetary Affairs Committee report of 25 January 2016 on occupation retirement, 2014/0091(COD)
• EP Legislative Observatory, Procedure file on Activities and supervision of institutions for occupational retirement
provision, 2014/0091(COD)
• Legislative act, European Parliament and Council Directive 2003/41/EC of 3 June 2003 on the activities and supervision of institutions for
occupational retirement provision
Further reading:
• European Parliament, EPRS, Occupational pensions - Revision of the Institutions for Occupational Retirement Provisions Directive (IORP II),
Legislative briefing, September 2016
• European Insurance and Occupational Pensions Authority (EIOPA), EIOPA 2014 report on IORPs
For further information: David Eatock, [email protected]
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RAPPORTEURBrian HAYES
HYPERLINK REFERENCES
• http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=1194&furtherNews=yes
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2013-204
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:52014PC0167
• http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML REPORT A8-2016-0011 0 DOC PDF V0//EN
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2014/0091(COD)&l=en
• http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32003L0041&from=EN
• http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/589800/EPRS_BRI(2016)589800_EN.pdf
• https://eiopa.europa.eu/Publications/Reports/EIOPA-BoS-14-083-Market-Development-Report-2014-deff.pdf
• mailto:[email protected]
MONEY MARKET FUNDS [ EXPECTED ARRIVALS ]
CONTENT
The aim of the regulation on Money Market Funds 2013/0306(COD) is to ensure uniform prudential requirements that apply to money
market funds throughout the Union.
A money market fund (MMF) is a mutual fund that purchases short-term assets such as money-market instruments issued by banks,
governments or corporations (e.g. treasury bills, commercial papers and certificates of deposit). These instruments qualify as an MMF
only if their residual maturity does not surpass 397 days (short-term MMF) or two years (standard MMF). MMFs are a considerable
source of short-term financing for financial institutions, corporations and governments. The MMFs in issue in the EU have systemic
relevance as they are worth approximately €1 trillion and constitute around 15% of the Union's funds industry. The crisis highlighted
possible problems with instantaneous redemption and value preservation when the prices of assets in which MMFs are invested start
to decline.. This could potentially lead to runs as investors withdraw from MMFs.
On 4 September 2013, the European Commission adopted a proposal for new rules on MMFs. The proposed regulation aims to
improve the ability of MMFs to weather possible redemption pressure by boosting their liquidity profile as well as stability, to be
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achieved through five initiatives: (i) introducing mandatory conditions on portfolio structure – MFFs would need to hold at least 10%
of assets that mature (i.e. have to be repaid by the issuer) within a day, and another 20% that mature within a week; (ii) establishing a
capital buffer for 'constant net asset value' (CNAV) MMFs, which seek to maintain a stable share/unit price (unlike variable NAV
MMFs) – this buffer will be used to help ensure stable redemption prices; (iii) clear labelling of MMFs, differentiating between short-
term and standard kinds; (iv) customer profiling to help predict substantial redemptions; and (v) internal credit risk assessment by
MMF managers, to prevent excessive dependence on external ratings.
The taking up of activities as fund manager is regulated either by the UCITS Directive or by the AIFM Directive. The activities of the
managers will continue to be subject to AIFMD and UCITS Directive but the product rules contained under UCITS framework will be
supplemented by the product rules contained in this proposed Regulation.
The European Parliament voted its amendments on the proposal for the MMF regulation in plenary on 29 April 2015. In its
amendments the European Parliament recognised that MMFs need to be more resilient to crises. MEPs proposed to remove the
obligation to hold a 3% capital buffer for CNAV MMFs and to limit CNAV MMFs to:
• Retail CNAV MMFs, available only for selected investors such as charities, public authorities, and foundations and non-profit
organisations;
• Public Debt CNAV MMFs (investing 99.5% of their assets in public debt instruments, and, by 2020, at least 80% of their assets in
EU public debt instruments) – a new type of Low Volatility Net Asset Value MMFs (LVNAV MMFs may show a constant NAV under strict
conditions). This type of fund would be authorised for a maximum period of five years, but the Commission would review the
regulation after four years, specifically including examination of the possibility of extending this authorisation indefinitely (this
provision is called by many stakeholders a 'sunset clause' and means that a law will expire on a particular date, unless it is
reauthorised by the legislature).
All MMFs should have in place liquidity fees and redemption gates to help prevent sudden outflows. Public Debt CNAV MMFs and
Retail CNAV MMFs should cease to be CNAV MMFs if they fail to meet the minimum amount of weekly liquidity requirements within 30
days of having utilised the liquidity fees or redemption gates. In such instances, they should automatically convert to a VNAV MMF or
be liquidated. The Parliament also underlined that it is not appropriate to ban MMFs from soliciting or financing an external credit
rating and added financial derivative instruments (fulfilling certain conditions) and high-quality asset backed securities (e.g. car loans)
to instruments eligible for investment by MMFs. MMFs will also be required to diversify their asset portfolios, respect strict liquidity
and concentration standards, have sound stress-testing processes and increase their reporting and transparency towards investors.
Importantly, the assets of an MMF are to be valued every day and this value published daily on its website. MMFs are also to report
weekly to their investors the following: the liquidity profile; the credit profile and portfolio composition; weighted average maturity
(WAM) of the portfolio; weighted average life (WAL) of the portfolio; and concentration of the top five investors in the MMF.
The plenary did not conclude Parliament's first reading, instead referring the proposal back to the ECON Committee with a view to
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starting trilogue negotiations as soon as possible, pending the Council agreeing on its general approach.
While the Council strived to advance the dossier, no further progress on general position was reported until June 2016 when the
Economic and Financial Affairs Council agreed draft rules to be negotiated with the EP. The draft regulation lays down rules for MMFs,
in particular the composition of their portfolios and the valuation of their assets, introduces common standards to boost their liquidity
when market conditions are stressed. In addition, the text provides for common rules to ensure that the fund manager has a good
understanding of his/her investors, and provides investors and supervisors with adequate and transparent information. The new rules
introduce a permanent category of LVNAV MMFs which are to replace most of the existing CNAV MMFs within 2 years of entry into
force of the regulation. LNAV MMFs would be allowed - although to a limited extent and under strict conditions - to offer a constant
net asset value. The CNAV MMFs would be limited to those that invest 99.5% of their assets in public debt instruments and those with
an investor base solely outside the EU.
Two trilogue meetings on MMF regulation took place so far (in July and September 2016), with a third one scheduled for 4 October
2016.
References:
• European Commission, Money Market Funds, dedicated website
• European Commission, UCITS – Undertakings for the collective investment in transferable securities, dedicated website
• Legislative act, European Parliament and Council Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers (AIFM)
• EP Legislative Observatory, Procedure file on Money Markets Funds, 2013/0306(COD)
• EP Press release: Making money market funds more resilient to financial crises, 26 February 2015
Further reading:
• European Parliament, EPRS, Money Market Funds. Measures to improve stability and liquidity, Legislative briefing, February 2016
• Council, Money market funds: Council agrees its negotiating stance, press release, 15 June 2016
For further information: Marcin Szczepanski, [email protected]
RAPPORTEURNeena GILL
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HYPERLINK REFERENCES
• http://ec.europa.eu/finance/investment/money-market-funds/index_en.htm
• http://ec.europa.eu/finance/investment/ucits-directive/index_en.htm
• http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32011L0061&from=EN
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2013/0306(COD)&l=en
• http://www.europarl.europa.eu/news/nl/news-room/20150224IPR25114/making-money-market-funds-more-resilient-to-financial-crises
• http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/577956/EPRS_BRI(2016)577956_EN.pdf
• http://www.consilium.europa.eu/en/press/press-releases/2016/06/15-money-market-funds/
• mailto:[email protected]
BANKING STRUCTURAL REFORM [ ON HOLD ]
CONTENT
Over the last five years, the EU has undertaken a large number of reforms to establish a safer, more resilient, transparent and
responsible financial system serving the economy and society as a whole. However, the size and complexity of a number of banks
remain an issue of concern. The balance sheet of some of these banks is larger than the GDP of their home countries. These banks still
remain ‘too big to fail’ and, as a result, take advantage of the presumption that the sovereign will bail them out with taxpayers’ money
in case of substantial trouble, instead of letting them fail.
That is why, on 29 January 2014, the Commission submitted a proposal for a regulation on structural measures improving the resilience of
EU credit institutions, which aims at strengthening the stability of the EU banking system and protecting the deposit-taking business of
the biggest and most complex EU banks from potentially risky trading activities. The new rules wouldd apply to banks that are either
deemed of global systemic importance or exceed certain thresholds in terms of trading activity or absolute size. The two key elements
of the regulation are the prohibition of proprietary trading and the potential separation of a bank's high-risk activities (market-making,
investment in/sponsoring of securitization and trading of certain derivatives) from its 'core' business, such as deposit-taking or retail
payment services. It would also empower supervisory authorities to systematically review banking activities including compulsory
‘separations plans’. Note that the proposed Regulation builds on the recommendations made by the High Level Expert Group chaired
by the Governor of the Bank of Finland, Mr Erkki Liikanen (‘Liikanen Group’).
The Council reached a common approach for negotiations with the Parliament on structural measures to improve the resilience of EU
credit institutions on 19 June 2015.
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The issue is currently on hold within the European Parliament's Committee on Economic and Monetary Affairs (ECON) after the draft
report was rejected in late May 2015 (29 in favour, 30 against, 0 abstentions). Among the most controversial issues discussed was
whether mandatory structural separation could be avoided if banks would add capital. The key proposals for amendments of the draft
report indicate a less strict approach than the Commission proposal: For instance, the rapporteur suggests to alter in Article 2b (subject
matter) the original wording 'separation of certain trading activities' into 'measures to reduce excessive risk taking'. Accordingly, Article
3 (scope) should read 'trading related risk exposures' instead of 'trading activities' as proposed by the Commission. Article 6.2 on
'prohibition of certain trading activities' should be slightly eased regarding the use of Alternative Investment Funds (AIF). The title of
Chapter 3 'Separation of certain trading activities' should instead read 'Measures regarding...' with subsequent further alterations to
Article 8 (scope of activities).
In the rapporteur's explanatory statement, he stresses that since systemic risk has less to do with the respective banking model or a
particular size of institution, regulation needs instead to focus on 'interdependence and the risk exposure'. Put differently, as trading
per se is 'not more systemically risky than lending', using a risk-based approach seems more appropriate than focussing on structures
or activities.
Further progress would require a second vote but no decision for this purpose has been taken yet. It was reported that the major
political groups reached an informal compromise in October 2015.
The 2015 Banking Union annual report adopted by Parliament on 10 March 2016 noted that 'Banking Structural Reform, which was
conceived to reduce systemic risk and address the issue of ‘too big to fail’ institutions, has yet to be implemented' and, as a result,
called for ‘a swift legislative agreement’.
References:
• European Commission, Proposal for a Regulation on structural measures improving the resillience of the EU credit
institutions, COM(2014)0043
• High-level Expert Group on reforming the structure of the EU banking sector, Final report, 2 October 2012
• Council, Restructuring risky banks: Council agrees its negotiating stance, Press release, 19 June 2015
• Committee on Economic and Monetary Affairs, Minutes of the meeting of 26 May 2015
• European Parliament, Resolution of 10 March 2016 on the Banking Union - Annual Report 2015, 2015/2221(INI)
• EP Legislative observatory, Procedure file on Structural measures improving the resillience of EU credit institutions, 2014/0020(COD)
For further information: Andrej Stuchlik, [email protected]
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RAPPORTEURGunnar HÖKMARK
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014PC0043&from=EN
• http://ec.europa.eu/finance/bank/docs/high-level_expert_group/report_en.pdf
• http://www.consilium.europa.eu/en/press/press-releases/2015/06/19-restructuring-risky-banks-council-agrees-negotiating-stances/
• http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&reference=PE-560.570&format=PDF&language=EN&secondRef=02
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0093
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2014/0020(COD)&l=en
• mailto:[email protected]
CORPORATE GOVERNANCE: LONG-TERM SHAREHOLDER ENGAGEMENT - CORPORATEGOVERNANCE STATEMENT [ ON HOLD ]
CONTENT
Corporate governance and company law are essential to ensure that companies are well-governed and sustainable in the long
term. For this reason, they are important in the context of the long-term financing of the European economy. European areas of
interest in corporate governance include directors’ duties and liability, shareholders’ right, remuneration policies, country-by-country
reporting provisions for financial institutions or transparency requirements.
In the context of the 2012 Action Plan on European company law and corporate governance and the Communication on the long-term
financing of the European economy, the Commission published on 9 April 2014 a proposal for a directive. The proposal focuses on
amending two other directives: one, which regards the encouragement of long-term shareholder engagement (2007/36/EC), and one,
which regards certain elements of the corporate governance statement (2013/34/EU).
On 08 July 2015 the rappoorteur proposed that the vote on the draft legislative resolution should be postponed in accordance with
Rule 61(2)). Parliament approved the proposal. The matter was thus deemed to have been referred back to the committee
responsible for reconsideration.
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References:
• Legislative act, European Parliament and Council Directive 2007/36/EC of 11 July 2007 on the exercise of certain rights of shareholders in
listed companies
• Legislative act, European Parliament and Council Directive 2013/34/EU of 26 June 2013 on the annual financial statements, consolidated
financial statements and related reports of certain types of undertakings
• European Commission, Proposal for a Directive amending Directive 2007/36/EC and Directive 2013/34/EU, COM(2014)0213
• European Commission, Commission Communication - Action Plan: European company law and corporate governance - a modern legal
framework for more engaged shareholders and sustainable companies, COM(2012)0740
• European Parliament, Long-term shareholder engagement and corporate governance statement, amendments adopted by EP, 8 July
2015
• EP Legislative Observatory, Procedure file on Corporate governance: long-term shareholder engagement; corporate governance
statement, 2014/0121(COD)
Further reading:
• European Commission, Commission roadmap to meet the long-term financing needs of the European economy, press release, 27 March
2014
For further information: Angelos Delivorias, [email protected]
RAPPORTEURSergio Gaetano COFFERATI
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1397142478478&uri=CELEX:32007L0036
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1397142682708&uri=CELEX:32013L0034
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52014PC0213
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1453891145338&uri=CELEX:52012DC0740
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2015-0257
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2014/0121(COD)&l=en
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• http://europa.eu/rapid/press-release_IP-14-320_en.htm?locale=en
• mailto:[email protected]
INTERCHANGE FEES FOR CARD-BASED TRANSACTIONS - PAYMENTS LEGISLATIVEPACKAGE / PART OF €2BN [ ARRIVED ]
CONTENT
Expected economic gain of the scheme as a complement to SEPA: part of €2 billion
The proposal aims at developing an EU-wide market for payments in line with Europe 2020 and the Digital agenda. It builds on 15
years of development of the regulatory and legislative framework, and contributes to the completion of an Internal Market in
payments. It is essential that electronic payments become secure, efficient, competitive and innovative. The level of interbank fees
varies substantially from one Member State to another. Although the amount of the fees might seem small for a given consumer, the
amounts concerned are immense at industry level.
The European Commission’s proposal was published on 24 July 2013. Amongst others, the proposal intended to encourage
innovation, and insure consistency between national rules, whilst taking the consumers’ needs into account.
Parliament finalised its positiion in a plenary vote on 3 April 2014, conferring a mandate for the negotiation team which would
represent its interests during the trilogue meetings to be held with Council and Commission.
Parliament’s intention was to establish a level playing field for payments across Europe. Having the consumers in mind it asked for
more transparency. It advocated the stimulation of competition between the businesses involved, and pushed to enable both retailers
and users to choose the card schemes that offer them the best terms. Parliament fought for an effective capping of transfer fees.
In the meantime the European Court of Justice ruled in its Master Card judgement of 11 September 2014 that interbank fees could be
in violation of EU antitrust rules.
The trilogues were successful and the results obtained during these negotiations were endorsed by the European Parliament during its
plenary sitting of 10 March 2015 and by Council on 20 April 2015, thus closing the procedure.
Parliament was successful in shaping this piece of legislation. Its fight for transparent fee capping rules paid off. As a consequence, the
interchange fees for card based payments, which are paid by the retailer’s bank to the bank which issued the card, have become more
transparent. The fees’ setting, which widely differed from one Member State to another, is now subject to harmonisation. The agreed
fee cap is 0.20 % of transaction value for cross-border debit-card transactions. After five years, at Parliament’s request, the same
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0.20% cap will apply to domestic debit card transactions. Exceptions to the rules were agreed upon for smaller domestic debit card
transactions. Fees will also be capped at 0.30 % for credit card transactions. Thanks to Parliament competition has been intensified
and the consumer’s choice increased.
The Commission estimates that the rules, once implemented, could lead to a reduction of about €6 billion annually in hidden fees for
consumer cards.
References:
• Legislative act, European Parliament and Council Regulation (EU) 2015/751 of 29 April 2015 on interchange fees for card-based payment
transactions
• EP Legislative Observatory, Procedure file on Interchange fees, 2013/0265(COD)
• Court of Justice, Judgement of the Court (Third Chamber) of 11 September 2014, C-382/12P on MasterCard's interchange fees
Further reading:
• European Parliament, MEPs put an end to opaque card payment fees, press release, 10 March 2015
• European Commission, Antitrust: Commission welcomes Court judgment upon MasterCard's payment card interchange fees, press release,
11 September 2014
For further information: Maria del Mar Negreiro Achiaga, [email protected]
RAPPORTEURPablo ZALBA BIDEGAIN
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:32015R0751
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2013/0265(COD)&l=en
• http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=C-382/12 P&td=ALL
• http://www.europarl.europa.eu/news/en/news-room/20150306IPR31705/meps-put-an-end-to-opaque-card-payment-fees
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• http://europa.eu/rapid/press-release_MEMO-14-528_en.htm
• mailto:[email protected]
SINGLE RULEBOOK FOR BANKS [ ARRIVED ]
CONTENT
The structure of the Banking Union is underpinned by a single rulebook applying to all EU Member States. This set of harmonised rules
is made up of three pieces of legislation:
1. The Capital Requirements Directive and Regulation (CRD/CRR) ? the so-called 'CRD IV package', which was adopted in
2013, aims to make all EU banks more resilient and able to withstand shocks so that, ultimately, the financing of the real economy is
safeguarded. The new rules also seek to enhance convergence of supervisory practices across the EU. Financial institutions began
applying the new rules on 1 January 2014, and their full implementation is scheduled for 2019.
The European Parliament has changed the original Commission proposal with regard to: bonuses - the salary to bonus ratio of 1:1, or
up to 1:2 with the majority support of the board; transparency rules; management board diversity idea; and benchmarking.
As regards flexibility and buffers under the CRRD, the European Parliament ensured that a mandatory buffer of Tier 1 capital
requirement will be included for banks that member states identify as "global systemically important institutions" (G-SIIs) in order to
compensate for the higher risk and potential impact of their failure. Parliament also introduced a voluntary buffer for "other
systemically "important institutions" (O-SIIs).
[See Train on Financial Services for the ongoing review of the CRR by the Commission.]
2. The Bank Recovery and Resolution Directive (BRRD) is an EU framework for bank resolution adopted in spring 2014. It
seeks to provide national authorities with adequate instruments to manage bank failures in an orderly manner, including cases with a
cross-border element. Ultimately, it aims to contribute to safeguarding financial stability and minimise costs for taxpayers in future
financial crises.
The BRRD requirements applies to all banks and investment firms whereas the Council had wanted waivers for small banks. The only
remaining waivers are limited and are for institutions covered by broader arrangements such as Institutional Protection Schemes. The
outcome ensures that exclusions from the possibility to ‘bail in’ liabilities are very limited and depositors are the very last in line to be
affected. If covered depositors were to be affected, then the Deposit Guarantee Scheme would step in in their place.
At the European Parliament's insistence, the level of the resolution fund (or levy arrangement) was negotiated to reach 1% of covered
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deposits in 10 years but these funds can only be used in resolution after 8% of a bank’s liabilities have already been bailed in or
written down. Only in exceptional circumstances and after 8% of bank's liabilities have been bailed in, public money can be injected
into a bank.
The BRRD has been fully operational since 1 January 2016. The Five Presidents' report calls on all Member States to fully transpose the
BRRD into national legislation, as of 27 September 2016, 27 Member States had fully transposed the Directive while the three
remaining ones had partially transposed it.
3. The Deposit Guarantee Scheme Directive (recast) adopted in spring 2014, aims mainly to protect EU depositors - up to a
ceiling of €100 000 - in the event of a bank failure.
In addition to further transparency for depositors, the European Parliament made sure that quicker access to deposits will also be
gradually ensured - i.e. from the current 20 working days to 7 working days in 2024 for the entirety of a deposit - whereas the Council
had initially refused to reduce the current time limit of 20 days. The Directive also stipulates a reimbursement deadline of 5 working
days for a sum allowing the depositor to cover the cost of living in that country. As far as the funds are concerned, the Directive ensures
funding requirements amounting to a targeted 0.8% of covered deposits (about €55 billion) to be reached over a ten-year period.
Those funds will be based on ex ante contributions from the banking industry, depending on how risky banks are, and on the amount
of covered deposits held.
The Five Presidents' report called on all Member States to fully transpose the Deposit Guarantee Scheme Directive into national
legislation.
As of 27 September 2016, 27 Member States had fully transposed the Directive while two others had partially transposed it.
References:
• Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and
investment firms
• Regulation No 575/2013 on prudential requirements for credit institutions and investment firms
• Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms
• Directive 2014/49/E on Deposit Guarantee Scheme (recast)
• Juncker, J-C., Five Presidents’ Report on strengthening Europe's EMU, 2015
• European Parliament, EU Bank Capital Requirements Regulation and Directive, Background note, 15 April 2013.
• European Parliament, Deal reached on bank “bail-in directive”, Press release, 12 December 2013.
• European Parliament, EP and Council negotiators break depositor-taxpayer link, Press release, 18 December 2013.
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For further information: Andrej Stuchlik, [email protected]
RAPPORTEURPeter SIMON
RAPPORTEURGunnar HÖKMARK
RAPPORTEUROthmar KARAS
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:176:0338:0436:EN:PDF
• http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:176:0001:0337:EN:PDF
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0059
• http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0049&from=en
• https://ec.europa.eu/priorities/publications/five-presidents-report-completing-europes-economic-and-monetary-union_en
• http://www.europarl.europa.eu/news/en/news-room/20130412BKG07195/eu-bank-capital-requirements-regulation-and-directive
• http://www.europarl.europa.eu/news/en/news-room/20131212IPR30702/deal-reached-on-bank-“bail-in-directive”
• http://www.europarl.europa.eu/news/en/news-room/20131217IPR31137/ep-and-council-negotiators-break-depositor-taxpayer-link
• mailto:[email protected]
PAYMENT SERVICES IN THE INTERNAL MARKET [ ARRIVED ]
CONTENT
The Payment Services Directive (PSD) was adopted in 2007. It provides the legal foundation for an EU single market for payments, toestablish safer and more innovative payment services across the EU. The objective is to make cross-border payments as easy, efficient
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and secure as 'national' payments within a Member State.
While the Directive has brought substantial benefits to the European economy, the Commission proposed to review it, to take account
of new types of payment services (such as payment initiation services) and help develop further an EU-wide market for electronic
payments.
The European Commission published its legislative proposal on 24 July 2013.
This proposal aims to update and complement the current framework on payments services by providing for rules that enhance
transparency, innovation and security in the field of retail payments and improving consistency between national rules, with an
emphasis on the legitimate needs of consumers.
TThe draft resolution was voted in ECON Committee on 12 March 2014. The EP voted the resolution in Plenary on 8 October 2015.
Various amendments were inserted to the Commission’s text, which among other things, broaden the scope of the Directive (also
covers the payment initiation services and account information services) and enhance some of its provisions (e.g. those related to
settlement of disagreements between competent authorities of different Member States, the supervision of payment institutions, or
measures to apply in case of non-compliance), provide that explicit consent of the payment service user is necessary for providers to
process and retain personal data for the provision of their payment services, and introduce the obligation to inform consumers of their
rights.
The act was adopted by the Council on 16 November 2015 and published in the Official Journal on 23 December 2015.
References:
• European Commission, Proposal for a Directive on payment services in the internal market, COM(2013)0547
• European Parliament, Legislative resolution of 8 October 2015 on the proposal for a directive on payment services in the internal market,
first reading, 2013/0264(COD)
• Legislative act, European Parliament and Council Directive (EU) 2015/2366 of 25 November 2015 on payment services in the internal market
• EP Legislative Observatory, Procedure file on
Payment services in the internal market, 2013/0264(COD)
For further information: Angelos Delivorias, [email protected]
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RAPPORTEURAntonio TAJANI
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013PC0547
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2015-0346
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015L2366
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0296(COD)&l=en
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2013/0264(COD)
• mailto:[email protected]
REPORTING AND FINANCING OF SECURITIES TRANSACTIONS [ ARRIVED ]
CONTENT
Securities financing transactions (SFTs) are a variety of secured transactions, which allow market participants to exchange assets
temporarily, pledging them as guarantee for a funding transaction.
The Commission put forward a proposal for a regulation on 29 January 2014 aimed at a number of types of securities financing
transactions, in particular securities lending (transactions involving a temporary transfer of the security's legal title from one party to
another (which serves as collateral), in exchange for legal ownership of other securities or cash) and repurchase agreements ('repo' -
agreements to sell an asset (usually a fixed-income security, such as a bond) and to buy it back again from the same counterparty on a
later date at an agreed price). The proposal aimed to increase the transparency of securities financing transactions by:
• requiring all transactions to be reported to a trade repository, so as to give supervisory authorities the possibility to bbetter
monitor exposure to (and risks associated with) securities financing transactions and, if necessary, take targeted and timely action;
• requiring investment funds to provide detailed reporting on such operations, in both regular reports and pre-investment
documents, to improve transparency towards actual and prospective fund investors;
• improving the transparency of the re-hypothecation of financial instruments, by setting minimum conditions to be met by the
parties involved, including written agreement and prior consent.
The European Parliament adopted its resolution on 29 October 2015.
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The amendments introduced in the compromise text, focus on the following areas:
The Central Banks of the European System of Central Banks are exempt from the obligation to report their SFTs to trade repositories
but must cooperate with competent authorities, including by providing them directly with a (confidential) description of their SFTs,
upon request.
Credit institutions and listed non-financial companies should disclose particular information about SFTs in their pre-contractual
documents (prospectus), as well as their activities in SFTs in their half-yearly and annual reports, so as to allow prospective or actual
shareholders to make informed choices about the risk profile of the companies in which they invest.
Furthermore, the modalities of equivalence and recognition of trade repositories, indirect access to data between authorities and
equivalence of reporting are further developed. Also, amendments are introduced to Regulation EU 648/2012, in particular with
regard to the definition of over-the-counter (OTC) derivatives and to equivalence decisions.
Finally, under the new regulation, the Commission will have to report on:
• the effectiveness, efficiency and proportionality of the obligations under the regulation;
• progress in international efforts to mitigate the risks associated with SFTs, including on the FSB recommendations for haircuts on
non-centrally cleared SFTs;
• the application of Article 11, with regard to fees charged to trade repositories by the European Securities and Markets Authority
(ESMA).
In that context, ESMA will have to
• identify material risks related to the use of SFTs by credit institutions and listed companies;
• assess whether the use of SFTs leads to the build-up of significant leverage that is not addressed by existing regulation, the
options available to tackle such a build-up, and whether further measures to reduce the pro-cyclicality of that leverage are required.
Following that, the act was adopted by the Council on 16 November and published in the Official Journal on 23 December 2015.
References:
• European Commission, Proposal for a regulation on reporting and transparency of securities financing transactions, COM(2014)0040
• European Parliament, Legislative resolution of 29 October 2015 on the proposal for a regulation on reporting and transparency of securities
financing transactions, first reading, 2014/0017(COD)
• Legislative act, European Parliament and Council Regulation (EU) 2015/2365 of 25 November 2015 on transparency of securities financing
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 36/46
transactions and of reuse
• EP Legislative Observatory, Procedure file on Transparency of securities financing transactions and of reuse, 2014/0017(COD)
For further information: Angelos Delivorias, [email protected]
RAPPORTEURRenato SORU
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:52014PC0040
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2015-0387
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R2365
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2014/0017(COD)
• mailto:[email protected]
INDICES AND BENCHMARKS IN FINANCIAL INSTRUMENTS AND FINANCIALCONTRACTS [ ARRIVED ]
CONTENT
The European Commission published its legislative proposal on Indices used as benchmarks in financial instruments and financial contracts
(2013/0314(COD)) on 18 September 2013. The aim of the regulation is to establish a regulatory framework at Union level for indices
used as benchmarks in financial instruments and financial contracts whilst ensuring a high level of consumer and investor protection.
A benchmark is an index (statistical measure), calculated from a representative set of underlying data, which is used as a reference for
financial instruments or contracts. Well-known benchmarks include the London Interbank Offered Rate (Libor) and the Euro Interbank
Offered Rate (Euribor).
The manipulation of those two benchmarks sparked concerns about the integrity of benchmarks worldwide.
The pricing of many financial instruments and financial contracts depends on the accuracy and integrity of benchmarks, published by a
benchmark administrator – thee legal person or entity responsible for the establishment, design, production and dissemination of a
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 37/46
benchmark and for the collection of the input data based on which the benchmark is calculated. The Commission saw it as important
to target all benchmarks in the EU. Cases of manipulation of different benchmarks, e.g. interest-rate benchmarks such as Libor and
Euribor, have demonstrated that they may be vulnerable to abuse. Failures in the accuracy and integrity of indices used as benchmarks
may undermine market confidence, cause losses to consumers and investors and distort the real economy. The Commission's 2013
proposal aimed at ensuring the accuracy, robustness and integrity of benchmarks and the benchmark-setting process, achieved by
ensuring that administrators of benchmarks are subject to prior authorisation and on-going supervision; improving their governance
and requiring greater transparency of how a benchmark is produced; and ensuring the appropriate supervision of so-called critical
benchmarks.
Committee referral was announced twice: on 10 October 2013 and 20 October 2014.
On 31 March 2015, the Economic and Monetary Affairs (ECON) Committee adopted its report on the proposal (rapporteur: Cora Van
Nieuwenhuizen, ALDE, the Netherlands). The Committee makes a clear distinction between critical, or systemically important, and less
critical benchmarks, aiming to limit the workload for administrators of smaller indices. It wants a lighter regime to apply to
administrators of noncritical benchmarks. Moreover, commodity benchmarks would also be exempt from certain requirements, in line
with the IOSCO principles. Critical benchmarks tracking a large volume of trade will have to be authorised by a competent authority in
a Member State, while non-critical benchmarks would have to be registered with such an authority. The European Securities and
Markets Authority (ESMA) would have an enhanced role with regard to critical benchmarks. Such benchmarks would be overseen by a
college of national supervisors, led by ESMA. Benchmarks provided by an administrator located in a third country may be used by
supervised entities in the EU, once the Commission has decided on their equivalence. However, until such equivalence is granted,
benchmarks provided by an administrator located in a third country may be used by supervised entities in the Union, provided that
the administrator acquires prior recognition from ESMA or an endorsement from an administrator located in the Union. As part of
regular review of the legislation, ECON calls on the Commission to review the evolution of international principles and to submit a
report to the EP and to the Council four years after the date of the entry into force of the regulation and every four years thereafter,
accompanied by a legislative proposal, if appropriate..
On 19 May 2015 the report was referred back to the competent committee for re-consideration and the vote was deferred to a later
session.
On 7 April 2016, the ECON Committee approved the compromise text agreed during the Trilogue negotiations with the Council. On 28
April 2016, Parliament adopted its legislative resolution on the matter, and finally the Council adopted the act on 17 May 2016. The
final act was signed on 8 June 2016 and published in the Official Journal on 29 June 2016.
References:
• European Commission, Proposal for a Regulation on indices used as benchmarks, COM(2013)0641
• European Parliament, Legislative resolution of 28 April 2016 on the proposal, accepting the trilogue outcome, first reading, 2013/0314
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 38/46
(COD)
• Legislative act, European Parliament and Council Regulation (EU) 2016/1011 of 8 June 2016 on indices used as benchmarks
• EP Legislative Observatory, Procedure file on Indices used as benchmarks in financial instruments and financial
contracts, 2013/0314(COD)
Further reading:
• European Parliament, EPRS, Benchmarks in financial instruments, Plenary at a glance, April 2016
For further information: Gustaf Gimdal, [email protected]
RAPPORTEURCora VAN NIEUWENHUIZEN
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:52013PC0641
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0146
• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=&uri=CELEX:32016R1011
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2013/0314(COD)&l=en
• http://www.europarl.europa.eu/RegData/etudes/ATAG/2016/581954/EPRS_ATA(2016)581954_EN.pdf
• mailto:[email protected]
MARKETS IN FINANCIAL INSTRUMENTS (MIFID2/MIFIR) [ ARRIVED ]
CONTENT
The Markets in Financial Instruments Directive (‘MiFID’ - Directive 2004/39/EC), sought to improve the competitiveness of EU financial
markets by creating a single market for investment services and activities, and ensuring a high degree of harmonised protection for
investors in financial instruments. While the Directive helped contribute to more integrated and liquid financial markets and has
driven down costs for issuers and investors, market developments and the financial crisis showed gaps that need to be closed (market
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fragmentation, market and technological developments).
The Commission proposed to replace the MiFID with a Regulation on markets in financial instruments and a Directive on markets in
financial instruments.
The proposals introduced a market structure framework which closes loopholes and ensures that trading takes place on regulated
platforms; increased equity market transparency and established a principle of transparency for non-equity instruments such as bonds
and derivatives; provided for strengthened supervisory powers and a harmonised position-limits regime for commodity derivatives to
improve transparency, support orderly pricing and prevent market abuse; improved conditions for competition in the trading and
clearing of financial instruments; introduced trading controls for algorithmic trading activities which have dramatically increased the
speed of trading and can cause systemic risks; achieved stronger investor protection by introducing better organisational
requirements, such as client asset protection or product governance, which also strengthen the role of management bodies;
strengthened the existing regime to ensure effective and harmonised administrative sanctions; introduced a harmonised regime for
granting access to EU markets for firms from third countries, based on an equivalence assessment of third-country jurisdictions by the
Commission.
The Commission’s legislative proposals were published on 20 October 2011. The European Parliament adopted the proposals on 15
April 2014. It inserted significant amendments, to address areas that were not regulated to that point (including new forms of trading,
such as algorithmic and high-frequency trading), to ensure market integrity and the protection of investors (by ensuring that trading
venues adopt more transparent fee structures and that the remuneration or the performance assessment of a firm’s staff do not
conflict with their duty to act in the best interests of their clients) and to limit speculation on commodity markets (by providing that
competent authorities must be able to establish limits on the positions any person can hold in a derivative contract in relation to a
commodity at all times).
The final acts were published in the Official Journal on 12 June 2014. However, due to challenges in collecting the necessary data for
the operation of the MiFID II rules, the date of entry into application of both instruments that are comprised in MIFID II has been
extended.
References:
• Legislative act, European Parliament and Council Directive 2004/39/EC of 21 April 2004 on markets in financial instruments (MiFID)
• Legislative act, European Parliament and Council Directive 2014/65/EU of 15 May 2014 on markets in financial instruments (MiFID II)
• Legislative act, European Parliament and Council Regulation (EU) No 600/2014 of 15 May 2014 on markets in financial instruments (MiFIR)
• EP Legislative Observatory, Procedure file on Markets in financial instruments; OTC derivatives, central counterparties and trade
repositories, 2011/0296(COD)
• EP Legislative Observatory, Procedure file on
Markets in financial instruments. Recast, 2011/0298(COD)
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• EP Legislative Observatory, Procedure file on
Markets in financial instruments; market abuse; securities settlement in the EU and central securities depositories: certain
dates, 2016/0034(COD)
For further information: Angelos Delivorias - [email protected]
RAPPORTEURMarkus FERBER
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32004L0039
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0065
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014R0600
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0296(COD)&l=en
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0298(COD)&l=en
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2016/0034(COD)&l=en
EUROPEAN LONG-TERM INVESTMENT FUNDS [ ARRIVED ]
CONTENT
In its 26 July 2012 consultation on UCITS (Undertakings for Collective Investment in Transferable Securities), the European Commission
sought feedback on how to create a European investment culture where retail investors take a longer-term and strategic view when
placing their savings with the providers of fund products and have access to products suited to this.
This consultation was followed by an informal questionnaire in January 2013, which aimed to gather further information on the
essential characteristics of ‘long-term investments’.
Finally, on 26 June 2013, the Commission proposed a regulation establishing a fund framework for a new type of investment, the
European Long-Term Investment Funds (ELTIFs). Those funds, created to allow investors to put money into companies and projects
that need long-term capital, would:
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• invest at least 70% of their money in certain types of assets;
• only be offered by a manager who is authoorised under the Alternative Investment Managers Directive, AIFMD;
• run for a specified period of time during which investors do not have the right to get their money back;
• limit the use of derivatives and leverage.
The European Parliament adopted its resolution on 10 March 2015.
It inserted, as an objective of the Regulation, to boost European long-term investments in the real economy. It clarified important
terms (e.g. ‘professional investor’, ‘retail investor’, ‘securities lending’ or ‘repurchase transactions’). In addition, it introduced measures
to ensure that ELTIFs do not promote speculative investment (e.g. assets without a predictable cash flow should not be eligible).
Furthermore, to incentivise retail investors, it provided them, under certain conditions, with the possibility of early redemption. Finally,
it increased transparency requirements (e.g. it added requirements relating to the information to be presented in an ELTIF’s annual
report and to its prospectus).
The act was further approved by the Council on 20 April 2015 and was published in the Official Journal on 19 May 2015.
References:
• European Commission, UCITS Product Rules, Liquidity Management, Depositary, Money Market Funds, Long-term Investments,
Consultation document, 26 July 2012
• European Commission, Questionnaire on long-term investment funds questionnaire
• European Commission, Proposal for a Regulation on European Long-term Investment Funds, COM(2013)0462
• Legislative act, European Parliament and Council Regulation (EU) 2015/760 of 29 April 2015 on European long-term investment funds
• EP Legislative Observatory, Procedure file on European long-term investment funds, 2013/0214(COD)
For further information: Angelos Delivorias, [email protected]
RAPPORTEURAlain LAMASSOURE
HYPERLINK REFERENCES
• http://ec.europa.eu/finance/consultations/2012/ucits/docs/ucits_consultation_en.pdf
• http://ec.europa.eu/finance/investment/docs/long-term/20130115-questionnaire_en.pdf
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• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013PC0462
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R0760
• http://www.oeil.ep.parl.union.eu/oeil/popups/ficheprocedure.do?reference=2013/0214(COD)&l=en
• mailto:[email protected]
INFORMATION ACCOMPANYING TRANSFERS OF FUNDS [ ARRIVED ]
CONTENT
Information accompanying transfers of funds is important in the context of the framework to combat money laundering and terrorist
financing. Prior to the Commission proposal, Regulation (EC) No 1781/2006 on information on the payer accompanying transfers of
funds, laid down rules for payment service providers to send information on the payer throughout the payment chain for the purposes
of prevention, investigation and detection of money laundering and terrorist financing.
The make sure that traceability of payments is improved and that the EU framework remains fully compliant with international
standards, the Commission decided to propose a Regulation on 5 February 2013. The Commission proposed, among other things, to
• include information on the payee;
• impose a requirement to verify the identity of the beneficiary (where not previously identified) for payments originating outside
the EU and where the amount is more than EUR 1 000;
• impose an obliigation to establish risk-based procedures for determining when to execute, reject or suspend a transfer of funds
which lacks the required information and to determine appropriate follow-up action;
• reinforce sanctioning powers for competent authorities and require coordination of actions when dealing with cross-border cases;
The European Parliament and the Council inserted amendments to the Commission’s proposal concerning the traceability of transfers
of funds (under the Regulation the ESAs should address guidelines to competent authorities and payment service providers on
measures to be taken, especially as regards transfer of funds, with missing or incomplete information on the payer or the payee) and
administrative sanctions which should be effective, proportionate and dissuasive.
The European Parliament adopted the Commission proposal on second reading on 20 May 2015. The final act (Regulation (EU)
2015/847) was published in the Official Journal on 5 June 2015.
References:
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• Legislative act, European Parliament and Council Regulation (EC) No 1781/2006 of 15 November 2006 on information on the payer
accompanying transfers of funds
• European Commission, Proposal for a Regulation on information accompanying transfers of funds, COM(2013)0044
• European Parliament, Legislative resolution of 20 May 2015 on a regulation on information accompanying transfers of funds and repealing
Regulation (EC) No 1781/2006, second reading, 2013/0044(COD)
• Legislative act, European Parliament and Council Regulation (EU) 2015/847 of 20 May 2015 on information accompanying transfers of funds
and repealing Regulation (EC) No 1781/2006
• EP Legislative Observatory, Procedure file on Information accompanying transfers of funds, 2013/0024(COD)
For further information: Angelos Delivorias, [email protected]
RAPPORTEURTimothy KIRKHOPE
RAPPORTEURPeter SIMON
HYPERLINK REFERENCES
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32006R1781
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013PC0044
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2015-0202
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32015R0847
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2013/0024(COD)#tab-0
• mailto:[email protected]
INVESTOR COMPENSATION SCHEMES [ DERAILED ]
CONTENT
Directive 97/9/EC on Investor-Compensation Schemes (ICSD) was adopted in 1997 to complement the Investment Services Directive
(ISD), the directive regulating, at that time, the provision of investment services in the EU.
The ICSD provides for clients receiving investment services from investment firms (including credit institutions) to be compensated in
specific circumstances where the firm is unable to return money or financial instruments that it holds on the client's behalf.
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In the years that followed the adoption of the Directive, the Commission has received numerous investor complaints about the
application of the ICSD in a number of important cases involving large investor losses. The complaints related to the coverage and
funding of schemes and delays in obtaining compensation. Moreover, there are issues such as the current non-compensation of
investors who, due to the default of a depositary or third party, cannot recover their assets or suffer a loss in the vaalue of their units or
shares in a UCITS.
That is why, in July 2010, a proposal for a Directive was put forward, to amend the ICSD. The proposal introduced common rules to
ensure a degree of harmonisation in the funding of the schemes and in the day-to-day practice. It also introduced a provision of a
borrowing mechanism among national schemes as a last resort tool to compensate any temporary needs from schemes, subject to a
rigorous assessment carried out by ESMA and to the obligation to repay any loan within the maximum period of five years.
The European Parliament adopted its legislative resolution on the proposal on 5 July 2011. It focused on the following:
It proposed increasing the amount of guarantee from €50 000 to €100 000 to facilitate cross-border competition and serve in the
interest of investors.
It proposed that the common minimum target fund level should be reached at most within a five-year period (as opposed to the ten
years proposed by the Commission).
With regards to investor coverage, it proposed that it should also be provided when the investment firm was unable to return to
investors any instruments held, in case this inability was the result of fraud, administrative malpractice, operational error or bad advice
regarding conduct of business obligations when providing investment services to clients.
It introduced the obligation for Member States to provide the Commission and ESMA with specific data (e.g. number of clients, level of
capital of each investment firm, number of approved persons or traders).
Finally, it proposed each member’s contribution to an investor-compensation scheme to be determined on the basis of the degree of
risk incurred and introduced the possibility to reduce those contributions, in case members to that scheme took additional measures
to reduce operational risk.
However, discussions with the Council halted. Because of this impasse, the Commission withdrew its proposal in March 2015.
References:
• EP Legislative Obsrvatory, Procedure file on Investor-compensation schemes, 2010/0199(COD)
• European Commission, Proposal for a Directive amending Directive 97/9/EC on investor-compensation schemes, COM(2010)0371
• Legislative act, European Parliament and Council Directive 97/9/EC of 3 March 1997 on investor-compensation schemes
LEGISLATIVE TRAIN 10.2016 4C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENED INDUSTRIAL BASE / FINANCIALSERVICES / UP TO €82BN 45/46
• European Parliament, Legislative resolution of 5 July 2011 on the proposal for a directive amending Directive 97/9/EC of the European
Parliament and of the Council on investor-compensation schemes, first reading, 2010/0199(COD)
For further information: Angelos Delivorias, [email protected]
RAPPORTEUROlle SCHMIDT
HYPERLINK REFERENCES
• http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2010/0199(COD)
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52010PC0371
• http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31997L0009
• http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2011-313
• mailto:[email protected]
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LEGISLATIVE TRAIN 10.20164C DEEPER AND FAIRER INTERNAL MARKET WITH A STRENGTHENEDINDUSTRIAL BASE / FINANCIAL SERVICES / UP TO €82BN
ACTION PLAN FOR CAPITAL MARKETS UNION
CONTENT
The Capital Markets Union aims at creating jobs, spurring growth and encouraging investment across the EU by reducing financial
markets’ fragmentation and diversifying the financing of the economy. The Commission’s action plan encompasses a series of
initiatives to reach that aim.
On 18 February 2015 the Commission published a Green Paper on Capital Markets Union (CMU). The Green Paper laid out the
Commission’s priorities (jobs and growth) and the rationale for a CMU (to link investors and savers with growth). It proceeded in
describing how European capital markets are currently structured and provided a preliminary analysis of some of the barriers to
deeper and more integrated capital markets. The rest of the document sought stakeholders’ views on the priority initiatives laid down
by the Commission (including high quality securitisation, European Long-term Investment Funds and the review of the Prospectus
Directive) and on existing bbarriers in accessing finance, widening sources of funding and making markets work more effectively. The
public consultation launched by the Green Paper ended on 13 May 2015 and was followed by a high-level conference on 8 June 2015.
On 30 September 2015 the Commission published its Action Plan on Building a Capital Markets Union COM(2015)0468 final. The
action plan is built around four key principles (creating more opportunities for investors, connecting financing to the real economy,
fostering a stronger and more resilient financial system and deepening financial integration and increasing competition) and aims to
achieve by 2019 the Commission’s goals through various legislative and non-legislative proposals, that aim, among other things to
overcome information barriers to SME investment, strengthen access to public markets, support infrastructure investment and
facilitate cross-border investing.
On 19 January 2016, the European Parliament adopted a resolution entitled stocktaking and challenges of the EU Financial Services
Regulation. It acknowledged the role that capital markets can play in fostering growth in a competitive European economy and in
addressing the financing needs of Member States, and welcomed the CMU action plan. It noted that priority must be given to serving
the needs of the real economy and to breaking the bank-sovereign nexus at national level. Furthermore, it insisted on the importance
of a streamlined EU position and of applying the current acquis. Finally, it reminded the crucial role of the ESAs and the SSMs in this
context, and called on the Commission and the ESAs to conduct regular checks for coherence, consistency, proportionality and
effectiveness, as well as a comprehensive quantitative and qualitative assessment of the cumulative impact of EU financial services
regulation on financial markets, every five years.
References:
1/2
• European Commission, Communication on an Action Plan on Building a Capital Markets Union, COM(2015)0468
• European Parliament, Resolution of 19 January 2016 on Stocktaking and challenges of the EU Financial Services Regulation,
2015/2106(INI)
• EP Legislative Obsrvatory, Procedure file on Stocktaking and challenges of the EU Financial Services Regulation, 2015/2106(INI)
LEGISLATIVE FILE(S) INCLUDED
FRAMEWORK for HIGH-QUALITY SECURITISATION
PROSPECTUS REGULATION
STRONGER EU-WIDE SUPERVISION
REVIEW OF REGULATORY BARRIERS FOR SME ACCESS TO PUBLIC MARKETS
REVIEW of EuVECA and EuSEF LEGISLATION
PAN-EUROPEAN CAPITAL FUND-OF-FUNDS and MULTICOUNTRY FUNDS
REVISION OF SOLVENCY II - CALIBRATIONS
Amending the prudential requirements (CRR) for securitisations
CROSS-BORDER DISTRIBUTION OF INVESTMENT FUNDS
BUSINESS INSOLVENCY
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