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					PROPOSAL


Market Abuse Directive

Prospectus Directive

Investment Services Directive
Transparency Directive
Collateral Directive
International Accounting
Standards Regulation
Takeover Bids Directive
UCITS Directives




Distance Marketing Directive
Pension Funds Directive


E-Money Directive



Electronic Commerce Directive

Financial Conglomerates Directive
Taxation of Savings Income
TITLE OF PROPOSAL


Proposal for a Directive of the European Parliament and of the Council on insider dealing and market
manipulation (market abuse).
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the prospectus to be published
when securities are offered to the public or admitted to trading
Proposal for a Directive of the European Parliament and of the Council modifying Directive (93/22/EEC) on
Investment Services. EUROPEAN PARLIAMENT AND OF THE COUNCIL on the harmonisation of transparency
DIRECTIVE OF THE
requirements with regard to information about issuers whose securities are admitted to trading on a regulated
Directive on financial collateral arrangements
Proposal for a Regulation on the application of international accounting standards


Proposal for a Directive of the European Parliament and the Council on takeover bids.
PROPOSAL FOR A EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
AMENDING DIRECTIVE 85/611/EEC ON THE COORDINATION OF LAWS,
REGULATIONS AND ADMINISTRATIVE PROVISIONS RELATING TO
UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE
SECURITIES (UCITS)
Distance marketing of consumer financial services modifying Directives 90/619/EEC,
Proposal for a Directive of the European Parliament and of the Council on the activities of institutions for
occupational retirement provision

Commission proposal for European Parliament and Council Directives on the
taking up, the pursuit and the prudential supervision of the business of electronic
money institutions

Proposal for a Directive on certain legal aspects of
electronic commerce.
Directive of the European Parliament and of the Council on the supplementary supervision of
credit institutions, insurance undertakings and investment firms in a financial conglomerate interest payments
Proposal for a Council Directive to ensure effective taxation of savings income in the form of
PROPOSAL



Market Abuse
Directive




Prospectus
Directive




Investment
Services
Directive




Transparency
Directive




Collateral
Directive
International
Accounting
Standards
Regulation




Takeover Bids
Directive




UCITS
Directives
Distance
Marketing
Directive




Pension Funds
Directive




E-Money
Directive
Electronic
Commerce
Directive




Financial
Conglomerates
Directive
Taxation of
Savings Income
Directive
THE PROPOSAL
1. Taking account of the principle of subsidiarity, why is Community legislation necessary in this area and what
are its main aims?

In accordance with the principles of subsidiarity and proportionality as set out in Article 5 of the Treaty, the
objectives of the proposed measures, namely to prevent market abuse in the form of insider dealing and market
manipulation, cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale
and effects of the measures, be better achieved by the Community. This Directive confines itself to the minimum
required in order to achieve those objectives and does not go beyond what is necessary for that purpose.

A single financial market should promote the competitiveness of the European economy, lowering the cost of
raising capital for all types of companies. The current complex and yet partial mutual recognition mechanism is
unable to ensure the objective of providing a single passport for issuers. There is a need for modernisation and
enhanced flexibility. To achieve this objective, harmonisation of the information contained in the prospectus is
likely to provide equivalent protection for investors at Community level and thus facilitate cross border offers and
trading. In addition, the European passport for issuers is also an opportunity to simplify regulatory compliance for
issuers without their having to produce duplicative sets of documentation or respond to numerous additional
national requirements. This action responds to the Lisbon European Council’s request to introduce a single
passport for issuers in the European Union. Facilitating the widest possible access to investment capital,
A single for SMEs, requires a complete the competitiveness of the prospectus Directives 15 , the first of of
includingfinancial market should promoteoverhaul of the two existing European economy, lowering the costwhich
capital and benefiting investors and companies alike. The existing Directive does not represent an adequate
regulatory foundation for an integrated financial market. An integrated financial market should be founded on a
harmonised set of principles and rules. The objective of these rules will be to ensure a high level of investor
protection and to promote the efficient and orderly functioning of the market. The corollary of these harmonised
rules will be the recognition by all Member states of the home country rule. This is, to enable Markets and
Investment Firms to provide services through the single market on the basis of home country authorisation and
supervision. This action responds to the Lisbon, Stockholm and Barcelona European Council’s request to
achieve an integrated financial market and in particular to give priority to securities market legislation provided for
A single financial market should promote the competitiveness of the European economy, lowering the cost of
capital whilst enhancing the level of disclosure of information about security issuers with the aims of sound
investor protection and the properly functioning of financial markets. An integrated financial market should be
founded on a harmonised set of principles and rules. The objective of these rules will be to ensure a high level of
investor protection at Community level enabling Member States to effectively reduce national barriers for issuers
seeking access to regulated markets in other Member States. Given the diversity of issues covered under this
directive, the issuer’s home Member State should be allowed imposing more stringent or additional disclosure
requirements. This action responds to the Lisbon, Stockholm and Barcelona European Council’s request to
Implementation of Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on
settlement finality in payment and securities settlement systems has demonstrated the importance of limiting
systemic risk inherent in such systems stemming from the different influence of several jurisdictions, and the
benefits of common rules in relation to collateral pledged to such systems or Central Banks. Under the Financial
Services Action Plan, the Commission undertook, after consultation with market experts and national authorities,
to work on further proposals for legislative action on collateral urging further progress in the field of collateral,
beyond the Directive 98/26/EC. These examinations demonstrate that differences between the laws of Member
States create administrative burdens, which hamper the development of an integrated internal market as well as
it creates legal uncertainties. There is therefore a need for significant improvement in the general legal
The initiative concerns the operation of the internal market and hence comes under the exclusive competence of
the Community; thus, the principle of subsidiarity does not apply to this specific situation.
This legislative proposal is a crucial element in delivering the Commission's Action Plan for Financial Services.
Adoption of uniform, high quality financial reporting rules in EU capital markets will greatly enhance the
comparability and transparency of financial information, thereby increasing the efficiency of the markets and
reducing the cost of capital for companies. The realisation of this objective is a necessary condition to make
progress in other key areas in financial services.
The present proposal allows Member States to permit or require the application of the same accounting
standards required for publicly traded companies to non-traded companies and for producing individual
accounts. Moreover, the proposal establishes the creation of an EU mechanism that will assess International
Accounting Standards and give them legal endorsement for use within the EU. This mechanism will be comprise
a two-tier structure: A Regulatory committee ("The Accounting Regulatory Committee") that will operate under
The proposed directive is part of the Financial Services Action Plan and was identified as a priority by the March
2000 European Council in Lisbon because it would facilitate pan-European restructuring and so contribute to
making Europe the most competitive economy in the world by 2010.
The proposed Directive has two main objectives: to give a legal framework for takeovers in Europe and to ensure
an adequate level of protection for minority shareholders across the EU in the case of a change of company
control.
First, the proposed Directive sets fundamental principles to govern takeovers and provides for the means of
determining which is the competent authority for the control of a takeover and which law is applicable, both of
which are of crucial importance, particularly in relation to cross-border takeovers. It will also ensure a basic level
of disclosure and information relating to the offer, thus guaranteeing transparency during the takeover bid.
The proposed directive then provides that shareholders should be afforded a minimum level of protection which
should be equivalent throughout the EU because the situation is currently far from equivalent . For instance, at
present some Member States do not require a full bid to be launched in the case of a transfer of control.
Considering that the main objectives of this proposal are to complete the internal
Market in the field of collective investment undertakings and to ensure the free cross-border
marketing of the units of a wider range of collective investment undertakings
while providing a uniform minimum level of investor protection, only a binding
Community Directive laying down agreed minimum standards can achieve the
desired objective.
Apart from the basic minimum standards (e.g. investment and risk-spreading rules,
investor information, etc.) Member States are free to define in detail the regulation
for collective investment undertakings covered by this proposal, prescribing possibly
stricter or additional requirements. The scope left for national discretion is therefore
large.
In accordance with what has been announced by the Commission Action Plan for the
Single Market, the Financial Services Action Plan and especially the recent European
Council conclusions in Lisbon in which the objectives of creating a strong integrated
pan-European financial services market has been agreed, the aim of this proposal is
to remove barriers to cross-border marketing of units of collective investment
undertakings through:
· the extension of the freedom to be marketed throughout the EU to collective
investment undertaking investing in financial assets other than transferable
securities such as: units of other UCITS and other collective investment
undertakings, bank deposits and derivatives;
                       · the revision of some other provisions of the UCITS Directive in order to up-date
the Directive in the light of new portfolio management techniques which have
been developed since 1985;
· the removal of interpretative uncertainties relating to a number of provisions of
the UCITS Directive which hinder a uniform application of basic principles of this
Distance selling of products and services, including financial services, and in
particular electronic commerce offer enormous opportunities for trading within the
Single Market, to the benefit of enterprises, SMEs and consumers. It is currently
offered and concluded primarily at domestic level. However, taking into account
the combined effect of the introduction of the Euro and technological
developments, it is anticipated that cross-border trading could expand rapidly,
notably by making use of the new opportunities offered by electronic commerce
and the Information Society.
The benefits of the Single Market for both consumers and suppliers should be
enhanced, given the increased competitive environment created by the extensive
use of new technologies, and therefore improved the choice and value of money
that should result. However, such benefits can only come about if consumers and
suppliers can place their trust in the underlying regulatory framework.
The Commission has decided to prepare a proposal for a directive on
distance contracts of financial services, following adoption of the Council and
European Parliament directive on "the protection of consumers in respect of
contracts negotiated at a distance” (general distance selling Directive),
Directive 97/7/EC of 20 May 1997, the scope of which did not include the
financial services sector, following a decision by the Council in 1995 to exclude
this. In consequence of this exclusion, the Commission invited interested parties to
express their opinion, and issued to this effect a Green Paper on
"Financial services": meeting consumers’ expectations" in May 1996. Following
this consultation, the Commission decided to prepare a specific proposal on
distance contracts concerning financial (i.e. banking, insurance, investment)
services.The need for such a directive has been confirmed by the Amsterdam Summit,
which included this issue in the "Action Plan for the Single Market" of
1 June 1997. These questions also have been reflected in a number of Commission
Communications, in particular "A European Initiative in Electronic Commerce" of
16 April 1997 and "Financial Services: Enhancing Consumer Confidence" of 26
June 1997.
The proposal aims at establishing a common basis for the conditions under which
distance contracts of financial services are offered/demanded, negotiated and
concluded, to banks, insurance companies and securities firms, IORPs are not subject to any Community
In contrast thus reducing the risk of divergent national approaches to the
prudential regulation for the time being. IORPs play a major role in promoting social cohesion and financing
economy in all Member States. In view of the ageing of the Union's population and financing future pensions it is
vital to ensure that they can operate with adequate security and efficiency by using the advantages of the single
market and the euro. Pension business is characterised by the very long-term nature of the activity, both in terms
of commitment of the IORPs and in terms of investment.
National legislation prevents Single Market and Euro from being exploited to full. The main objectives of this
Directive are:
- adequate protection of interests of scheme members and beneficiaries and to enable secure and efficient
investment.
- to enable the free choice of asset managers and custodians within the Community and to maintain equal
competition between all pension providers.
The purpose of the proposed directive is to introduce a regulatory framework for
the business of electronic money institutions which aims to ensure the stability and
soundness of issuers, thereby ultimately safeguarding customers’ interests.
The analysis undertaken by the Commission’s services has demonstrated that:
(i) the greatest part of the potential growth in investment and employment that
electronic commerce can yield is associated with cross-border trade;
(ii) since a Web site can be seen across the Community, the key economic barrier
that undermines confidence in investing in on-line activities are the significant
legal search costs arising from having to account for the differing laws in the
Member States;
(iii) this regulatory fragmentation problem can only be addressed by a European
initiative which covers the entire economic chain involved in the execution of
a trade.
Furthermore, the legal barriers identified in the text consist of existing laws. It
follows that they could not be removed through, for example, sole reliance on
European self-regulation.
It follows that in order to establish the Internal Market in the area of electronic
commerce such that the potential economic growth and consumer choice that this
new form of trade offers can be exploited, a harmonising directive with a cope
covering all Information Society services and the entire economic chain is required.
The Commission Action Plan for Financial Services identifies a series of actions that
are needed in order to complete the Single Market for Financial Services. It
announces the development of supplementary prudential legislation for financial
groups with cross-sectoral financial activities, called financial conglomerates, that
will address loopholes in the present sectoral legislation and additional prudential
risks to ensure sound supervisory arrangements with regard to regulated entities
(credit institutions, insurance undertakings and investment firms) in those financial
conglomerates. Current Community legislation only provides for rules for
homogeneous financial groups, and shows important overlaps and underlaps in
respect of the prudential regulation of financial conglomerates. This has also led to
distortions between regulated entities.
A single financial market will promote the competitiveness of the European
economy. The further elimination of loopholes in current legislation will enhance
prudential soundness and financial stability in the financial markets. This will be
beneficial for all those that are active in the financial markets, the financial
institutions as well as depositors, policyholders and investors in general.
As the objectives of the proposed action, namely the establishment of rules on the
supplementary supervision of regulated entities in a financial conglomerate, cannot
be sufficiently achieved by the Member States in view of the scale and the affects of
the action, they should be achieved by the Community. The Directive however
confines itself to the absolute minimum required in order to achieve those objectives
and does not go beyond what is necessary for that purpose.
The aim of this proposal for a Directive is to ensure that savings income in the form
of interest payments made in one Member State to beneficial owners who are
individuals resident in another Member State can be subject to effective taxation in
accordance with the national laws of the latter Member State.
Due to the present lack of co-ordination between Member States, individuals are
often able to avoid any form of taxation in their Member State of residence on
interest paid to them in another Member State. This is causing distortions in the
operation of the single market and losses in tax revenue for Member States. It is clear
that the European financial are cannot deliver its full benefits if savers’ decisions are
determined by the possibility of avoiding tax instead of being taken in the light of a
comparison between investment alternatives based on their intrinsic merits.
This proposal for a Directive is designed to help overcome these problems and allow
Member States to tax their residents on cross-border savings income in accordance
with their own laws. The proposal is not aimed at harmonising Member States’
domestic tax treatment of such income.
PROPOSAL                                        THE IMPACT ON BUSINESS
                                                2. Who will be affected by the proposal?
                                                – which sectors of business



Market Abuse Directive                          All financial market participants working in
                                                relation with financial instruments traded on
                                                regulated markets.


Prospectus Directive                            All issuers will be affected apart from EU
                                                sovereign issuers, international bodies of
                                                which one of more member States are
                                                members, the ECB and UCITS.


Investment Services Directive                   Those that provide Investment services as
                                                defined by the Directive and those that
                                                manage Regulated Markets.




Transparency Directive                          Publicly traded companies whose securities
                                                are admitted to trading on regulated markets
                                                in Member States. This will cover all sectors
                                                of business. Investment funds holding
                                                securities on behalf of their clients.
                                                Auditors/accountants being in charge of
                                                auditing/establishing the companies financial
                                                statements (accounts).
Collateral Directive                            Participants in the collateralised financial
                                                market in the EU, including the repo market.




International Accounting Standards Regulation   All EU companies traded in a EU regulated market as well as all EU companie
                                                required to prepare, at the latest by 2005, their consolidated accounts in acco
Takeover Bids Directive        The provisions of the Directive apply to the
                               laws, regulations, administrative provisions,
                               codes or other arrangements of the Member
                               States relating to takeover bids for the
                               securities of a company governed by the law
                               of a Member State whose securities are
                               admitted to trading on a regulated market of
                               a Member State. The proposal does not
                               affect any specific economic sectors.

UCITS Directives               The proposal will affect management companies of unit trusts/common funds
                               investment companies already regulated by the UCITS Directive, irrespective
                               size. As Member States have different regulation on the capital requirements
                               management companies the concentration of small and medium-sized firms v
                               The majority of management companies have their registered offices in the fin
                               centres of the EU.
Distance Marketing Directive   Financial service suppliers which market financial products and/or services us
                               means of communication at a distance, as well as the operators and suppliers
                               such means of communication.
                               New technologies could give rise to the creation of new firms specialised in ce
                               of these techniques (e.g. Internet) or enable small suppliers to market their
                               financial services and/or products directly.
Pension Funds Directive        The proposal will affect both employers of all
                               sectors (especially those with cross-border
                               activity) and the whole industry of
                               occupational pension providers running
                               IORPs (pension funds, "insurance type"
                               institutions such as "Pensionskassen" or
                               Group life-insurance plans, investment funds).




E-Money Directive              The proposed directive creates a new form of credit institution, i.e. “electronic
                               money institutions” which issue electronic means of payment or who invest the
                               proceeds of that activity without being subject to the Investment Services
                               Directive.
Electronic Commerce Directive       There is evidence and analysis to show that
                                    all sectors of business and all parts of
                                    their value-added chains could benefit from
                                    electronic commerce. By removing the
                                    legal uncertainty that undermines the
                                    exploitation of these benefits this proposal
                                    should help any company in any sector
                                    seeking to develop an Information Society
                                    service to do so.




Financial Conglomerates Directive   All credit institutions, insurance undertakings
                                    and investment firms that are part of a
                                    financial conglomerate as well as their parent
                                    mixed financial holding companies
                                    will be affected.
Taxation of Savings Income Directive   The Directive applies to cross-border interest payments to individuals. Interes
                                       payments to legal persons fall outside the scope of the Directive. In order not
                                       impose too high an administrative burden on paying agents, the Directive app
                                       irrespective of whether the interest payments constitute business income or p
                                       investment income of the individual. Consequently, cross-border interest paym
                                       sole proprietorships fall within the scope of the Directive. The Directive howev
                                       provides for procedures which allow sole proprietors and other individuals to a
                                       the imposition of the transitional withholding tax by authorising their paying ag
                                       to report the interest payments or by obtaining a certificate from their Member
                                       of residence. Moreover, the Directive imposes an obligation on the Member S
                                       residence to eliminate any double taxation which may arise as a result of the
                                       imposition of the transitional withholding tax. Sole proprietors and other individ
                                       will therefore not be subject to a higher tax charge as a result of this Directive.
                                       Paying agents play a key role in the implementation of this Directive. They are
                                       charged with providing information or, under the transitional arrangements,
                                       deducting withholding tax on interest payments to individuals. For the purpose
                                       this Directive, a paying agent is any economic operator who pays interest to, o
                                       secures the payment of interest for the immediate benefit of, the beneficial ow
                                       whether it be the debtor of the debt-claim which produces the interest or the o
                                       charged by the debtor or the beneficial owner with paying interest or securing
                                       payment of interest. The Directive only affects economic operators paying inte
                                       directly to individuals, i.e. the last intermediary in any given chain of intermedia
                                       The majority of issuers of securities and other economic operators will therefo
                                       suffer no additional administrative costs as a result of this Directive.
                                       The obligations placed on paying agents will entail some additional administra
                                       costs for the economic operators concerned and may require them to adapt th
                                       administrative procedures and computerised systems. However, every effort h
                                       made to minimise the compliance cost for paying agents, in particular by simp
                                       the identification and reporting obligations and by basing them as much as po
                                       on existing obligations under international and national anti-money laundering
                                       "know-your-customer" rules. When transposing the Directive into national law,
                                       Member States should take account of the need to keep costs and extra burd
                                       minimum.
posal?
             – which sizes of business (what is the     - are there particular geographical
             concentration of small and medium-         areas of the Community where these
             sized firms)                               businesses are found
             All market participants, of whatever     No.
             size they are, are affected by the
             proposal. The concentration of small
             and medium-sized firms varies
             according to the Member States.
             The single passport will be available to No. Issuers everywhere in the
             all issuers irrespectively from their    Community will be affected.
             size. However, normally capital is
             raised directly on the market by listed
             companies and medium size firms.

            All Investment Firms and Regulated          No. But trading in some specific
            Markets whatever size they are, are         products can concentrate in specific
            affected by the proposal. The directive     geographical areas.
            takes into account the fact that some
            services are provided mainly by small
            sized firms, i.e. investment advice
            when undertaken as the exclusive
            business of the firm.
            –      All publicly traded companies,       No. But trading of specific securities
            including small and medium sized            (shares, bonds, derivatives) can
            firms. However, it should be taken into     concentrate in specific geographical
            account that small firms are normally       areas.
            not quoted on regulated markets.
            Proportionality has been taken into
            account in that SMEs are not subject
            to too stringent reporting requirements.
            The proposal will be applicable to any      No, these kinds of businesses exist
            financial institution under prudential      throughout the Community.
            supervision, central banks, public
            authorities and persons other than
            natural persons whose capital base
            exceeds EUR 100 million or whose
            gross assets exceed EUR 1000
            million. Although the wholesale market
            is dominated by large entities, the
            proposal could enhance the
            opportunities for small and medium
            sized financial entities on the financial
            markets because counterparties may
            be prepared to deal with less highly
            rated, or unrated, entities if they
            receive collateral in which they have
            confidence.

egulated market as well as all EU companies preparing a listing on such a market will be
y 2005, their consolidated accounts in accordance with adopted international accounting
              The proposal concerns all companies          No
              whose securities are admitted to
              trading on a regulated market of a
              Member State. Indeed, regardless of
              the size of the company, the same
              need for protection of minority
              shareholders exists.



 ent companies of unit trusts/common funds and
gulated by the UCITS Directive, irrespective of their
erent regulation on the capital requirements of
 entration of small and medium-sized firms varies.
 panies have their registered offices in the financial

market financial products and/or services using
ance, as well as the operators and suppliers of

 o the creation of new firms specialised in certain
 or enable small suppliers to market their
 directly.
              All firms potentially in all Member          IORPs exist in many forms
              States (big and small entities) as well      throughout the Community.
              as the wide range of IORPs operating         However, the bulk of assets (as a %
              in Member States (e.g. pension funds,        of GDP) is invested by pension
              insured programmes and investment            funds from the UK, NL and IRL.
              funds). However, a "de minimis
              provision" is proposed, as an option for
              Member States, for IORPs managing
              very small pensions schemes
              (schemes to which less than 100
              persons are members and
              beneficiaries) that are likely to be not
              interested in any form of cross-border
              activity. Such a provision will facilitate
              supervision in Member States where a
              huge number of schemes is operating.

new form of credit institution, i.e. “electronic
ectronic means of payment or who invest the
eing subject to the Investment Services
All sizes of business will benefit from  No, this will help businesses in all
the proposal because it addresses a      areas of the Community.
problem
which they all face. However, it will be
particularly beneficial to small
companies.This
 is because the significant legal search
costs (equivalent in absolute level for
all
companies in a same sector) required
to evaluate the current fragmented
European
regulatory framework represent a far
higher burden as a proportion of
revenue of a
small company than for a large one.
There is evidence from a survey in a
DG XV
sponsored newsletter (the newsletter
survey) that these search costs are so
great for
some small companies that they have
decided not to launch innovative
projects in this
area because of these cost burdens. It
is by removing these excessive legal
search
costs arising from the present
regulatory uncertainty that many small
firms will be
encouraged to enter into electronic
commerce and for the first time will
therefore be does not distinguish on
The directive                            No.
the basis of size. However, most
financial
conglomerates are international active
groups, some of them being global
players.
der interest payments to individuals. Interest
side the scope of the Directive. In order not to
  burden on paying agents, the Directive applies
 t payments constitute business income or private
al. Consequently, cross-border interest payments to
 scope of the Directive. The Directive however
  w sole proprietors and other individuals to avoid
 ithholding tax by authorising their paying agents
 by obtaining a certificate from their Member State
 ive imposes an obligation on the Member State of
  taxation which may arise as a result of the
 olding tax. Sole proprietors and other individuals
  gher tax charge as a result of this Directive.
  e implementation of this Directive. They are
n or, under the transitional arrangements,
est payments to individuals. For the purposes of
  y economic operator who pays interest to, or
 r the immediate benefit of, the beneficial owner,
bt-claim which produces the interest or the operator
 ficial owner with paying interest or securing the
  only affects economic operators paying interest
 ntermediary in any given chain of intermediaries.
es and other economic operators will therefore
  costs as a result of this Directive.
agents will entail some additional administrative
concerned and may require them to adapt their
mputerised systems. However, every effort has been
  cost for paying agents, in particular by simplifying
 igations and by basing them as much as possible
national and national anti-money laundering and
n transposing the Directive into national law,
  nt of the need to keep costs and extra burdens to a
PROPOSAL
Market Abuse Directive




Prospectus Directive

Investment Services Directive




Transparency Directive




Collateral Directive


International Accounting Standards Regulation




Takeover Bids Directive
UCITS Directives
Distance Marketing Directive




Pension Funds Directive




E-Money Directive



Electronic Commerce Directive
Financial Conglomerates Directive
Taxation of Savings Income Directive
3. What will business have to do to comply with the proposal?
– Fulfilment of deontological standards. - (For persons or entities arranging transactions in Financial Instruments)
Refraining from entering into transactions, and reject orders on behalf of their clients, if they can reasonably
expect that the transactions would be based on inside information or constitute market manipulation. Such
refraining may have negative consequences on short term brokerage revenues; but in the mid term, general
investor confidence thus created will benefit to the industry. – Delivery of copies of documents, if asked by the
competent authority. -Telephone and data traffic recording.
Business will have to meet the requirements provided for the publication of the prospectus and, as the case may
be, to update the relevant information
For Investment Firms, They will have to comply with an enhanced set of conduct of business rules. This will
suppose that their management and control systems as well as the compliance capabilities could need to be
adapted in order to ensure an adequate protection of the interest of investors. In particular, those firms that
provide services in a way that could give rise to potential conflicts of interests will have to establish the necessary
arrangements in order to detect and minimize those risks. As regards trading shares on behalf of clients, the
proposal requires firms to implement adequate and efficient procedures to ensure the best execution of those
orders. In addition, it establishes rules aiming at defining the way those client orders should be handled. In
particular referring to limit orders. If investment firms provide for in-house execution services in equities or if they
deal with eligible counterparties outside the rules and systems of Regulated Markets or Multilateral Trading
Facilities they will also have to set up systems for making available on a post trade basis the details of the trades
executed that way.The Investmentthe requirements onMultilateral Trading Facilities will a given deadline of three
Security issuers will have to meet Firms that operate annual financial reporting within be subject to specific
months, on interim financial reporting (half-yearly financial report and quarterly financial information) within a
deadline of two months. In addition, they will be required to make public all amendments to statutes/instruments
of incorporation, as well as other internal rules on the acquisition of own shares and on remunerating managers
by securities, including on stock options. In the context of security holders meetings, publicly traded companies
will be required to allow proxy participation, but will also be provided with the opportunity to invite its shareholders
to decide on the introduction of electronic means. Companies who hold securities will be required to more
frequently and swifter notify to issuers the acquisition or disposal of major holdings in securities. As a necessary
complement, the security issuer concerned will be required to make such notifications public.
Apart from entry into a straightforward written contract outlining the terms of the
collateral arrangement, no special procedures for establishing the collateral
arrangement is necessary.
To meet in practice the requirements of the proposal, companies concerned will have to start either preparing
consolidated financial statements or retreating them according to adopted IAS already in 2003 and 2004 so as to
be in a position in 2005 to present IAS compliant consolidated financial statements for that financial year as well
as for the two previous financial years to meet the comparability requirement imposed both by the Accounting
Directives and IAS norms.
It is expected that this proposal should be adopted by Council and Parliament at the latest in 2002. This will
provide the accounting profession as well as companies with the necessary transition period to prepare
themselves before 2005.
Costs for companies will mainly be costs of training, as their accountants will need to familiarise themselves with
a sophisticated set of accounting rules. The same applies to the accounting profession.
The proposal imposes obligations on the Member States.
In order to receive an authorisation valid in all Member States, collective investment
undertakings investing in financial instruments other than transferable securities
identified in the proposal will have to comply with the investment policy rules and
the transparency requirements also laid down in this proposal.
Some Member States (France and Italy, for example) already have, or are in the
process of having, specific laws covering all forms of distance selling of financial
services. In the vast majority of Member States, there are specific provisions
concerning financial services and/or products, which usually apply irrespective of
the method of selling used (at a distance or face-to-face). However, the present
proposal does not intend to affect the existing national and EC framework
regulation concerning financial services. The provisions already in place at
EC level, in the field of financial services, and in particular those concerning
consumer information continue to apply, irrespective of the method of selling
used.
This proposal sets out principles governing the marketing method of distance
selling. Its structure specifies in particular: (i) the right of the consumer to receive
in advance all contractual terms and conditions; and (ii) the principle that the
contractual terms and conditions thus offered should hold firm for a given period
of time (“warming-up”). In case of (a) conclusion of the contract without the
consumer having received the contractual terms and conditions or (b) unfair
inducement by the supplier to conclude a contract during the reflection period, the
consumer benefits from the possibility of withdrawal from the contract against pro
rata payment of the service rendered but without payment of penalties.The proposal also determines the
conditions applicable in case a financial
service/product is partially or totally unavailable. Furthermore, it includes
provision against inertia selling and regulating unsolicited communications. It
finally includes provisions governing legal action by professional and consumer
Business will have to meet minimum prudential requirements depending on the nature of the IORP and the risks
covered. These minimum prudential requirements shall allow mutual recognition of national supervisory regimes
and include in particular provisions on: specialisation of business; conditions of operations; annual acounts and
annual report; disclosures of information and investment policy to supervisors and members/beneficiaries;
technical provisions and funding; capital requirements in particular cases and investment rules.
The proposal does not create a complete new prudential environment for IORPs but coordinates as much as
possible national prudential approaches and supervisory principles already existing in Member States.
The proposal imposes obligations in relation to authorisation by competent
authorities; initial capital and on-going own funds requirements; limitations of
investments; verification by competent authorities; and, sound and prudent
operations.

Business will have to meet requirements regarding solvency (the financial
conglomerate should be sufficiently capitalized), risk concentration and intra-group
transaction (the conglomerate should have adequate risk management policies), and
the fitness and propriety of its management. The Directive introduces reporting
requirements, as well as a legal basis for supervisors to ask for and to check
information regarding the financial conglomerate’s compliance with the rules on the
supplementary supervision for financial conglomerates. Furthermore, the Directive
also introduces technical amendments to the sectoral directives in the above-mentioned
domains in order to harmonize some of the provisions in the sectoral
directives with the cross-sectoral legislation.
Economic operators who act as paying agents will have to comply with the
identification and reporting requirements of the Directive. They must establish the
identity and residence of the beneficial owners in accordance with the minimum
procedures laid down in the Directive and report the interest payments they make to
such individuals to the tax authorities of their Member State of establishment. During
the 7-year transitional period, paying agents in Belgium, Luxembourg and Austria
will not be required to report the interest payments but levy a withholding tax. As
noted above, these obligations will probably require paying agents to adapt their
administrative procedures and computer programs, although every effort has been
made to minimise the additional cost involved.
PROPOSAL                        4. What economic effects is the proposal likely to have?
                                – on employment

Market Abuse Directive          The smooth functioning of financial markets
                                and public confidence in them are
                                prerequisites for sustained economic growth
                                and health, with positive effects on
                                employment.




Prospectus Directive            Positive effects on job creation can be
                                expected. By facilitating and lowering the
                                cost of raising capital directly on the
                                securities market improving the amount of
                                new financial resources available to
                                business.


Investment Services Directive   Overall economic impact. A competitive and
                                flexible market based financing can make a
                                substantive contribution to the growth and
                                employment of the European Union. The
                                integration of the European Financial
                                Markets will result in a significant reduction
                                in the trading costs and the cost of the
                                equity/corporate bond finance. Pooling
                                European liquidity will maximise the depth of
                                trading interests, reduce stock-specific
                                volatility and limit adverse price impacts for
                                large trades.
                                The consequence of lower costs of capital
                                and increasing returns on investments
                                should be an increase of the overall wealth
                                of the European Union. This will mean a
                                higher investment rate and its corollary of
                                more employment.
                                The results of a study commended by the
                                European Commission on the “Quantification
                                of the Macro-economic impact of Integration
                                of EU Financial Markets ”, reflect that the
                                integration of the European Financial
                                Markets could result in a 1.1% increase of
                                the Union’s GDP and a 0.5% rise in the level
                                of employment.
Transparency Directive                          Positive effects on job creation can be
                                                expected. By facilitating and lowering the
                                                cost for raising capital directly on the
                                                European securities markets improving the
                                                amount of new financial resources available
                                                to business. In addition, improved
                                                information standards protecting investors
                                                can be expected to create more loyalty and
                                                confidence of investors to capital markets.




Collateral Directive                            A sound and efficient legal regime for limiting credit risk will improve the stabil
                                                of the European financial market. The increased possibilities for conducting cr
                                                business will create a more competitive market, which in macroeconomic
                                                terms are believed to enhance the potential for stronger growth in the gross d
                                                product and therefore also in job creation.
International Accounting Standards Regulation   Adoption of uniform, high quality financial reporting rules in EU capital markets
                                                of financial information, thereby increasing the efficiency of the markets and re
Takeover Bids Directive        The European Parliament has been
                               concerned about the consequences of a
                               takeover on employment and about the
                               rights of the employees of the companies
                               affected. The previous proposal, amended
                               after the second reading and again after the
                               conciliation procedure (compromise text),
                               already provided for information for the
                               employees or their representatives (likely
                               impact of the bid on employment,
                               employment conditions and company
                               locations), as well as for the right for
                               shareholders to give their own opinion on the
                               offer. The proposal does not introduce new
                               consultation rights for employees. It does,
                               however, specifically refer to the various
                               Community measures that have already
                               been adopted in this area.
UCITS Directives               Even if the UCITS sector is managing very
                               large amounts of savings, the number of
                               employees is relatively small. From this point
                               of view, the proposal is not expected
                               to have much influence on employment in
                               this sector.




Distance Marketing Directive   The text establishes Community rules which will facilitate the use of new
                               technologies in distance selling. This may lead to these techniques being used
                               often by consumers in the internal market and consequently may have the eff
                               increasing employment and investment in these activities. The
                               cross-border possibilities may lead to an intensified competitiveness in retail
                               business.
Pension Funds Directive   Positive effects can be expected. Most
                          Member States have opted for increased
                          reliance on funded schemes to supplement
                          the basic state social security scheme. The
                          single market and the euro can make the
                          accumulation of these funds more efficient.
                          Increasing efficiency can either lead to
                          higher pensions and thus help to sustain
                          basic state systems or reduce social charges
                          for any given pension and so have positive
                          effects on the employment situation.




E-Money Directive         The effects on employment should be
                          positive. The increase in the both the
                          number of institutions and volume of
                          business as a consequence of the legal
                          framework created by the directive, on a
                          domestic as well as a cross-border
                          basis, could be expected to generate
                          employment.
Electronic Commerce Directive       It is impossible to forecast the employment
                                    growth that could result from this
                                    proposal. However, it is clear that the
                                    present regulatory fragmentation that this
                                    proposal addresses stifles innovation and
                                    plays to the advantage of a few big players
                                    in certain service areas who may simply use
                                    electronic commerce as a means to cut
                                    sales forces in existing service lines.
                                    Moreover, it is clear that investment in
                                    electronic commerce is, by the nature of the
                                    technology it relies on, the most foot-loose
                                    that exists. Thus, unless this proposal is
                                    adopted there is a risk that jobs will
                                    be created in electronic commerce in more
                                    investment friendly environments in third
                                    countries to serve the European market and
                                    that the few examples of electronic
                                    commerce in Europe will reduce rather than
                                    increase employment.
                                    The present proposal ensures the opposite.
                                    It facilitates entry, encourages
                                    innovation and therefore helps create
                                    employment (See Section III of Annex).




Financial Conglomerates Directive   No direct impact on employment. However,
                                    indirectly there are positive effects on
                                    job creation as the Directive contributes to
                                    the realisation of the European internal
                                    market.
Taxation of Savings Income Directive   The present scope for non-taxation of cross-border interest payments results
                                       of tax revenue for Member States and may even force some Member States t
                                       their tax rates on domestic interest payments in order to avoid the risk of a fur
                                       outflow of savings. By ensuring effective taxation of cross-border interest paym
                                       the Directive can contribute to Member States' efforts to restore the balance b
                                       the burden of taxation on the different factors of production and thereby to ach
                                       reduction in the taxation on income from employment. This would be certain to
                                       a positive effect on job creation and the fight against unemployment. The Dire
                                       should also have a favourable impact on the European financial area, becaus
                                       decisions will no longer be determined by the possibility of avoiding tax but wil
                                       instead be based on the intrinsic merits of the investments. This should help f
                                       institutions, investment funds and other market operators to compete on equa
                                       Since the scope of the Directive includes all cross-border interest payments,
                                       irrespective of the place of establishment of the issuer of the debt-claim giving
                                       the interest, debtors established in the EU are not placed at a competitive
                                       disadvantage in relation to issuers outside the Community. Moreover, the sco
                                       the Directive also includes income from investment funds established outside
                                       Community when such income is paid in a Member State. The Directive shou
                                       therefore not involve any particular risk of relocation of debt-issuing or investm
                                       fund activities to countries outside the Community. The risk of relocation of pa
                                       agent activities is reduced by the efforts that have been made to keep addition
                                       administrative costs to a minimum and by the continuing efforts to promote th
                                       adoption of equivalent measures at a wider international level.
roposal likely to have?
              - on investment and the creation of new        – on the competitiveness of businesses
              businesses
             By lowering costs for rising capital,           Prohibition and enforcement against insider
             efficient financial markets have a positive     trading reinforce the level playing field
             effect on company investments in general.       between market participants in access to
             Moreover, the development of new types          issuer information, and so increase the fair
             of participants (like “e-brokers”) or means     competitiveness between these
             of trading (like electronic platforms), which   participants. Similarly, prohibition and
             create employment, relies on investor           enforcement against market manipulation
             confidence depending on the transparency        reinforce the level playing field between
             of the markets.                                 market participants through transparency in
                                                             market participant behaviours, thus
                                                             contributing to the fair competitiveness
                                                             between the participants.

             As explained above, efficient European          Positive impact can be expected due to the
             securities market should improve the            lower cost of raising capital and the
             overall macroeconomic performance of            existence of harmonised and comparable
             the economy, producing higher economic          conditions, for all competitors, within the
             growth with positive impact on                  Union.
             employment creation, business innovation,
             and productivity (including, encouraging
             venture capital growth).
                                                             On the industry. The proposal will increase
                                                             of the confidence of investors in the fair
                                                             functioning of the market due to the
                                                             application of the market efficiency and
                                                             investor protection oriented rules. This
                                                             could well soar the European savings
                                                             rate.In addition, it enhances the
                                                             competitiveness of the financial industry as
                                                             a whole. It creates a playing field which can
                                                             adapt to the future evolution of the financial
                                                             markets. It encourages innovation whilst
                                                             taking due account of the interest that are to
                                                             be protected. This openness will reinforce
                                                             the European financial industry making it
                                                             stronger and more adapted to the needs of
                                                             its customers. Competitiveness, innovation
                                                             and development will not only result in more
                                                             employment in the financial sector but also
                                                             in better shaped strategies towards
                                                             investors. These will be able to get better
                                                             risk-adapted financial products which
                                                             should enhance the medium and long term
                                                             returns of their savings.
             Efficient European securities markets         Positive impact can be expected due to the
             should improve the overall                    lower cost of raising capital throughout the
             macroeconomic performance of the              European Union and new robust
             economy and the confidence of investors       Community disclosure requirements to
             into the economy, producing higher            which host Member States may not add
             economic growth with positive impact on       further disclosure requirements. This does
             business innovation and productivity          not prejudice other requirements for
             (including encouraging venture capital        admission of securities to trading on a
             growth).                                      regulated market.




e for limiting credit risk will improve the stability
  The increased possibilities for conducting cross-border
 etitive market, which in macroeconomic
e potential for stronger growth in the gross domestic
creation.
 inancial reporting rules in EU capital markets will greatly enhance the comparability and transparency
  creasing the efficiency of the markets and reducing the cost of capital for companies.
            Takeovers are a means for investors to         Although the proposal does not promote
            create synergies between existing              takeover bids as such, the harmonisation of
            businesses and target companies. Many          the rules which govern takeover bids will
            European companies will need to grow to        contribute to improving the competitive
            an optimal size and therefore invest by        position of companies in Europe. At the
            means of takeover bids. The financial          moment there are legal, economic and
            markets should benefit as well from more       structural differences between the Member
            liquidity.                                     States with respect to defensive measures
                                                           that can be put into operation in order to
                                                           fight hostile takeover bids, so that
                                                           companies in some Member States are
                                                           more protected than companies in other
                                                           Member States. The proposal will reduce
                                                           these differences in several ways, without
                                                           compromising the competitiveness of EU
                                                           companies in relation to companies of third
                                                           countries.

            The increased investment possibilities for     The fact that a wider range of investment
            UCITS will contribute to sustain growth in     funds would be covered by the Directive
            this sector. It also might contribute to the   85/611/EEC and that the units of such funds
            creation of deeper and more liquid financial   could be freely marketed throughout the
            markets in Europe with indirect benefits for   EU, could increase the competition among
            employment.                                    management companies, thus improving
                                                           the price/quality relation of these investment
                                                           products.


ules which will facilitate the use of new
 his may lead to these techniques being used more
l market and consequently may have the effect of
tment in these activities. The
d to an intensified competitiveness in retail
Positive effects can be expected. IORPs          Positive effects can be expected. In the
have a key role to play in the integration,      absence of any coordination at Community
efficiency and liquidity of EU capital           level, IORPs are the only major financial
markets. As very long-term investors, they       institutions unable to offer their services in a
are ideally placed to assist in the financing    Member State other than their own. It has
of private initiatives. While the security and   been calculated that, for a pan-European
profitability of investment portfolios is a      company, the cost of setting up separate
priority objective, a Community framework        occupational systems in each Member
can also ensure that the IORPs participate       State is about EUR 40 million per year.
in the efficient allocation of savings in the    Allowing IORPs to manage schemes for
Community.                                       companies established in another Member
Due to demographic changes in EU                 State would result in economies of scale of
populations, the demand for funded               several types: more efficient investment
pensions is growing. At the moment many          policies as a result of asset pooling,
employers (usually the small and medium          simplification of administration and
sized companies) do not have any                 compliance with the prudential and
alternative to buying insurance plans for        reporting rules of a single supervisory
their employees. It can be expected that a       authority. Furthermore, labour mobility
Community prudential Directive will              would become easier: workers could more
provide employers with more alternatives         easily take up a job in another Member
for occupational pension provision.              State if they could remain members of the
                                                 same IORP; multinationals would come up
                                                 against fewer obstacles to moving their
                                                 employees from one Member State to
                                                 another.


                                                 The proposal, by establishing a legal
                                                 framework for electronic money
                                                 issuance, is likely to encourage further
                                                 development and innovation in this
                                                 field. This should have positive effects not
                                                 only on the issuing institutions
                                                 themselves but also on related enterprises
                                                 associated with technological
                                                 hardware and software development.
                                                 Moreover, the proposal removes any
                                                 legal uncertainty that may have been
                                                 associated with cross-border issuance. It
                                                 should, therefore, increase competition in
                                                 the business of electronic money
                                                 specifically and payment instruments
                                                 generally.
                                                 Electronic money also has the potential to
                                                 reduce the costs of cash handling
                                                 for enterprises generally.
The proposal will encourage the launching        The proposal again has a strong positive
of new Information Society services and          effect. By stimulating competition through
investment in Europe. By reducing                facilitating entry in the market by small
compliance costs (you have to comply with        innovative firms, European electronic
the                                              commerce suppliers will be internationally
rules of your country of origin rather than      competitive in what is a truly
all fifteen sets of national rules) it ensures   global market.
that small innovative firms will look to
Europe to launch their on-line services. It
also encourages innovation because it
does not lead to a situation where
companies
design their new Information Society
service to be compatible with the most
restrictive (but not necessarily most
effective) of the fifteen existing European
laws.




As explained above, a single financial        The same goes for the competitiveness of
market will promote the competitiveness of business
the European economy and financial
stability, and therefore will have a positive
effect on investments and the creation of
new business.
on of cross-border interest payments results in a loss
   and may even force some Member States to reduce
st payments in order to avoid the risk of a further
 fective taxation of cross-border interest payments,
 mber States' efforts to restore the balance between
  rent factors of production and thereby to achieve a
  e from employment. This would be certain to have
 nd the fight against unemployment. The Directive
pact on the European financial area, because savers'
mined by the possibility of avoiding tax but will
merits of the investments. This should help financial
   other market operators to compete on equal terms.
ncludes all cross-border interest payments,
 shment of the issuer of the debt-claim giving rise to
 n the EU are not placed at a competitive
s outside the Community. Moreover, the scope of
e from investment funds established outside the
  paid in a Member State. The Directive should
ar risk of relocation of debt-issuing or investment
e the Community. The risk of relocation of paying
 efforts that have been made to keep additional
m and by the continuing efforts to promote the
 at a wider international level.
PROPOSAL



Market Abuse Directive
Prospectus Directive




Investment Services Directive




Transparency Directive




Collateral Directive
International Accounting Standards Regulation




Takeover Bids Directive
UCITS Directives

Distance Marketing Directive


Pension Funds Directive




E-Money Directive
Electronic Commerce Directive
Financial Conglomerates Directive


Taxation of Savings Income Directive
5. Does the proposal contain measures to take account of the specific situation of small and medium-sized firms
(reduced or different requirements etc)?


No.
The proposal provides that through a comitology decision, the Commission can reduce the present requirement
of three years of existence required to have access to the single passport for issuers and the mutual recognition
system. As far as the disclosure standards are concerned, the Commission, in line with international relevant
organisations believes that there should not be any difference due to size of the issuers. The prospectus should
allow the investor to make a proper assessment of the securities offered or admitted to trading; high level
disclosure standards (as the US experience demonstrates) should improve investor confidence, finally,
standardisation is cost saving.
Where the Commission, through the consultation process detailed hereafter, has identified potential negative
effects of its proposals to some of the investment services and activities that fall under the scope of the proposal
it has reassessed those measures in order to take due account of those concerns. One of the areas that has
been identified has been the “investment advice”. The fact is that in some European jurisdictions advice is
basically provided in a professional basis by small entities. Applying undifferentiated customer protection oriented
rules could be considered as an excessive burden for them to carry. Consequently the proposal lays down some
specific measures aimed at those advisors that operate only at a national level. In particular it exempts them
from the application of the CAD regime. However they will be subject to the application of Conduct of Business
The proposal provides for further technical rules to be adopted under the comitology decision. Where the
Commission, through the consultation process in co-operation with the Committee of European Securities
Regulators, has identified potential negative effects of its proposals for detailed technical implementing
measures, it will have reassessed its measures in order to take due account of those concerns. The impact of
periodic reporting requirements (annual financial report, interim financial reports) on SME’s has in particular been
assessed in two open and public consultations with the business community, market participants, and investors.
The conclusion has been that the reward/risk profile of SME’s quoted on regulated markets, in particular of
young companies, do not justify specific exemptions. In fact, investors encountered particular problems with
SME’s whose securities are admitted to trading on a regulated market (e.g. Neuer Markt in Germany), and it is
worth while noting that Member States introduced even higher reporting requirements for young SME’s (UK and
LUX). This line is particularly supported by the Committee of European Securities Regulators in which the
No, there is no need for such measures.
The vast majority of small and medium-sized companies will not be concerned by this proposal, to the extent that
its main requirement relates essentially to the application of adopted IAS for the preparation of consolidated
financial statements, with which very few SMEs are concerned.
Although the proposal allows Member States to extend this requirement to the producing of annual accounts
and/or consolidated accounts by non-traded companies, it is very unlikely, for obvious reasons of proportionality,
that it will apply to SMEs. Member States may however permit SMEs to use adopted IAS if they so wish for the
preparation of their financial statements.
No
No. All collective investment undertakings covered by the Directive must comply
with the same provisions.
The key measure – providing consumers with all the relevant contractual
conditions – is not of a nature to indicate any need for differentiation according to
the size of the enterprise providing financial services.
A "de minimis provision" is proposed, as an option for Member States, for IORPs managing very small pensions
schemes (schemes to which less than 100 persons are members and beneficiaries) that are likely to be not
interested in any form of cross-border activity. If a Member State makes use of the option this Directive must not
apply to these small pension schemes. Such a provision will facilitate supervision in Member States where a
huge number of schemes is operating.
Consultation
None.
There are no specific provisions as regards small and medium-sized firms. However,
as explained above, financial conglomerates are the result of consolidation and
internationalisation which means that most financial conglomerates are big groups.
The proposal contains no specific measures for small and medium-sized firms.
However, every effort has been made to keep costs and extra burdens to a minimum
for all enterprises. This should particularly benefit small and medium-sized firms
which are generally more affected by such costs.
PROPOSAL

Market Abuse Directive

Prospectus Directive




Investment Services Directive




Transparency Directive




Collateral Directive
International Accounting Standards
Regulation


Takeover Bids Directive




UCITS Directives




Distance Marketing Directive




Pension Funds Directive
E-Money Directive


Electronic Commerce Directive




Financial Conglomerates Directive




Taxation of Savings Income Directive
CONSULTATION
6. List the organisations which have been consulted about the proposal and outline their main views.
The Forum of European Securities Commissions (FESCO), composed by national Securities Supervisors,
contributed to the work of the Commission during the elaboration of the draft Directive.
The Commission has consulted the actors concerned directly and indirectly. The Forum group on consumer
information has widely discussed issues linked to the consumer information. FESCO (Forum of European
Securities Committee) to whose work the Commission take part as an observer has published for consultation in
May 2000 a paper on the European public offer. The answers to the consultation have been made available to
the Commission. Among others, 18 EU and national Federations, submitted their comments. Following the
outcome of the consultation FESCO has submitted to the Commission a new paper on European Public Offer,
the content of which is broadly consistent with the Commission proposal. Commission has discussed this issue
with national representatives and supervisory authorities in the High Level Securities Supervisors Committee on
8 June 2000 and has organised an ad hoc meeting to discuss the draft proposal on 26 January 2001. The FSPG
has also discussed about broad policy lines on the introduction of the single passport for issuers. In order to draft
the Final Report on the of the Lamfalussy Committee of Wise Men, endorsed men consulted theEuropean
The recommendations Regulation of European Securities Markets, the wise by the Stockholm industry
Council in March 2001, have heavily shaped the preparation of this proposal. The Commission published a
Green Paper in November 2000 exploring a number of themes relating to the operation of the ISD[1]. In the light
of the 68 responses to the Green Paper, the Commission concluded that a wide-ranging review of the Directive
was required. Since publication of the original Green Paper, Commission services have twice solicited the
reactions of interested parties, in an open and inclusive way, to informal and preliminary thinking on the scope
and form of ISD revision. A first consultation, which comprehensively mapped out possible modifications to the
Directive, was published in July 2001. These preliminary orientations were discussed in an open hearing,
attended by 150 interested parties, in Brussels in September 18-19 2001. 77 submissions were received in
response to this consultation. On the light of the responses received to the first consultation, the Commission
The recommendations of the Lamfalussy Committee of Wise Men in March 2002. The revised Securities
published a substantially revised set of orientations for ISD revisionon Regulations on European orientations were
Markets called for early, broad and systematic consultation. The Stockholm European Council endorsed this in
March 2001, the European Parliament in February 2002. On 11 July 2001, the Commission published a first
consultation document in which it presented its preliminary views for reforming disclosure requirements at
Community level. It received 91 replies from all the Member States, but also from third countries. In December
2001, it published a summary of the replies received. In the light of the reactions received, the Commission
published a second and final consultation on 8 May 2002 and set a deadline of two months for replies. In this
document, it revised its preliminary views, draw the attention of the public to the relationship of this initiative to
other initiatives under the “disclosure and transparency agenda” (such as the IAS-Regulation, the forthcoming
Directives on Market Abuse and Prospectus) and presented in particular a detailed outline on its ongoing work
towards to final Commission proposal. On of 1999 theconsultation, the Commission received again 93 responses
In order a study the issue, in the autumn its second Commission constituted a
Forum Group on Collateral, choosing experts from a list of suggested nominations
received through European financial services organisations. The Group was well
balanced with wide experience and interests, as well as sectoral and geographical
expertise. The Group met five times ending in the spring of 2000. There was in general consensus in the Forum
Group regarding the steps necessary to reform the European legislations.
The issue has also been explored by many other working groups, e.g. the Report of
the Giovannini Group “EU Repo Markets: Opportunities for Change” in October
1999, the Report “Collateral Arrangements in the European Financial Markets - The
Need for National Law Reform” by the International Swaps and Derivatives
Association, Inc. (ISDA), Collateral Law Reform Group in December 1999, and a
report presented in June 2000 by the European Financial Markets’ Lawyers Group,
meeting at the ECB, just to mention some of them.
The conclusions of these different working groups including the Forum Group are in
general similar. The proposal is in line with these conclusions. There is therefore an
overall support for this proposal, which is deemed essential by the sector itself.
FEE (accounting profession); UNICE/ERT (industry), FESE (stock exchanges), EFFAS (financial analysts), CEA
(insurance), UEAPME (small and medium-sized enterprises) have all responded positively to the proposal and
are considering taking part to the foundation of a private organisation that will provide support to an expert
committee on accounting, the Accounting Technical Committee.
The proposal is to a large extent identical to the compromise text that was adopted by the Conciliation
Committee in connection with the initial Commission proposal. This compromise text was the result of extensive
negotiations and consultations that have taken place since 1989. As far as additions to this text are concerned,
the Commission set up in September 2001 a HighLevel Group of Company Law Experts, chaired by Jaap
Winter, to provide advice on panEuropean rules for takeover bids. The Group was asked to provide the
Commission with recommendations on the issues which the European Parliament wanted to be addressed in a
new Commission proposal. The Group, which presented its report in January 2002, collected opinions of several
organisations and of the European Parliament:
– The Group appeared before the European Parliament Legal Affairs and Internal Market Committee in a hearing
held on 5 November 2001;
– The Group invited representatives of several organisations interested in the regulation of takeover bids to give
their views. It organised a hearing on 5 November 2001 at which representatives of the following organisations
were heard:
– ETUC (European Trade Union Confederation)
– Euroshareholders
The European Federation of Investment Funds and Companies (FEFSI), representing
the interests of the sector in general, and national associations of investment fund
managers have been consulted during the preparation of proposal no. 1 and they were
also involved in the further development of the amended proposal. The European
fund industry broadly supports its approach.
Since July 1997, the Commission has consulted consultative bodies (BAC, IC,
Consumer Committee), interested parties (financial services sector, consumer/user
organisations) and national experts (meetings on 22 September 1997 and on
21 January 1998) on preliminary drafts.
The Commission services in charge (DG’s XV and XXIV) have received several
opinions and views on the drafts from financial service federations and associations
(banking, insurance, etc.), consumer/user organisations, other professional
associations and operators of means of communication.
The majority of these opinions have recognised the necessity of community action
in the matter of contracts negotiated at a distance; the opinions of financial
industry have in particular emphasised the need for a level playing field.
Prior to this proposal the Commission has issued a Green Paper. We received comments from about 80
interested parties (i.a. industry, Member States, consumer protection organisations, trade unions, academics)
most of which also participated in a public hearing organised by the Commission. Results of the consultation
period following the Green Paper were summarised in a Communication which also provoked massive reactions
of interested parties. The general thrust of this past consultation was positive, encouraging the Commission to
draft a prudential directive in the field of supplementary pensions. EP and ECOSOC adopted favourable
resolutions supporting the general thrust of the Communication.
The Commission has consulted closely with the main European industry associations throughout the preparation
of the current proposal:
The European Federation for Retirement Provision (EFRP) - representing the pension fund industry - welcomes
the institutional approach. EFRP is strongly in favour of making progress in the field of cross border activity of the
IORPs to make use of economies of scales and to find the right balance between security and affordability.
However, the regulatory framework should be neutral vis a vis social, labour and fiscal policy choices of Member
States and cover all providers in the field of occupational pensions.
The Comité Européen des Assurances (CEA) - representing the insurance industry -also supports the
institutional approach. According to CEA a pension product by nature provides benefits of an uncertain duration
linked to the duration of human life and the protection against biometric risk should be covered. All institutions
Have the two sides of industry been consulted? What are their views?
No. The proposed measures affect only the prudential regulation of electronic
money issuers.
The proposal itself has not been circulated to interested parties since
the Commission still has to adopt it. However, in response to the
Commission Communication on “A European Initiative in Electronic Commerce”
(COM(97) 157 final) the European Parliament and the Economic and Social
Committee both supported the principle of such a horizontal European
harmonisation initiative based on an Internal Market approach proposed in the
Communication to address the problems listed above.
Moreover, the newsletter survey mentioned above has given further evidence of
the significance of the Internal Market problems that need to be addressed. Informal
bilateral contacts with interested parties including the regulated professions have
also resulted in favourable reactions to the approach detailed in the current
proposal.
The European Commission services have disseminated to the industry a consultative
paper on the supervision of financial conglomerates and a first draft for a proposal
for a directive as a working paper. Commentators generally agree on the need for an
appropriate supervisory framework for financial conglomerates, but were less
unanimous on the extent and the timing of the regulation.
The principles underlying this proposal were agreed by the ECOFIN Council of 26
and 27 November 2000. The ECOFIN conclusions take account of the need for
minimising the additional administrative costs for market operators. This has been an
overriding concern throughout the Council discussions. Throughout these
discussions, Member States have been encouraged to consult their market operators.
                                        The Commission has also received numerous written submissions from
individual
market operators and representative bodies such as the European Banking
Federation, the European Federation of Investment Funds and Companies (FEFSI),
the London Investment Banking Association (LIBA) and the International Primary
Markets Association (IPMA).
The Commission has constantly informed the Council of its consultations with
market operators and the Council working group has spent considerable time
examining how to accommodate the concerns expressed by the industry. A very
useful meeting between Members of the Council working group and industry
representatives was held on 18 November 1999 in order to examine these issues and
particularly to discuss possible ways to reduce the impact of the Directive on market
operators.