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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. 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.
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