28 August 2015

ECON: Draft report on stocktaking and challenges of the EU Financial Services Regulation

Stocktaking and challenges for the current framework

The European Parliament, having regard to all relevant documents published related to building a Capital Markets Union (CMU), 

1. Notes that the Commission communication entitled ‘A reformed financial sector for Europe’ provides a first stocktaking of the financial sector reforms but fails to provide a full assessment of the overall effects and the interaction of the individual measures;

2. Welcomes the Commission’s Investment Package, including the Capital Markets Union (CMU); stresses that an efficient and effective financial services framework ensuring financial stability is a prerequisite in order to increase (long-term) investment and to foster growth in a competitive European economy; underlines the linkage between economic and financial stability;

3. Is concerned about the increased complexity, reflected in the greater amount, detail and number of layers of regulation and supervision with requirements at international,

4. Notes that a sound and robust CMU has to acknowledge the interdependencies with other financial sectors and has to be based on well-established existing structures; stresses the need for a holistic view of EU financial services regulation;

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9. Highlights the benefits of asset diversification; emphasises that the purpose of prudential regulation is not to favour certain asset classes; calls for a risk-based approach to regulation, with the same rules being applied to the same risks; believes that a more granular categorisation of asset classes is appropriate, in particular by establishing categories such as infrastructure;

10. Stresses the need for consistency in the risk-based approach, including sovereign exposures; supports the work of the BCBS and ESRB in this regard;

11. Notes the possible unintended consequences of multiple capital, liquidity and leverage requirements on maturity transformation and the provision of long-term financing; asks the Commission, in cooperation with the supervisors, to analyse these consequences for banking and insurance as a matter of priority;

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14. Calls for an appropriate division of competences between EU and national level, bearing in mind that national supervisors have more knowledge of local market characteristics; is concerned about the effect of a one-size-fits-all supervisory approach on smaller and primarily nationally active entities within the Single Supervisory Mechanism (SSM); 

15. Notes the achievements in establishing a banking union; stresses that the next step has to be its full implementation, including full capitalisation of national Deposit Guarantee Schemes (DGS) and the Single Resolution Fund (SRF); emphasises the aim of avoiding moral hazard and ensuring that risk-takers bear the costs when their risks materialise;

16. Reiterates the need for a level playing field within the EU, also with regard to SSM banks and the banks of non-participating Member States;

17. Acknowledges the traditional reliance of SMEs on bank funding due to their specific nature, different risk profiles and variety across Europe; calls on the Commission, in cooperation with the European Supervisory Authorities (ESAs) and the ECB, to analyse the obstacles to, and benefits of, the diversification of funding channels and how to enable banks to increase SME funding; suggests that the initiatives for improved SME funding should be expanded to mid-cap companies;

18. Recognises the efforts made to establish a more transparent securitisation market; emphasises that stringent requirements for underlying high-quality assets and calibrations according to the actual risk profile are necessary, bearing in mind the riskiness of securitisation as shown during the crisis; calls on the Commission to conduct a thorough assessment of the benefits of securitisation for SMEs and the marketability of securitisation instruments as a matter of priority, and to report to Parliament;

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A better EU financial services regulation 

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29. Welcomes the objectives of the better regulation agenda; underlines the role of REFIT in achieving an efficient and effective financial services regulation;

30. Believes that the ESAs and SSM have a crucial role to play in achieving the objectives of better regulation and supervision;

31. Highlights that the revision of the ESA Regulations has to reflect the accountability and transparency provisions for enhanced Parliament scrutiny, as laid down in the SSM and SRM Regulations;

32. Stresses the need to respect the interplay, consistency and coherence between the basic acts and delegated and implementing acts; insists that the Commission and the ESAs, when drafting delegated and implementing acts and guidelines, stick to the empowerments laid down in the basic acts and respect the co-legislators’ agreement;

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34. Calls on the Commission to make any amendment made to the draft regulatory technical standards (RTS) and implementing technical standards (ITS) submitted by the ESAs transparent to the co-legislators;

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The way forward

40. Calls on the Commission and ESAs to conduct regular (at least annual) coherence and consistency checks, also on a cross-sectoral basis and on every draft legislative act, and to dedicate resources to this activity;

41. Calls on the Commission and ESAs to conduct regular (at least annual) proportionality checks, particularly with regard to the requirements applicable for small and mediumsized market participants and on every draft legislative act, and to dedicate resources to this activity;

42. Stresses that the impact of individual legislative measures differs from their cumulative impact; calls on the Commission services, in corporation with the ESAs, SSM and ESRB, to conduct a comprehensive quantitative and qualitative assessment every five years of the cumulative impact of the EU financial services regulation at EU and Member State level;

43. Calls on the Commission services to complete the first assessment by the end of 2016 and to report on the overall impact and, in separate chapters, on [other possible effects].

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Full draft report

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