07 February 2001

FESCO Consultation Paper on Harmonization of Conduct of Business Rules

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The area of investor protection and particularly the harmonisation of article 11 of the Investment Services Directive (ISD) are considered by FESCO members one of the major obstacles to the effective cross-border provision of investment services. Conduct of business regimes adopted at domestic level are still different throughout the European Economic Area (EEA). The harmonisation of conduct of business rules has been considered by the Financial Services Action Plan and by a recent Communication from the European Commission on upgrading the ISD, as a priority for the achievement of an integrated securities market and an effective passport for investment firms.

A FESCO expert group has worked intensively in this area and, after a comparison of different regimes throughout FESCO members, FESCO has: - adopted in March 2000 a paper on the “Implementation of article 11 of the ISD: Categorisation of investors for the purpose of conduct of business rules” (00-FESCO-A) following an intense period of consultation. It provides criteria and procedures to implement an appropriate differentiation between categories of investors; among others, these criteria were endorsed by the European Commission in its recent Communication on the interpretation of article 11 of the ISD, which was widely welcomed by FESCO members; - and agreed to start a consultation on an new paper on “The harmonisation of core conduct of business rules for investor protection” (ref. FESCO/00-124b).

The consultative paper is intended to be exhaustive: it covers the provision of services to non-professional clients, as well as the services rendered to professional investors. Furthermore, it provides principles and rules on all aspects of the provision of the investment services, as defined in Section A of the Annex to the ISD, but, where appropriate, it covers non-core services.

See consultative paper.
See also press release.

© FESCO