09 March 2009

ECON vote on CRD II

ECON agreed on a retention rate of at least 5% of the total value of the securitised exposures. Colleges of supervisors should only be a temporary step towards a more integrated system of supervisors, and the CDS market should be subject to regulation.

ECON Committee adopted the report on the Capital Requirements Directive prepared by Othmar Karas.

ECON agreed with the Commission's proposal on a retention rate of at least 5% of the total value of the securitised exposures. However, Committee proposes an "explicit and unconditional warranty" to be issued by the originator of the securitisation, to prove respect for due diligence criteria. This would work as an alternative solution to the 5% retention limit, to ensure the retention of an economic interest by the institution.

The establishment of colleges of supervisors should only be a temporary step towards a more integrated system of supervision. The Commission is called to put forward a legislative proposal to address supervisory concerns with "a stronger role for an EU level supervisory system" by the end of the current year.

Also, Member States will have to require all credit institutions to report to the supervisory authorities on their large exposure. The Committee also asks CEBS to provide national authorities with uniform guidelines so as to introduce a uniform reporting format before end of 2011.

MEPs support reinforcing the existing rules on the large exposure regime, including interbank trading. A bank would not be able to expose more  than Euro 150 million or more than 25% of its own funds to a client or a group of clients, if the proposed legislation enters into force.

Credit Default Swaps should be subject to regulation, ECON agreed and calls on the Commission to put forward a proposal to regulate the CDS market by end 2009. This should include to set up a central counterparty or clearing house that is supervised by the EU.

MEPs call Member States to transpose the proposed legislation by 31 October 2010 and apply the new provisions from the beginning of 2011.

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