Coverage level

The views of Member States on this issue varied to a large extent. While a number of Member States questioned the necessity of the increase from the current level of at least €20,000, others were ready to introduce a maximum harmonised level and accept the Commission proposal of €50,000. A few Member States already offer a higher amount of protection than the proposed level. In order to accommodate all of the needs, the Presidency proposed to maintain the minimum harmonisation principle and introduced a coverage level of €30,000 in its compromise text.

Harmonisation of funding principles

The opinions of the Member States regarding the necessity and the extent of harmonisation of funding of investor compensation schemes (ICS) are divergent. Some Member States would welcome a harmonised pre-funded system, claiming that an ex ante system is essential in order to protect the interests of investors. Other Member States expressed the view that each Member State should remain responsible to determine and ensure adequate financing methods of their ICS (ex ante, ex post or a combination of both). In order to offer an alternative to ex ante financing and in order to ensure adequate financial guarantees, the Presidency introduced the concept of payment commitments. These could combine the advantages of prefunding financing in terms of security, with the advantage of investment firms receiving the interest due on the payment commitment in a similar way to ex-post financing.

Target fund level

Several Member States found the target fund level too high for the ICS. A large majority of Member States expressed that the target level must be established at a substantially lower level than proposed by the Commission. Therefore, to make the proposal more acceptable to the Member States, the Presidency proposed that the target funds should be composed of available financial means of at least 0.5 per cent of the value of the monies and of at least 0.05 per cent of the value of the financial instruments held, administered or managed by the investment firms that are covered by the scheme.

Borrowing between national schemes

As nearly all Member States were strongly opposed to a mandatory borrowing mechanism proposed by the Commission, the Presidency proposed to modify this provision to a borrowing on a voluntary basis.

Alignment with the Markets in Financial Instruments Directive (MiFID)

With regard to the scope and alignment with MiFID, some Member States were of the opinion that widening the scope to include investment firms not authorised to hold clients’ assets is unnecessary. In order to keep these situations within the scope of the proposal, the Presidency proposed an obligation of an annual fixed contribution for these firms. However, some further discussion on this issue might be necessary.

Extension of coverage in case of failure of a UCITS depository

As most Member States raised serious concerns about the extension of coverage in case of failure of a UCITS depository, the Presidency deleted this provision from its compromise text. The possible extension can be further examined taking into account the forthcoming proposal on the UCITS depositories’ liability regime.

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