-The European Commission has launched a second and final round of open consultation on possible amendments to the Investment Services Directive.
The Commission services have made substantial changes to their initial suggestions as a result of the 77 responses received to the first round of consultation launched in July 2001. Those who so wish now have a further chance to comment before the Commission presents a formal proposal in late 2002.
This feedback confirmed that the main regulatory issues that ISD revision needs to address are:
updating investor protection safeguards to help investors profit fully from a wider range of investment services
enabling investment firms to provide services across borders on the basis of home country authorisation and supervision
improving the working of markets and avoiding market fragmentation by establishing a level playing field between different ways of executing investment orders through, for example:
'regulated markets' such as stock exchanges
Alternative Trading Systems (which enable market participants to trade at different terms than on the stock exchange)
'in-house' order-matching by banks who execute client orders to buy/sell securities against other client orders or their own trading positions.
However, in order to serve these objectives better and in the light of detailed comments made by some respondents, the Commission services have made a number of changes to the earlier suggestions. These include:
fine-tuning investor protection obligations to take account of new forms of investment services
broadening the scope of the Directive to include, among other things, investment advice and trading of commodity derivatives
simplifying the classification of order-execution systems and making it more flexible. The future ISD would not dictate whether a particular trading system should be defined as an investment firm or as a regulated market
a greater emphasis on ensuring that different trading systems performing similar functions are subject to comparable regulation
clarifying requirements for the disclosure of quotes or details of transactions performed off-exchange. It is suggested that these transparency obligations be limited to equity transactions
streamlining the high-level principles for regulated markets. Regulated markets would be able to compete for liquidity without jeopardising the orderly and efficient operation of European securities markets, or the interests of issuers and investors.
The Commission will also host a hearing in Brussels on 22 April 2002 concerning the new consultation. This will be open to interested parties and journalists, and take place in the Borschette Conference Centre, Brussels.
Registration form to open hearing
See overview paper
See revised orientations
See summary of responses to the preliminary orientations
© European Commission
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