-The European Commission has presented a proposal for a new Directive on Investment Services. The proposed Directive would replace the existing Investment Services Directive, dating from 1993. The current Directive relies heavily on mutual recognition and has not proved sufficient in practice to ensure investment firms can operate EU-wide on the basis of approval in their home country.
It would increase harmonisation of national rules and meet two key prerequisites for the completion of the Internal Market in financial services. First it would give investment firms an effective 'single passport', which would allow them to operate across the EU. Second, it would make sure investors enjoyed a high level of protection when employing investment firms, wherever in Europe they were located.
It seeks to establish a comprehensive regulatory framework governing the organised execution of investor transactions by exchanges, other trading systems and investment firms. The proposal also deals with structural changes in financial trading and order-execution and the conflicts of interest within broker-dealers which may execute client orders internally against proprietary trading positions – a process widely referred to as “internalisation”. European Investment Banks already criticised the European Commission for last-minute changes to its reform of the EU's share trading regime. The Commission changed its proposal slightly from the original draft, by saying that the controversial pre-trade transparency arrangements will only apply to large investment houses and only to retail-sized orders.
Commissioner Bolkestein said: 'This proposal is a cornerstone of the Financial Services Action Plan. If we want a true Internal Market in financial services, with all the enormous benefits that will bring, we need investors large and small to be able to invest across borders easily and with confidence. That in turn means we need investment firms to be able to work anywhere in the EU, under supervision rigorous enough to weed out the cheats and charlatans and flexible enough to liberate reputable operators from the headache of fifteen different sets of regulations.”
The proposal will be forwarded to the European Parliament and the EU's Council of Ministers for adoption under the so-called co-decision procedure.
Commission proposal
Commission press release
FAQ
© European Commission
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article