02 December 2008

ECON meeting 1-2 December

Exchange of views with Commissioner McCreevy

Commissioner McCreevy is to launch a public consultation on hedge fund regulation and will present to the College a consultation paper on hedge funds this week. The results of the consultation should be discussed at a high level conference to be held in February, McCreevy said. Final results should be available by end March 2009 to feed into the G20 summit in April.

The focus of the consultation will include the definition of hedge funds, oversight responsibility, the adequacy of transparency measures, direct or indirect capital requirements for hedge funds and risk management. Also, the issue of short selling should be on the agenda although the Commissioner underlines the positive elements of this practice.

On private equity the Commissioner said he wants to make sure “that their codes apply across the industry, provide sufficient transparency and are subject to effective monitoring.” A report on the review is planned within the next three months at the latest.

“In reviewing the Basel 2 framework the appropriateness of the methodologies used to determine the risk weightings that are applied to private equity deals needs to be looked at with some fresher and more critical eyes”, he added.

Furthermore, the review of the Transparency Directive will include issues such as notification thresholds, investment policy disclosure and identification of shareholders. The Commission will address the issue of remuneration and reward structures next year.

On derivatives trading, McCreevy repeated his plans to create a CCP for Credit Default Swaps over the coming months. “I am also engaging in a wider review of all derivatives to see if further measures are necessary to remove any risks to financial stability”, he said. “This is to be completed by the end of March 2009.”

Full speech

ECON Committee also voted on a number of issues including:

Ø       UCITS, Adoption of draft report

Ø       Deposit Guarantee Schemes as regards the coverage level and the payout delay, Adoption of draft report

Ø       Capital Requirements Directives, Adoption of motion for a resolution

Ø       Securities settlement systems and financial collateral arrangements, Adoption of draft report

Ø       Statute for a European private company, Adoption of draft opinion

Ø       Statutory audits of annual accounts and consolidated accounts, Adoption of draft opinion

ECON adopted the report on the UCITS directive

ECON committee included a management company passport, which allows a management company to set up a fund in a member state in which it is not established by means of a company under local law. “The Parliament has embedded a very close cooperation between supervisory authoritie”, Klinz said. “The management company passport will hence lead to more efficiency with the same high level of investor protection."

Other amendments included a quicker notification procedure, the creation of a framework for cross-border fund merger, and the new 'Key investor information' document.

Parliament is now entering the negotiations with the Council and the European Commission. The report will be voted in Plenary in early 2009 with the view to reaching a first reading agreement.