03 October 2002

EMAC meeting 01-02 October

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The European Parliaments Economic and Monetary Affairs Committee (EMAC) discussed a number of issues related to the Financial Services Action Plan during its last meeting. Among others the Committee dealt with the Directives on Financial Conglomerates and Market Abuse, the Report on Prudential Supervision, and held a hearing on the Prospectuses Directive.

Financial Conglomerates

In his statement on the Council Common Position EP’s rapporteur Allain Lipietz welcomed the fact that the Council of Ministers has taken on board almost all the points contained in the amendments adopted by the European Parliament at first reading.

Although there are a small number of points where the Common Position still could be improved, Lipietz proposed to approve the Common Position without amendment.

There was common agreement among Parliamentarians that the main points raised by the Parliament are sufficiently covered by the Common Position. Mrs Villiers also was content with regard to the clearer definition of financial conglomerates and the simplified procedure in dealing with third countries. Amendments to the Common Position are not expected.

Draft Recommendation for second reading

Deadlines:
Amendments: 23 October, Committee vote: 5 November, EP Vote: end November

Market Abuse

In his statement EP’s rapporteur Robert Goebbels pointed out that 60 of the 77 parliaments amendments have been incorporated fully and 10 partially.

Goebbels therefore supported the common position and does not wish to see the second reading become excessively drawn out. He himself placed some three amendments to which the Commission is content with.

Although there was common agreement that the Directive – as the first one operating under the new Lamfalussy procedure - should be adopted as soon as possible, there is some concern about the incorporation of journalists into the Directive (article 6.5).

As some Parliamentarians want to exclude journalists at all, Mr. Mann and others stated that the fears were exaggerated by the relevant associations and that he cannot support the amendments to that point. However, there are clear signs that a compromise might be reached with regard to a modified amendment (no.13) made by Mrs Kauppi.

Mrs Villiers also stated that there are several overlaps between the Market Abuse Directive and the forthcoming Investment Services Directive and that certain parts could be better dealt with in the ISD. But there was not much support to delay decisions that could be dealt with now.

Another point of concern was dealing with the role of CESR and the consultation process that already started. Many Parliamentarians were quite upset and it is planned to invite CESR to the Committee give their statement on it.

Deadlines:
The vote in Committee is planned for Tuesday 08 October

Prudential Supervision

The reaction on the EP report on ‘the rules of prudential supervision in the EU’ of the rapporteur Mrs van den Burg was mixed among Committee members.

Although Mr Herzog was content with a free choice of the competent authority on an international basis he pointed out that even on a bilateral basis the cooperation among these institutions is rather weak. Furthermore he criticised that:

With regard to the role of the Commission the discussions on the Lamfalussy procedure should also be integrated.

Several points on Clearing and Settlement, Pension funds, and Banks and Insurances still remain open in the current draft.

An equivalent to the US Sarbanes/Oxley act should be incorporated

The aspects of European coordination have to be deepened

Intersectorial supervision should be strengthened

The role of the ECB should be strengthened

A rather different view on the report was expressed by Chris Huhne talking of a well balanced report aiming towards a common culture of basking supervision.

Mrs Randzio-Plath stated that regulatory aspects should be excluded as long as there is no clear evidence how the new Lamfalussy procedures are working.

Deadlines:
Amendments: 22 October, Committee vote: 5 November, Plenary: end November

Hearing on Prospectuses

There was a common agreement among the experts invited to the hearing on Prospectuses that:

further disclosure requirements will lead to higher costs, which will be extremely negative for small companies. One expert estimated that the costs of further disclosure requirements – combined with the resulting costs of new IAS regulations - will rise by a factor of between 3 to 10. Furthermore, as smaller companies do neither have the experience, nor the expertise the experts also doubted that a ‘more’ of information will lead to ‘better’ information.

companies should have the freedom of choice of the competent authority they want to select as this would allow companies to chose a competent authority that is most experienced and specialized on the subject. Other problems could result from the fact, that companies who have their Holding abroad will also have to take the foreign competent authority instead of the national where one the company is established.

A third factor which was critisized was the introduction of special EU rules for securities with an minimum denomination of € 50 000.

The Committee has now to decide if a new first reading is needed.

Position papers of experts

© Graham Bishop