31 October 2002

EU Issuers and Financial Markets Reject Council Compromise on Prospectus Directive

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In a joint letter to European Finance Ministers sent out before last ECOFIN meeting in October, a number of European associations and organisations representing European issuers and financial market participants heavily criticized the Council compromise on the Prospectuses Directive reached on 05 November.

The current text will only benefit non-EU issuers and some EU issuers whose registered office is established in one of the main EU financial centers posing an unfair competition problem since those issuers will be able to go to the market earlier and often on better terms, they argue.

Furthermore, the € 50,000 threshold, when used in the context of choice of competent authority, is regarded as inappropriate. Any monetary limit would deny the benefits of choice to many issuers. Also Pension funds will miss the opportunity of deeper equity markets if all equity issuers are denied the choice of competent authority.

Possible solutions to these and other questions were proposed in an annex to the letter

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