ECOFIN results

08 May 2007




Key items for Financial Services

White paper on asset management
Adoption of Council conclusions
The Council

  • AGREES with the view of the Commission that, for harmonised investment funds (UCITS), the best approach at this stage consists in targeted amendments to the UCITS Directives, and INVITES the Commission to present the announced amendments, for examination by Council and Parliament, as soon as possible, bearing in mind the need for proper impact assessment and consultation;
  • STRESSES the need to ensure, in the context of retail distribution of, and advice on, UCITS, that all steps are taken by the Commission and the Member States in enforcing the conduct of business rules provided for in the Markets in Financial Instruments Directive (MiFID), and that the cost reductions expected from further integration of the European fund market are adequately passed on to retail investors; and also STRESSES the need for clearly ensuring the coherence of application of the MiFID and the UCITS Directives;
  • LOOKS FORWARD to the Commission's assessment of the case for EU action in the area of private placement, expected in autumn 2007;
  • NOTES that the Commission is equally undertaking a broad examination of the cross-border distribution potential of various types of non-harmonised funds (such as e.g. funds of hedge funds, open-ended real estate funds, …), taking account of relevant national experiences, and LOOKS FORWARD to its Report on possible single-market solutions for the retail-oriented nonharmonised fund industry, expected by mid-2008;
  • SUPPORTS the work of CESR in both the UCITS and non-UCITS fields and STRESSES the importance of its making full use of the supervisory tools mentioned in the FSC Report on financial supervision 1 also in these fields;
  • INVITES the Commission to review the consistency of EU legislation regarding the different types of retail investment products (such as unit-linked life insurance, investment funds, certain structured notes and certificates), so as to ensure a coherent approach to investor protection and to avoid any misselling possibilities.'
    Conclusion

    Hedge Funds
    Adoption of Council conclusions

  • ACKNOWLEDGES that hedge funds have contributed significantly to fostering the efficiency of the financial system, but also STRESSES the potential systemic and operational risks associated with their activities,
  • NOTES that the so-called 'indirect supervision' approach, through close supervisory monitoring of credit institutions' exposures to hedge funds and progress in upgrading their internal risk management systems, has so far enhanced resilience to systemic shocks; and RECALLS the need for creditors, investors and authorities to remain vigilant and to adequately assess the potential risks that hedge funds present. In this context creditors and investors should also examine whether the current level of transparency of hedge funds' activities is appropriate. In the exercise of their 'indirect supervision', relevant supervisory authorities should monitor developments and cooperate among themselves;
  • STRESSES the need for a better understanding of hedge funds characteristics for proper monitoring of the financial stability impact of hedge funds' activities, and therefore ENCOURAGES all relevant institutions to develop and apply an analytical and evidence-based approach in this area;
  • NOTES that concerns have been expressed regarding increased retail distribution of hedge fund products in some Member States and RECOGNISES the need to ensure adequate investor protection;
  • INVITES therefore the Commission to take all relevant regulatory and market developments into account, in assessing the case for and against providing a Single Market framework for the retail-oriented non-harmonised fund industry, which might include some funds of hedge funds; and LOOKS FORWARD to the Commission's report thereon.'
    Conclusion

    Aging Population
    Adoption of Council conclusions
    The Council:

  • ENDORSES the Report on the implications of ageing for financial markets, elaborated by the FSC according to that mandate, and STRESSES in particular the following points for further monitoring and action by Member States, which are invited i.a. to (excerpt):
    - Consider, where appropriate, possible additional solutions so as to increase the participation and contribution levels of households in non-statutory pension schemes and address relevant cases of possible insufficient access to pension products and schemes, e.g. for low-income households, drawing experience from other national experiences as appropriate;
    − Encourage industry's efforts to further enhance the supply of pension savings products, where relevant, and raise the standards of advice and customer support, in order to ensure proper matching between the customer profile, on the one hand, and the nature of the investment proposed including in relation to all costs, on the other hand.
  • STRESSES the need for further monitoring of market innovation, bearing in mind the need for a level playing field across investment products with similar characteristics, and therefore INVITES the Commission to investigate whether further work is necessary for the development of a Single Market for retirement products;
  • EMPHASISES its vigilance, as regards the macro-economic and financial stability implications of current trends in the shifting of risks to households, and in the concentration of assets within ageing populations, including as intermediated through institutional investors' investment strategies.'
    Conclusions
    Main results of the Council
    Agenda
    Background note

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