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EU Financial Services Update
June 2011
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Deposit guarantee schemes
On May 24th, the European parliament ECON committee adopted its draft report1 on
deposit guarantee schemes. The adopted report, which was written by Peter Simon
(S&D, DE), upholds the increased bank deposit protection limit of €100,000 but
chose to allow Member States more leeway over how they design their schemes. All
schemes must be fully funded within fifteen years instead of the European
Commission's proposed ten. In addition, the MEPs also voted for payouts to be made
within five working days rather than seven. The report is expected to be debated and
adopted in plenary in the week of July 4th 2011.
On May 31st, a presidency compromise on the proposal was discussed in the Council
working group. In an exchange of views with the European Parliament’s Economic
and Monetary affairs committee (ECON), Commissioner Barnier called upon the
Council and the Parliament to reach an agreement on the final text as quickly as
possible, as this concerns an important element in consumer protection.
Derivatives, central counterparties and trade repositories
On May 24th, the ECON committee adopted its draft report2, written by Werner
Langen (EPP, DE), on derivatives, central counterparties and trade repositories. The
draft regulation aims to bring greater safety, transparency and stability to the OTC
derivatives market. Information on OTC derivative contracts would have to be
reported to 'trade repositories' and be accessible to supervisory authorities. They
would also need to be cleared through central counterparties (CCPs). The
parliamentary draft report envisages a central role for ESMA (European Securities
and Markets Authorities). The new European supervisor will work closely with
national supervisory authorities, have an important stake in authorising new CCPs to
the market and should be allowed to carry out on-site inspections. The report also
called for the rules to apply only to OTC derivatives. However, to ensure ESMA has
the full picture, the ECON report calls for reporting obligations to apply to all
derivatives. Although it provides for a special regime for pension funds, the report is
strict regarding exemptions. Co-operation arrangements between clearing houses
are limited to cash securities. A CCP has to have functioned in line with the standards
for at least three years before it can apply for authorisation for interoperability. The
ECON draft report said that clearing will only be mandatory from the moment the
regulation enters into force.
1
The final version of the ECON report as adopted is not yet available
2
Idem
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Following the adoption of the report, the rapporteur, Werner Langen, said that he
would now like there to be a full vote in plenary before negotiations with the Council
begin. This would in effect set the parliament’s position in stone and make finding a
first reading agreement with Council difficult. The report will be debated and voted
in plenary in the week of July 4th 2011.
In an exchange of views with the ECON committee, Commissioner Barnier also
explained that the Commission is working on a proposal for the derivative market in
raw materials. Concerning the EMIR directive, he called for an agreement to be
found as soon as possible and warned that were the proposal to go to second
reading, it could add an extra six months to the process.
On May 27th, a presidency compromise was published and this will form the basis for
the ongoing negotiations within the council.
Capital requirements and Banking stress tests
On May 27th, Commissioner Barnier reiterated that the European commission’s
proposal on implementing Basel III would “respect the balance and level of ambition
included in Basel III.”
In addition, in an exchange of views with the ECON committee in the European
Parliament, he explained that CRD IV will cover Basel II and III. In its proposal, the
Commission will seek to take the specificities of the European banking sector into
account. The proposal will include general rules on liquidity and the commission is
currently working on finding the right ratio for this. The commission proposal is
expected to be published on July 5th 2011.
On June 1st, the Basel committee on Banking Supervision published a revised version
of Basel III.
The European Banking Authority is currently coordinating the results of the banking
stress tests. The commission has promised that these will be far more stringent than
the first ones. During this month, Commissioner Barnier stated that European banks
should be subject to regular stress tests. The results of the current stress tests are
due to be published in mid to late June. However, reports on June 2nd suggest that
the publication of results may be pushed back until July as the EBA requires certain
banks to resubmit data on how they would fare in an economic downturn. Further
information on the timetable can be found here.
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MiFID
In front of MEPs, Commissioner Barnier said that the commission will be very
ambitious and try to find the best possible supervision, fair competition and increase
transparency in its upcoming proposals. The commission proposal is expected in
September or October 2011. When the parliament deals with the proposal, Markus
Ferber (EPP, DE) is likely to be the rapporteur.
General Information
On May 23rd, the Presidency Interim Report on Taxation of the Financial Sector was
released. The summary report of DG TAXUD from the commission consultation was
published on May 26th 2011.
On May 27th, the Council adopted the directive on EU rules for alternative
investment fund managers. The directive will enter into force on the 20th day
following its publication in the Official Journal and member states will have two
years to transpose its provisions into national law.
On May 31st, the ECB published its contribution to the European commission’s public
consultation on the technical details of a possible EU framework for bank recovery
and resolution.
On June 1st, the regulation (EU) no 513/2011 of the European parliament and of the
Council amending Regulation (EC) No 1060/2009 on credit rating agencies was
published in the official journal. It entered into force on July 2nd 2011.
Upcoming proposals and meetings
• ECOFIN council – June 20th 2011
• Proposal on a Regulation on Central Securities Depositories (CSDs) – June
2011
• Beginning of the Polish Presidency of the EU – July 1st 2011
• Proposal on CRD IV – July 5th 2011
• Proposal on the Securities Law directive – July 2011
• Proposal on Packaged Retail Investment Products – Mid-July 2011
• Proposal on taxation of the financial sector – Summer 2011
• Proposal on the Market Abuse Directive – September / October 2011
• Proposal on a crisis management framework – September 2011
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