Title: European Commission, Technical Assistance Information Exchange Unit (TAIEX), DG Enlargement in co-operation with the Union of Chambers and Commodity Exchanges of Turkey
1European Commission, Technical Assistance
Information Exchange Unit (TAIEX), DG Enlargement
in co-operation with the Union of Chambers and
Commodity Exchanges of Turkey
- Seminar on Financial Services
- Ankara, 1 March 2005
- Recent developments in the EC legislation of the
financial services sector - Dr. jur. Dimitris Tsibanoulis Legal Advisor,
Bank of Greece
2Main Fields of Financial Services
- Banking
- Transactions on financial instruments /
Securities field - Insurance
3A Single Financial Market
- Investors free to invest in instruments issued/
traded in other Member States - Intermediaries free to transact freely with
clients in other Member States - Issuers free to tap a deeper and more liquid
market - Infrastructure suppliers can make their
facilities available to market participants/users
in EU - Enforcement of authorities able to prosecute
cross-border infringements
4The integration of the European financial
markets and its importance for growth and
economic development in Europe
- The achievement of a fully integrated single
market is a key objective of the European Union
that is a market allowing for the free movement
of goods and services and for the right of EU
citizens to take up employment or establish their
business anywhere within the EU, without
discrimination, on the basis of a harmonized set
of rules and regulations.
5Why do we need an Integrated Financial Services
Market?
- Long term economic benefits
- Greater market liquidity
- More efficient allocation of investment
resources - Greater freedom for investors consumers
- Lower cost of capital increased investment
- Better return on private savings for ordinary
investors and funds will help defuse pension
time-bomb - More venture capital and finance for higher-risk
segments - Increased growth, employment
6Building blocks of the Single Market
- Home country/country of origin authorization and
supervision - Mutual recognition of equivalence of partner
country authorization/supervision - Harmonisation of key regulatory protections/rules
- Close co-operation between host State and home
State authorities
7Financial Services Action Plan
(FSAP)Implementing the framework for financial
markets action plan
- The Financial Services Action Plan adopted in May
1999 set out a road map to get rid of all
existing barriers to the integration of European
financial markets. It contained over forty
measures, both legislative and non-legislative,
which covered the entire financial services
field, from securities and banking to insurance,
as well as from major financial institutions to
retail investors.
8Financial Services Action Plan (FSAP)
- The action plan for a single financial market
put forward indicative priorities and a timetable
for specific measures to achieve strategic
objectives, namely - establishing a single market in wholesale
financial services - making retail markets open and secure
- strengthening the rules on prudential
supervision - widening conditions for an optimal single
financial market.
9Financial Services Action Plan (FSAP)
- The FSAP is designed
- - to enhance the integrity of European markets
- - to increase investor confidence
- - to lower the costs of offering cross-border
services and - - to unify the primary markets.
10Financial Services Action Plan (FSAP)
- 42 legislative and soft law measures to
enhance the EU legislative framework - Common EU rule-book for securities
- Single set of financial reporting standards
- Common initial and regular disclosure documents
- First steps towards EU framework for occupational
pension funds - Secure and transparent environment for
cross-border restructuring of companies - Strengthening of supervision of companies and
markets - Internal Market for retail customers
11FSAP
- Need for further work on integration
- Markets remain fragmented
- Obstacles remain
- Developments and changes in the markets call for
appropriate responses
12How to achieve the goal of integrated financial
markets ?
- EU financial services law-making, traditionally
- too slow
- too rigid
- results divorced from market reality/practice
- insufficient legal certainty/uniformity to
sustain home country principle. - Response
- Lamfalussy blue-print for reform of EU
legislative process
13THE COMMITTEE OF WISE MEN ?N THE REGULATION OF
EUROPEAN SECURITIES MARKETS
- ?he challenges facing the creation of an
integrated securities market in Europe are - that the basic legislation is not in place
- that there is still insufficient prioritization
- that the present system cannot produce quickly or
flexibly enough the type of legislation that
modern financial markets require and - that inconsistent implementation is severely
handicapping the emergence of a pan-European
market.
14Lamfalussy Model for a reformed EU-legislative
process
- Consultation and Transparency
- Efficient and flexible regulatory system
- Regulatory convergence and co-operation
- Common implementation and enforcement.
15THE FOUR-LEVEL APPROACH RECOMMENDED BY THE
COMMITTEE
- - Level 1 Framework principles to be decided by
normal EU legislative procedures (i.e. proposal
by the Commission to the Council of Ministers/
European Parliament for co-decision). - - Level 2 Establishment of two new committees
an EU Securities Committee and an EU Securities
Regulators Committee (in a format similar to that
of FESCO) to assist the European Commission in
determining how to implement the details of the
Level 1 framework.
16THE FOUR-LEVEL APPROACH RECOMMENDED BY THE
COMMITTEE
- - Level 3 Enhanced cooperation and networking
among EU securities regulators to ensure
consistent and equivalent transposition of Level
1 and 2 legislation (common implementing
standards). - - Level 4 Strengthened enforcement, notably
with more vigorous action by the European
Commission to enforce Community law, underpinned
by enhanced cooperation between the Member
States, their regulators, and the private sector.
17Financial Services Action Plan (FSAP)
- What remains to be done?
- Corporate scandals, money laundering and fight
against terrorism - Follow up to the Action Plan on Company Law
Corporate Governance - Modernisation of 8th company law directive
(statutory audit) - 3rd money laundering directive
- Transposition of FATF recommendation No. 7
18Financial Services Action Plan (FSAP)
- What remains to be done?
- Modernisation of capital adequacy rules
- Base II / CAD III
- Solvency II
- Payment systems Legal framework for payments in
the internal Market and payment institutions
19Financial Services Action Plan (FSAP)
- What remains to be done?
- Financial Markets Infrastructure Clearing and
Settlement / Achievement of an integrated,
efficient and safe clearing and settlement
environment in the European Union.
20Charlie McCreevy European Commissioner for
Internal Market and Services
- The integration of European financial markets
our objectives for the coming years - (Initiative Finanzstandort Deutschland,
20.12.2004, Frankfurt am Main, Germany) - Implementation and enforcement of the
existing legislation - The new framework puts greater emphasis on
the cooperative responsibilities of the
supervisors. We want the concept of a
consolidating supervisor to work and
cross-border groups not to be subject to
multiplicative requirements.
21Conclusion
- Huge potential benefits from integrated financial
market - Legislative phase nearly complete
- Immediate focus now on implementation and
enforcement - Need to have flexible system which allows to
adapt quickly - Need for strong involvement of stakeholders to be
successful