Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-04-02-Speech-1-039"
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". – I thank both Mr Katiforis and Mrs Kauppi for the reports which they have produced. They reflect a very large measure of agreement. It is good to hear that speakers have supported these two reports. The Commission has also taken cognisance of these two reports with great pleasure.
On the first issue, criticism of the FESCO definition of professional investors, as yet no legal content has been given to the concept of professional investor by the European Court of Justice. The FESCO agreement represents a first informal attempt to establish a collective European view on this concept and it should be welcomed as a valuable first step towards clarifying this important operational concept. The Commission is, of course, aware of widespread concern that the FESCO agreement is overly restrictive in determining which investors qualify automatically as professionals. This deprives many large and sophisticated investors of the benefits of operating under a single, that is, home-country, light-touch supervisory regime. Nevertheless, given the prevailing uncertainty surrounding the term ‘professional investor’, the Commission believes that the wisest course of action is to make use of an approach which has won support from all national securities authorities. The proposed approach to the definition of professional investor, as set out in both reports, would seem to offer additional advantages from the perspective of a properly functioning single passport. The Commission will study these proposals carefully when preparing the revision of the ISD.
Finally, on the matter of the interface between this proposal and the well-known Lamfalussy blueprints, the Commission notes the observation made by Mrs Kauppi in her explanatory statement that the revised ISD is – I quote – "a prime candidate to be adopted and implemented according to any new approach which may be agreed in the light of the Lamfalussy reports". The Commission agrees with that view. The ISD communication clearly states that the lack of capacity to issue legally binding guidance on implementation of ISD provisions has been one of the principal factors contributing to the shortfalls and uneven implementation which have bedevilled the ISD. In view of its increased scope and complexity, a revised ISD is likely to suffer even more from such defects: hence the importance of the Lamfalussy report for this issue as for a number of other ones.
In conclusion, may I once again thank both rapporteurs for the important work they have been doing. May I also thank other Members of this Parliament who have intervened, in particular Mr Gasòliba i Böhm and Mr Karas. The Commission would like to assure Parliament that it will act accordingly.
It is well-known that the investment services directive is the bedrock of the EU legislative framework in the field of securities markets. That directive defines common regulatory parameters for investor protection and orderly markets. Five years after its entry into force it is now time to test its roadworthiness. The Commission believes that the judgment must be mitigated. While there have been significant improvements, cross-border provision of investment services continues to be dogged by legal uncertainty and impediments. More fundamentally, the securities trading environment has undergone seismic shifts which pose new challenges for EU regulation.
The Commission welcomes the timely and coherent responses of the European Parliament to the two communications on the investment services directive. The reports provide clear pointers for the Commission when it prepares its proposal for a modification of the ISD which is due for adoption by the end of this year.
I will now mention a few specific points which are contained in the report prepared by Mrs Kauppi. The most immediate and tangible objective of the ISD remains the provision of a single passport for investment firms. The Kauppi report cogently addresses the principal hurdle to be overcome, which is the overlapping and conflicting national rules for conduct of business. The approach outlined in the communication in Article 11 has been constrained by the inherent ambiguity of the provision and the absence of relevant jurisprudence of the European Court of Justice. Despite this, the communication sends a clear message, that the cross-border provision of investment services to professional investors should already be subject to home country conduct-of-business rules alone. The definition of professional investor put forward by the Commission on the basis of a consensus reached between national supervisors and FESCO represents a useful starting point.
Before mentioning some elements which are specific to the report prepared by Mr Katiforis, perhaps I could mention a few aspects which are common to both reports.
The forthcoming revision of the ISD provides an opportunity to clarify the conditions under which firms and investors engage in cross-border business. The Commission is convinced that the approach advocated by both reports is the only one consistent with a single market. Furthermore, it will ensure that both on-line and off-line provision of investment services will benefit equally from the country-of-origin principle of the e-commerce directive. The challenge is to reach this goal in a manner which offers sufficient safeguards to the retail investor. The ISD communication suggests that this requires some further convergence of conduct-of-business and advertising rules for retail investors. The Commission is hopeful that such convergence can be achieved within a relatively short time-frame.
I now come to a few points which are specific to the report prepared by Mr Katiforis. The Commission believes that inter-exchange competition and the emergence of infrastructures for cross-border trading of securities raise important new regulatory issues. These are not adequately addressed by the current ISD. The Katiforis report cautions against sweeping changes at this time. The Commission is acutely aware of the need to do no harm and of the risks of acting at a time when markets are in a state of flux. However, profound changes in the organisation of the trading infrastructure and increased involvement of household investors in equities investment call for fresh thinking. The Commission agrees with the Katiforis report that clarification of ISD provisions relating to exchanges and trading systems should concentrate on the risk to market integrity. The Commission also agrees that the primary focus of attention should be equity markets where retail investors are more exposed. Mr Katiforis, in his speech, said that he wanted a Commission proposal concerning the integrity of markets as soon as possible. As he may or may not know, the Commission is in the last stages of preparing a proposal on market abuse. That will hopefully be made known in a few weeks time.
A strengthened ISD will not in itself prevent the sizeable market corrections that we have witnessed in recent weeks. However, a revised ISD can help to contain market excesses by promoting transparency, protecting integrity and ensuring that investment firms always act in the best interests of their clients. Moreover, it can ensure that these protections are enjoyed by investors throughout the European Union, regardless of the origin of the security which they are purchasing or the exchange on which that transaction is executed. Without such a framework, the Lisbon objective of a single integrated capital market, which we all want and need, will remain a dead letter.
I shall now provide a more specific reply to two points raised: the first being criticism of the agreement reached within FESCO on the definition of professional investors, and the second a reply to what Mrs Kauppi said about the link between this issue and the Lamfalussy report."@en1
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