Local view for "http://purl.org/linkedpolitics/eu/plenary/2000-02-17-Speech-4-009"
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"en.20000217.2.4-009"2
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"Mr President, Commissioner, ladies and gentlemen, it is my hope that Parliament is prepared now to make a decision to extend and strengthen the financial market in Europe. As a new Member of the European Parliament, it has been very interesting and instructive for me to be given responsibility for this important matter. I should especially like to thank my colleagues on the committee for their willingness to find compromises; the President and the Bureau for lending a sensitive ear to this complex issue; the Commission, and especially the Commissioner, for being such worthwhile contacts; the Council; and also the division responsible for servicing the committee, for its selfless work. There was a good deal of agreement within the committee, apart from on a matter which, too, I hope it will be possible to solve.
I just want to conclude by saying that a number of Members of Parliament think that the present proposal goes too far, while others think that I am not sufficiently liberal. To them I just want to say, as the English expression goes, ‘You can’t have it all.’
The issue of UCITS may appear difficult, technical and a political minefield. I believe that some people do not even know what UCITS stands for. Allow me, however, to state very clearly that this is a question which really does affect the citizens of Europe in so far as it relates to how their savings are administered, what options there are available, how competition operates between countries in regard to different forms of savings, savers’ demand for security, and the opportunities Europe’s citizens have to save wisely for their old age. It is a question of weighing demands for liberalisation in the interests of a better market and higher yield against investors’ need for protection and security.
In the course of the 1980s, most markets in Europe underwent drastic deregulation. As a result, the national money and bond markets in particular developed very quickly over a period of a few years. Collective investment undertakings became an alternative to saving with a bank. In my own country, more than 60 per cent of Swedes save with a variety of funds. The security afforded by this type of saving is attributable to the broad range of investment vehicles in which the funds are placed. The capital and securities market has continued to be developed. The current Directive on UCITS has become antiquated and outdated. New types of funds have been introduced in the various Member States which are not permitted to market their units in other Member States. Obviously, this inhibits competition and innovation and restricts the public’s range of savings options.
The Commission’s proposal with which we are dealing today is in two parts. The first concerns the product, that is to say the funds. The other concerns the collective investment undertakings. The main purpose of the first proposal is to extend the investment opportunities of collective investment undertakings by allowing them to invest in units in other collective investment undertakings, for example units in funds, standardised options and futures contracts and deposits in credit institutions and in certain types of money market instruments. Special risk-spreading rules are proposed in respect of such investments, involving both quantitative and qualitative criteria. In addition, the Commission’s proposal puts forward special risk-spreading rules for funds whose aim is to replicate a particular stock index, a so-called index fund. The committee wishes to make the requirements in relation to the Commission’s proposal more stringent.
To guarantee transparency and prudence, investments in non-harmonised funds should only be allowed on condition that qualitative criteria, for example a transparency requirement and investor protection, are introduced. In addition, quantitative criteria (risk exposure) should be introduced.
Moving on now, then, to the point where there is (or, I hope, was) a lack of agreement, namely OTC derivatives. The Commission’s proposal makes a distinction between derivatives dealt in on regulated markets and derivative instruments not dealt in on regulated markets (so-called OTC derivatives). The Commission’s proposal takes it as read that OTC derivatives are not one of the general types of investment that UCITS deal in, but that they should only be used to achieve efficient portfolio management and to hedge exchange-rate risks. In recent years, the derivatives market has grown very rapidly in almost all the Member States. It is therefore important that regulation of derivatives is flexible so that the market is not tied down ahead of future developments. The definitions ‘standardised futures contracts’ and ‘standardised options’ should therefore be combined to form a new definition, ‘financial derivative instruments’, which also covers OTC derivatives. Investment in OTC derivatives, however, should only be allowed on condition that both quantitative and qualitative criteria are introduced. They are very important in this case. They must be introduced to guarantee the protection of investors.
The Commission’s second proposal focuses on the bodies which manage UCITS, that is to say management companies. The rules for management companies, for example the conditions for starting up and conducting business, are brought into line with the existing rules and regulations. A crucial point is that rules are proposed for so-called simplified prospectuses. Relevant information must be given to prospective unit-holders in a fund in a language which is readily understandable to investors in the host country. In this regard, too, the committee is prepared to go further than the Commission.
A question which has also been discussed in the committee is that of the capital contribution to be required from management companies. There are different views on this. One of the most important things, for me, personally, is that the common regulations should not cause smaller companies to go under.
During the months that I have been working on this report, one very clear demand has emerged, both from industry and from those who represent the consumer. The current situation is not good. Both savers and the industry need modernised regulations for the whole of Europe. I believe that today’s proposal strikes a good balance between liberalisation of the market and the desire for effective protection for investors."@en1
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