Local view for "http://purl.org/linkedpolitics/eu/plenary/2000-02-17-Speech-4-025"
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"Mr President, could I first of all express my heartfelt thanks to rapporteur, Mr Olle Schmidt, and the members of the Committee on Economic and Monetary Affairs, which has principal authority, as well as the rapporteur, Mr Brian Crowley and the members of the Committee on Legal Affairs and the Internal Market, whom I would like to thank for their thorough and important work on the refinement and extension of the proposals.
Moreover, I have taken note of the request made by the Committee on Economic and Monetary Affairs to codify the entire text, once it has been approved – Amendment No 7 of the first proposal and Amendment No 22 of the second proposal. The Commission is in favour of codification and will, in the foreseeable future, once the proposals have been approved and subject to its right of initiative, concentrate its efforts on drafting a codified version. However, I cannot accept the wording of the consideration as it stands.
The Commission is also of the opinion that a number of the amendments proposed by the Committee on Economic and Monetary Affairs would fundamentally change the content of the first proposal. This is why the Commission regrets that it is unable to accept the following amendments to the first proposal:
Amendment No 8 because the proposed, general reference to assets ‘covered by this directive’, instead of the more precise reference to assets ‘mentioned in Article 19 of this Directive’, hinders implementation. This Amendment could also lead to different interpretations in the Member States, which might well look for similar instruments in other articles of the directive.
Amendment No 16 jeopardises the protection of investors because a blocked security deposit with a third party custodian is a contradiction in terms. Neither are securities lending transactions via securities clearing houses or exchanges – as opposed to the purchase and sale of securities – automatically covered by these institutions. We cannot, therefore, adopt the proposed Amendment for this reason.
Amendment No 42 relates to a provision which was not changed by the proposal and which has not caused any problems since the implementation of the directive. I therefore cannot see any reason why Article 22, paragraph 3 should be omitted and reject the amendment for this reason.
Amendment No 44 cannot be accepted because, if it is prescribed that non-harmonised funds are subject to rules which have been ‘imposed by the directive’ concerning lending, borrowing, selling from an uncovered position and the third party custodian, this will indeed lead to a situation where very few funds, for example Swiss funds, would be eligible for investment. This goes against the Commission’s intention to widen the scope of investments, and the wording thereof could contravene GATS agreements.
Amendment No 47 is unacceptable as far as the proposed changes to the first paragraph of Article 22a are concerned, because this proposal completely clashes with the spreading rules of Article 22, especially when the UCITS are obliged to indicate a point of reference in their prospectuses, as discussed in the Council.
The key issue regarding the first proposal, however, is Parliament’s amendment which allows the use of over-the-counter instruments for general investment purposes. The Commission points out that, according to the national legislation of some Member States, the use of OTC derivatives for general investment purposes is already authorised. However, the Commission will be suspending its position, given the intrinsically high risks of these investments compared to the more traditional financial instruments. I believe that OTC instruments could lead to problems, because they are not liquid, the price is difficult to estimate and they entail uncovered counterparty risks. It seems inconsistent to opt for an extremely prudent approach with regard to investments as non-harmonised funds or deposits and, at the same time, freely to allow investments in clearly more risky OTC instruments. By rejecting the rapporteur’s Amendment No 39, the Committee on Economic and Monetary Affairs has aligned itself with the Council.
The upshot of this amendment by Parliament would be that funds are allowed, in theory, to invest in OTC instruments and to trade the rights of participation in their funds across the entire internal market. In practice, access to other EU markets for these theoretically harmonised funds which invest in OTC instruments can be blocked by applying different national legislative frameworks and protective measures against OTC investments. This would contravene the fact that EU legislation applies to all funds which invest in OTC instruments. Given this possibly negative effect on the internal market and the risks inherent in OTC instruments, the Commission cannot accept Amendments Nos 12, 15, 37, 38, 39, 43, 46 and 48 and parts of Amendments Nos 17, 36 and 45 which pertain to OTC instruments.
As far as the second proposal is concerned, I already mentioned that the Commission will take into consideration many amendments. Despite this, there are some amendments which the Commission cannot adopt: Amendment No 26, which does not seem to observe the order in which licences are granted and activities start; parts of Amendment No 27, especially the part where the prevention of conflicts of interests is deleted, the delegation of tasks is restricted to components of management decisions and the general decision-taking of Member States concerning delegation is repealed; Amendment No 31 because the Commission is of the opinion that the application of Article 44 of the directive in unchanged form has proved adequate for the trading in rights of participation in UCITS.
Since the approval of Directive 85/611, the investment funds sector has undergone lengthy development and it is now important to modernise the rules. The aim of the new proposals is to maintain the highest level of protection for the benefit of investors, which is an essential precondition for market integration resulting from the launch of the euro. Since the average European family puts its savings in investment funds, the proposals contain provisions on prudent management – and I would like to underline this – prudent management as far as investment policy and risk-spreading are concerned.
The application of the provisions of the directive concerning the performance of services in the field of investments in securities, better known as ISD, is therefore unnecessary and could lead to difficulties or confusion.
Amendment No 33 is ambiguous regarding ‘the language’ of the guest member state, especially when there are various official languages, and it is questionable what will be gained from translations in two other languages.
Amendment No 34 is unacceptable because a simple deletion of the reference to pension funds can create ambiguity as to whether or not a management company can carry out these activities. I think that pension funds could also benefit from this possibility, provided that management companies are not lumped together with pension funds, but may only carry out part of the management per delegation.
Amendment No 35 cannot be accepted because legally, it cannot command any authority. Management companies which are denied access to a Member State would need to re-incorporate as a different legal entity in order to be permitted in another Member State.
Amendments Nos 49, 50 and 51, which share the same basis, are not acceptable because they make substantial changes to the consistent approach of the Commission regarding the regulations of third party delegation, and do not offer sufficient security to the competent authorities and investors.
I would like to finish off by commenting on the remarks made by a few Members this morning and, Mr President, with your permission, I will do this in English.
The two proposals form a coherent whole. The first proposal extends the number of instruments in which an ‘undertaking for collective investment in transferable securities’ (UCITS) can invest. As already remarked in this session, UCITS are key players within the modern capital markets. Their presence offers the opportunity to a larger number of ordinary investors to participate in these markets, in which the principle of risk-spreading is taken into consideration, protected by appropriate supervision. Since diverse types of investment are permitted, private investors can also benefit from all the advantages of new investment techniques.
The second proposal expands the role which these important intermediary organisations can play within the EU capital markets in terms of developing the investment funds sector. By allowing branches to be set up and certain services to be provided on a cross-border basis, these organisations will at long last be able to apply the freedoms of the Treaty of Rome, which they have been denied for all these years.
The Commission welcomes many of the clarifications proposed by the Committee on Economic and Monetary Affairs with open arms and will adopt a large number of its ideas. The Commission will adopt Amendments Nos – and I am now referring to the most recent numbering – 2, 3, 4, 5, 6, 9, 13, 19 and 21 for the first proposal, and 23, 28 and 32 for the second proposal, since these are really very useful clarifications and improvements.
I also value the ideas put forward in Amendments Nos 1, 10, 11, 14, 18 and 20, although the wording needs to be adapted.
I also endorse the rationale underlying the general maximum percentage of the counterparty risk in Amendments Nos 17, 36 and 45.
I can also accept the idea in the second proposed paragraph of Amendment No 47. All the amendments I have listed so far pertain to the first proposal.
As far as the second proposal is concerned, the ideas of Amendments Nos 24, 25, 29, 30, 41 and some parts of 27, which contain sensible suggestions, can be adopted, again formulated appropriately. The Commission has suggested adopting the content of these, with certain changes in the wording."@en1
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