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Procedure : 2006/2081(INI)
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Texts tabled :

A6-0170/2006

Debates :

PV 03/07/2006 - 14
CRE 03/07/2006 - 14

Votes :

PV 04/07/2006 - 6.16
CRE 04/07/2006 - 6.16
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P6_TA(2006)0294

Verbatim report of proceedings
Monday, 3 July 2006 - Strasbourg OJ edition

14. Consolidation in financial services Mergers and acquisitions (M&A) developments around Europe's stock exchanges (debate)
PV
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  President. The next item is the joint debate on the following:

- A6-0170/2006 by Mr Muscat, on behalf of the Committee on Economic and Monetary Affairs, on further consolidation in the financial services industry (2006/2081(INI));

- the oral question (O-0069/2006 B6-0317/2006) by Mrs Berès, on behalf of the Committee on Economic and Monetary Affairs, on mergers and acquisitions developments around Europe’s stock exchanges.

 
  
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  Joseph Muscat (PSE) , rapporteur. – (MT) The issues brought up by the debate we have before us are many, important and sensitive. For this reason, I choose to begin by immediately giving attention to the main emphasis of this report, on which a wide convergence has significantly been reached in the Committee for Economic and Monetary Affairs. We have four messages to put across.

First of all, we acknowledge the consolidation process in the field of financial services as one which has so far had positive economic effects. Secondly, it is the justly regulated, transparent market, free of unjustified obstacles, which decides what the level of consolidation should be. Thirdly, our role as legislators is to ensure that this process, particularly the acquisition and the merging of banks, leads to greater competition and not to the creation of new monopolies. Fourthly, competition should mean a true and wider choice among quality products and services, reaching the broadest possible spread of consumers.

In my opinion, consumers should be the ones who benefit from the possible advantages of this process. I do care that financial institutions gain from consolidation, but I am much more interested in the greatest benefits going to the consumer, in the form of wider choice, better products, more efficient services and more competitive prices. By consumers, we mainly understand individuals and families, especially those who are more vulnerable. However, to these we should add companies, above all small and medium-sized companies which are the core of our economy, and which should be given the service they deserve.

At this point, those who share my social ideal may find themselves confused. Yes, it is good that consumers have more benefits thanks to consolidation, but should it be the workers of financial organisations who pay the price? We cannot bury our heads in the sand and pretend that this problem does not exist. News about the acquisition and merging of companies often does not excite workers with the new prospects that this may entail for them. On the contrary, we cause them to worry that the money-saving moves being mentioned, and those yet to be mentioned, take place at the expense of their working conditions, or even worse, at the expense of their job. Is there no solution at all? I have no doubt that serious institutions look to other methods of efficiency before considering turning towards the workers, but there are some who do not set the example of social responsibility towards the community.

The point we surely need to support is the one which workers' representatives from around Europe made with me: that is, the need for them to be informed and involved in the process as early as possible. There is another point related to this. Countries' economies, especially those in transition or in the process of developing, are not simply a cow which is there to be milked. Corporations have the duty to truly invest in these countries, with the creation of new and better work opportunities which provide access to a higher quality of service. The new environment being formed in the field of financial services will push vital questions onto us as legislators, among them the issue of supervision.

Many of the national authorities are doing an excellent job, but the issue is much bigger than this. Given the shape that the market is taking, is the field of supervision still good enough to protect delicate interests, such as those of the economy and of consumers? There are many different answers to this question, even among ourselves. Nevertheless, we need to begin discussing them, and not leave them on the shelf. If we do not begin to deal with these questions, the danger will be that in the not-so-distant future, when a crisis may arise, we will not have the tools to face it, whatever these tools may be. It is also for this reason that the main recommendation of the report is to ask for a committee of independent experts, so that in a period of six months from when the mandate begins, it provides us alternative proposals which we can consider before taking decisions in this field.

It would be remiss of me not to end my intervention by thanking all those who helped in the drafting of this report. Firstly, I would like to express my gratitude to my colleagues in the Socialist Group in the European Parliament and the representatives of the other groups for the proactive way in which we worked. I would also like to thank Commissioner Charlie McCreevy and his Cabinet for always being ready to discuss. I also thank those who took the time to put forward their opinions on the report, the secretariat of the Socialist Group, and the secretariat of the Committee for Economic and Monetary Affairs.

Mr President, Commissioner, fellow colleagues, I believe that we have a concrete, balanced and positive report, which can send a strong signal that the European Parliament has a clear vision for this sector, which is of such importance to our economies and to our citizens.

 
  
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  Pervenche Berès (PSE), author. (FR) Mr President, Commissioner, the European Parliament’s Committee on Economic and Monetary Affairs thought it necessary, at this stage, to put an oral question on the state of discussions concerning mergers and acquisitions developments around Europe’s stock exchanges.

I said Europe’s stock exchanges because we in this Parliament’s Committee on Economic and Monetary Affairs have for many years now been working for the construction, consolidation and integration of a European financial market, and I think the question we are faced with today is really whether or not there should be European stock exchanges. We as legislators cannot in fact be interested in every segment of the financial market, since this question, no doubt the most fundamental, is solely a matter of strategy for the market players. The issue lies beyond that: it is an issue of public interest that the legislator needs to take hold of and to which the Commission, as the holder of the legislative initiative, cannot remain indifferent.

The situation of the stock exchanges today reminds me of the history of the euro, and I want to draw your attention here to something we all need to remember: without political intervention, that is if it had been left to market forces alone, the euro would not exist today, or else it would be quite different from what it now is: a currency that inspires confidence, that is shared by so many Member States and that so many Member States aspire to adopt.

What we need for the stock exchanges is a solution in the same spirit as the euro: a solution whose conception goes beyond mere market forces and market logic. From this point of view, Commissioner, you who have the law-making initiative have a tremendous responsibility. That is something, of course, that you share with Mrs Kroes, who has her own responsibilities in the field of competition.

What concerns observers and many parliamentarians today, however, is that the Commission, despite its power of initiative, remains content to arbitrate between opposing interests, analysing market situations and assessing the chances of getting a text passed in the Council, instead of trying to rise above all that and take a European perspective.

From this point of view I believe we must follow the negotiations about stock exchange restructuring very closely because there is one point, Commissioner, and you are as aware of this as I am, that very much determines the state of those negotiations: it is not what happens on the securities market, but what happens in the back office – a question that has been before the Commission for years.

A number of us in Parliament thought we ought to deal with the back office at the same time as talking about the market. Some, because it corresponded to their market strategy, wanted to keep the two separate. They now have the text on the market and think that competition ought to reign supreme in the back office. Some of the questions raised will not, however, be resolved by market forces alone, because the market cannot take everyone’s interests into account.

Last time this Parliament expressed an opinion on this subject, it said it was waiting for an impact study before deciding whether a legislative initiative was necessary. That impact study is in your hands, Commissioner, but you have not yet allowed us to see it. The wildest rumours are circulating, suggesting that you might go so far as to amend the text of that impact study before reporting to us on it. I think this debate will allow you to enlighten us on all these points, Commissioner.

My colleagues will be addressing other matters. There are nevertheless two points to which I would again like to draw your attention in conclusion. First the consequences of the following decisions at European level, consequences that have not been thought through or anticipated: one, the quotation of the stock markets; two, the withdrawal of the institutional investors – the big banks and insurance companies – which will have been the first to make their profits, leaving the door open for what are called the hedge funds to be the main players on the European stock exchanges.

Then, I will draw your attention to the questions of supervision and corporate governance. We can in fact see that a merger between the New York Stock Exchange and Euronext could be to the detriment of any European governance.

 
  
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  Charlie McCreevy, Member of the Commission. Mr President, in the few minutes I have this evening, I am going to follow current financial trends and consolidate my opening remarks in covering both Mr Muscat’s report and the oral question by Mrs Berès on behalf of the Committee on Economic and Monetary Affairs.

As I emphasised during the hearing organised by the Committee on Economic and Monetary Affairs in January, the real debate cannot be on more or less cross-border consolidation. That is for the market players to decide, not the politicians. Rather, the core of the debate is on how to create the optimal regulatory and prudential framework for the European financial sector to thrive, delivering concrete and substantial benefits to the consumers and boosting economic growth and job creation.

That is why I would like to warmly congratulate the rapporteur, as well as the shadow rapporteurs, and members of the Committee on Economic and Monetary Affairs for their work. With such complex issues, it is not always easy to identify the real questions, to take into account all the different points of view and strike the right balance to set the way forward. Thanks to the rapporteur’s open, transparent and inclusive approach, the report does just that. It brings a substantial contribution to the debate.

I believe that there is a broad consensus on the main obstacles identified, shared by the Council conclusions adopted by the Ecofin Council in May.

We must improve the cost efficiency of the supervision of cross-border activities. In that respect, as noted in the report, further convergence of supervisory practices and standards is essential. To achieve this objective, we do not need a supervisory ‘big bang’, but rather to optimise the functioning of the Lamfalussy structure. There are concrete projects that can be implemented rather soon. The role of the Level 3 Committees is essential, for instance to implement common reporting standards and thus avoid costly and unnecessary duplicative requirements. A number of such concrete improvements have been identified and were endorsed by the Ecofin Council last May.

I would like to give a push to accelerating work in this area. We cannot have an internal market if companies are going to have to keep under-utilised capital tied up because we do not have in place sufficient cooperation between supervisors. I intend to come back to that in the time ahead. There is a regulatory and supervisory cost that should be evaluated.

The report rightly underlines the implications of increasing integration for supervision. Some complex questions, such as deposit guarantee schemes or the issue of lender of last resort, must be re-examined in that context. The Commission’s White Paper on financial services policy has identified those questions. This will surely be one of the most interesting policy debates for the coming months and years.

Besides supervision, the fragmentation of retail markets must also be addressed. The current difficulties in selling similar retail products in different countries is a major stumbling block in exploiting scale synergies.

I fully agree with the report that further integration, notably in the retail market segments, should not occur to the detriment of consumers. We have means to prevent that from happening and we will use them. The ongoing sectoral inquiries, under the supervision of my colleague Commissioner Kroes, are a good example.

A third area calling for our attention is the one related to impediments to corporate reorganisation on a pan-European basis. We are currently consulting on future priorities for company law and corporate governance to identify how we could make further progress.

I would like to thank the rapporteur again for his work. We now have a shared analysis of what the main obstacles are. Our challenge for the coming years will be to remove them.

Turning to the oral question by Mrs Berès, let me be clear: the Commission believes strongly that market forces and shareholder choices should determine the optimal shape of exchange consolidation – not bureaucrats, not politicians. We should not be in the business of ‘picking winners’ or trying to shape markets according to a bureaucratic vision of what is best for European shareholders, investors and issuers.

In the long run, European investors and European corporations seeking to raise capital will be best served by world-class institutions doing business in a world-class regulatory framework deploying cutting-edge technology and able to provide the breadth and range of services they want. Those services might include the ability to trade in a multitude of currencies, time-zones and instruments. There are strong commercial pressures driving consolidation. If a deal makes commercial sense, and if the competition law and regulatory aspects can be adequately dealt with, then we will not stand in the way.

However – and this is the key point – the Commission considers that it is essential that financial market business in the jurisdiction of the European Union is regulated by European and Member State rules, and by our regulators. Of course we will be very vigilant to ensure that current levels of investor protection and market integrity will be maintained. We believe in strong and effective regulation of European marketplaces. Otherwise, we would not all have put so much effort into getting the MiFID right, as well as the other aspects of the Financial Services Action Plan that we have laboured on for so long together.

We note the preliminary assessment from some regulators in Europe and the United States that the mergers being discussed will not mean significant changes of regulatory responsibility. But if there are any spillovers, regulators should work out constructively together what the rules are going to be and how to cooperate.

I will be maintaining close contact with the college of Euronext supervisors in the time ahead so as to ensure there is a full understanding about how all these issues will evolve.

So there is no question of imposing new, extra-territorial burdens on European businesses that would put us at a disadvantage and jeopardise our internationally successful and developing financial markets. We know European users and shareholders do not favour that either.

On competition issues, the Commission’s competences in merger assessment are laid down in the EC Merger Regulation No 139/2004. Within this framework, it is up to the parties in the first instance to inform the Commission as to whether, in their view, the relevant turnover thresholds are met for Community competence. The New York Stock Exchange and Euronext have informed us that this transaction would not meet these thresholds.

On clearing and settlement issues, in the course of our work we have been trying to determine the best range of measures – legislative or not – that will deliver improved competitiveness in these areas. As regards the steps needed to deliver those benefits, the Commission has not yet taken a decision. All options remain on the table; a decision will probably be taken shortly.

 
  
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  Karsten Friedrich Hoppenstedt, on behalf of the PPE-DE Group. – (DE) Mr President, I need hardly say that I very much welcome the report on further consolidation measures in the financial-services industry, which was adopted by a large majority in the Committee on Economic and Monetary Affairs, and I should also like to convey my sincere thanks to the rapporteur for our constructive cooperation.

The consolidation of the banking sector among most of the EU Member States is not so far advanced as it is within some individual countries. In accordance with the Lisbon Strategy, the financial-services industry has to take the lead here, and it is aware of this and is willing to play its part.

How is the European banking sector structured? Where do its strengths lie, and why has little consolidation taken place in Europe? I welcome the initial studies of these matters conducted by the Commission. Regardless of whether we are considering the financial-services industry, education systems, the linguistic landscape or regional differences, Europe’s strength has always lain in its diversity.

In the realm of financial services, this has three main implications: firstly, a financial-services sector that is working for European business will necessarily comprise diverse operators, namely those whose size enables them to face up to international challenges and those that are mostly concerned with regional markets. Small and medium-sized enterprises are active in these selfsame regional markets, where they account for the bulk of Europe’s economic potential. This diversity must be preserved within the European Union, and I am pleased that we have addressed this point clearly in our report through the amendment tabled by Mrs Berès and others.

Secondly, what does a pluralist banking structure mean in the European Union? It means nothing more than institutions in France, Spain, Hungary and so on being able to follow different business models with different commercial aims. Which model or aim succeeds is left to market forces. Perhaps this is just another of those areas where Member States can adopt diverse approaches rather than seeking the ideal way.

Thirdly, European consumers differ in their cultures and lifestyles and will therefore demand different financial services too. Only a variety of products can guarantee effective and efficient financial services in Europe that are tailored to the needs of consumers and the economy.

The hearing in the Committee on Economic and Monetary Affairs is also mentioned in this report. The report backs the European financial-services industry in its efforts to remove the real obstacles to cross-border consolidation. There has also been positive feedback from the European Central Bank.

 
  
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  Ieke van den Burg, on behalf of the PSE Group. (NL) Mr President, although the Muscat report and the oral question we have accurately reflect my concerns about the developments, of the questions we have asked with regard to the developments in stock exchanges, Commissioner McCreevy has only really answered the first part of Question 2, namely whether we should infer from the silence surrounding these developments that you really think that this is only a matter for the shareholders. That is apparently your opinion, and I should like to stress that it is one that I do not share.

I think that you certainly cannot say that it is only a matter for the shareholders. There are many other stakeholders with major interests, including users of the stock exchanges, companies who are listed on them, private and institutional investors, as well as pension funds that invest via the stock exchanges, but also financial institutions that offer alternative investment routes have their own interests, and I am referring here to the investment banks with in-house dealerships offering alternative platforms, and the hedge funds.

I do not know whether you are familiar with the book by Mr Seifert, former CEO of the Deutsche Börse. In it, he describes very accurately how hedge funds, based on other interests, have also exercised their shareholders’ rights within the battle surrounding the proposals which the Deutsche Börse made at the time in an attempt to take over the London Stock Exchange. I do not know whether you read German, or whether a translation is now available, but it would be good to take on board the advice from somebody with first-hand experience in converting a stock exchange, which the users owned, to a listed company, and who can now also see the drawbacks of this pure shareholder’s mentality.

I think that you will need to focus more on the general interest that is at stake. As politicians, it is incumbent upon us to consider this public interest, and that is clearly a task at European, rather than just national, level. It is certainly not my intention to elicit from you the combination that would work best and whether it should be a European or transatlantic stock exchange. I do think, though, that it is up to the Commission to prescribe the conditions, and what is needed based on the interests of those other stakeholders, the users, of the European economy.

With regard to this transatlantic dimension, you have already stated that we should not adopt the rules of the United States. In that respect too, there are various experts, including Harvey Pitt and Callum McCarthy who indicate that this is certainly not that cut-and-dried. Accordingly, what we expect from the Commission is clear answers as to what the consequences are and how we can prevent this American influence from extending into possible constellations in Europe.

As a final remark further to the Muscat report, I should like to stress our proposal to set up a committee of wise men. I think that we need to bring about European supervision as a matter of desperate urgency. The stock exchanges are an example of a sector where that is very much needed. Similarly, the consolidation of financial institutions elsewhere demonstrates that we cannot afford to leave this matter to be dealt with at national level alone, because other interests would then come into play. Clearly, in this globalising economy, we urgently need a European outlook and European supervision, and it would be great if a committee of wise men were to advise you in this respect.

 
  
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  Wolf Klinz, on behalf of the ALDE Group. – (DE) Mr President, Commissioner, ladies and gentlemen, whatever may be said to the contrary, the single market has not yet been completed. Financial services is one of the main areas where further improvements are possible and necessary. You, Commissioner McCreevy, are trying to change this state of affairs. The European Parliament is happy to support you in this venture. The Muscat report gives the House an opportunity today to throw its weight firmly behind the immediate removal of unwarranted obstacles to mergers and acquisitions. I should like to congratulate Mr Muscat warmly on a very balanced report and thank him for the open and constructive cooperation.

The political frontier between two Member States of the European Union must not be a barrier to cross-border mergers or acquisitions. The decision to merge with or acquire a company should not be a political matter but should depend solely on whether the merger or takeover will benefit shareholders and staff as well as customers and business partners in Europe or round the globe and will thereby make the companies in question more competitive. On no account, however, must a merger or acquisition infringe EU competition law. In short, the task of politicians – as Commissioner McCreevy has said – cannot be to decide whether more or fewer mergers will take place but only to ensure that the whole system is not thrown out of balance.

With regard to the possible merger between the New York Stock Exchange and Euronext, I take the view, unlike the previous speaker, that politicians should not play an active role here. They must only draw a line where it becomes apparent that American attitudes to supervision are suddenly establishing themselves in Europe through this merger. That possibility cannot entirely be dismissed if we consider that even money-market transactions between European parties are increasingly being conducted, to all intents and purposes, in accordance with US market legislation.

Unwarranted barriers of a fiscal or supervisory nature must be removed. At the request of the Ecofin Council, the Commission has been working to identify the precise nature of these barriers. As a concrete result of these efforts, let me cite the forthcoming publication of the amendment to Article 16 of the Banking Directive. Supervisory authorities must, of course, have teeth. In Article 16, however, the grounds on which the competent supervisory authority can reject a cross-border merger or takeover are too vaguely defined. Assessment based on the ‘fit and proper’ test leaves the supervisory authority a great deal of scope to interpret the criteria and is therefore open to abuse. Recent cases have clearly illustrated this defect.

Transparency, logical decisions and hence predictability for companies are aspects that we shall have to discuss over the coming months. As the parliamentary rapporteur on these issues, I await the Commission’s proposals with particular interest.

Lastly, let me make a few comments on the tabled amendments. I support Mr Muscat’s proposal for the appointment of a committee of wise men to examine the effects of consolidation and to study issues of supervision and supervisory law, of financial stability and of crisis management. I also consider it right and proper that the committee be given six months to compile an authoritative report with specific proposals on the issues that have been highlighted.

My own amendments are designed to make the draft somewhat more impartial. It is about the single European market and the removal of unwarranted barriers. In other words, Parliament must not seek to set the specific situation in a Member State in tablets of stone or to change such a situation at all costs.

Let us set aside our national spectacles. Let us ensure that the industry and consumers are given the single market they desperately need. This is the only route to success in the global marketplace.

 
  
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  John Whittaker, on behalf of the IND/DEM Group. Mr President, the Muscat report applauds the consolidation and merger and acquisition activity that has been taking place in pursuit of these elusive economies of scale and scope. However, I am not aware of any evidence that consumers are more satisfied, that risks have been reduced or that the cost of capital has been reduced. On the contrary, the main effects of the financial services action plan to date seem to be that financial services at all levels – retail banking, stockbroking, investment banking – are all being rather seriously hampered by onerous and largely unnecessary reporting requirements.

However, the issue I want to highlight – and which the report acknowledges – is crisis management, or, to put it more bluntly, who bails out. Sooner or later some large multinational bank is going to get into difficulties, not necessarily through bad management, but simply because banks, like any other business, can go bust. Banking, like any other business, is risky. There will be calls for bail-outs and guarantees to forestall contagion and to prevent the breakdown of the payment system. At that point, cooperation between the national authorities becomes non-cooperation, as each national authority strives to limit its own financial liability.

Nobody has thought this through. The report mentions the lender of last resort without telling us what it is or how it is going to work. So, instead of the blind pursuit of the single market in financial services, I believe it would be prudent not to encourage any more consolidation or cross-border merger activity for the present, until such time as the European Union has a single fiscal authority to take the potentially large financial responsibility when things go wrong. Fortunately, I think that time is very far in the future.

 
  
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  Gunnar Hökmark (PPE-DE). – (SV) Mr President, I should like, if I may, to agree with my party colleague’s, Mr Hoppenstedt’s, views and, especially, with his appreciative remarks about the work done by the rapporteur. I think there are three important things to say in this connection. Firstly, experience of consolidation in the financial market has been positive. It might, if anything, be said that there is too little cross-border consolidation. Where we have seen such consolidation, it has been an expression of genuine cross-border integration and produced sound conditions for consumers and customers.

Another thing that it is important to say in this connection is that, when we debate the situation in Europe, we should do so with the global financial market in mind. We need not only strong European players but also strong players in Europe if we are to have both ready access to capital, notably for investment purposes, and a powerful financial dynamic. It is in this context that it is important for major companies to be able to develop in Europe, and it is, therefore, also important to welcome the consolidation we see.

In this connection, I should also like to point out that it is important for the European economy to develop the transatlantic market. Irrespective of what develops as regards the transatlantic issue of European and US stock exchanges or purely European ones, it is important to exploit the opportunity we now have. We have an interest in, as far as possible, upholding European rules when it comes to reporting, sound company management and common rules governing competition. I should like to call on the Commission not to intervene in the discussions about transatlantic stock exchange mergers and not to steer matters in one particular direction or another. Instead, it should use these discussions to emphasise European rules, the implementation of which could give European financial markets a strong position in the global economy. That is an opportunity of which we must take advantage now.

 
  
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  Antolín Sánchez Presedo (PSE). – (ES) Mr President, I would like firstly to join with all those who have congratulated Mr Muscat on his report on consolidation in financial services and particularly on his proposal to create a committee of ‘wise men’.

I shall refer primarily to the phenomena of mergers and acquisitions in European stock exchanges. For the last thirty years, technological development, the free movement of capital at international level and financial innovation have led to profound changes in the capital markets and have increased domestic savers’ participation in the financial markets, in general, and in the stock market in particular. In some European countries their participation is equivalent to around a third of their savings and in others a fifth.

The demutualisation of stock exchanges, which began in Asia in the middle of the 90s and then at the beginning of this decade spread to the main European centres of London, Paris and Frankfurt, and is still taking place, as is currently happening in Spain with the process of public offerings, has led to restructurings and to concentrations in the internal market, as in the case of Euronex and the Scandinavian market. All of these are positive developments, since they lead to reductions in costs and the extension of transactions and the quotations markets.

In my view, the recent announcements of transatlantic mergers and acquisitions represent a qualitative change. I say this because, despite the increasing convergence taking place on each side of the Atlantic, substantial differences remain between the two markets, which have been identified both in the model of the stock market and in the actual structure of the market and in the elements of post-negotiation.

Furthermore, this is happening at a time when the European Union, having approved the MiFID and when it is going to be applied in the future, intends to complete the European financial market. At the same time, an important debate has begun on the updating of the stock markets. This debate relates to their role in the future, to organisation, structures, transparency, economic aspects, competence, governance and infrastructures.

This is a time of very significant changes. There are therefore many questions to be cleared up and it is not just a matter of simply acting on a case-by-case basis. Rather, we must identify the European Union’s general interests, assess the impact of the operations announced on those interests, consider the consequences of the operations from political, legislative and economic points of view and, of course, seek the best necessary response, bearing in mind that the financial policy and the stock market policy have a significant impact on the European Union’s monetary policy. I also believe that we must assess the best method for ensuring transparency, stability and balance on the part of the European Union with a view to the proper global operation of the financial markets. That is the task that we must carry out.

 
  
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  Sharon Bowles (ALDE). – Mr President, I too would like to explore the transatlantic mergers of the stock exchanges. We have seen on the front page of the Financial Times several times and heard from the head of the New York Stock Exchange that it is possible the US Sarbanes-Oxley corporate governance rules could apply to the merged exchange, with jurisdiction in US courts.

Of course not everybody agrees with that analysis. Indeed, at the New York Stock Exchange’s second annual securities conference a couple of weeks ago, Commissioner Annette Nazareth of the US Securities and Exchange Commission said that the merger seemed to call for a common technology strategy but not a common exchange platform. So there will be a common holding company under US jurisdiction, but Euronext would not register as a US exchange and would not offer its products on the US market. On that basis, Sarbanes-Oxley, in her opinion, would not apply to Euronext.

However, it would seem to me that neither would the benefits of a merged market, at least from the Euronext side. In fact she said a mere affiliation with a US exchange does not subject a non-US exchange to US law.

However, with all the excitement and interest in cross-Atlantic acquisitions, it seems likely that perhaps something more momentous than a mere affiliation was afoot, at least in the minds of some. Is it possible that some kind of asymmetric process, with the US base parts registering in Europe but not vice versa, may occur? What would be the consequences for the European market?

Commissioner Nazareth was very careful with her words in referring to the technology platform. Is it in fact practical for there to be separate IT platforms in the long term? I doubt it. There would be a desire to integrate and at that stage it would seem Sarbanes-Oxley would surely come into play, which was why she was so careful with her words.

Therefore, unless steps are taken to reach an international standard sooner rather than later, there could well be problems ahead. I would say there is a role for the bureaucrats here as well as the shareholders. In Europe we have experience of having to balance different legal traditions and practices and that is one reason we should be taking the lead in the future of regulation.

 
  
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  Zsolt László Becsey (PPE-DE). – (HU) I would like to congratulate Mr Muscat and all those who took part in the preparation of the report, which required a considerable amount of thorough work, and produced a balanced document.

I believe that there are two factors that have a significant influence on the consolidation of financial processes. One of them is, with reference to the Lisbon process, the building of the internal market and the increase in competitiveness. The other, with reference to enlargement and alongside the advantages of expanding the market, is the implementation of cohesion, as well as equality and unity between Member States.

Unfortunately, in respect of the latter, the balance has been upset. This is due to the fact that while in financial processes the sensitivity of new Member States is pushed to the background with the declaration of increased opening-up, the determinant factor in the case of labour-intensive services is the sensitivity of old Member States, rather than internal liberalisation. This overturns the balance in the services sector. Incidentally, this is why I cannot accept the consideration of social or environmental protection aspects in the consolidation of financial services or of the financial sector.

Additionally, I believe that it is important that we move forward with some regard for solidarity. We should not allow the development of a situation where market supervisory authorities in recipient states – and new Member States are basically recipient states – are defenceless against the dominant market supervisory authorities of old Member States. We can only move forward in the area of liberalisation if we impose strict requirements for cooperation, and, in particular, for transparency. At the same time, I agree that in order to facilitate concentration, we must help change the tax systems, and in particular the VAT regime.

I would also like to stress that the over-concentration resulting from mergers and acquisitions should be analysed both from the perspective of the emerging internal market and for the sake of the cohesion of Member States trying to catch up. This is required because in some situations it may happen that there is no over-concentration at Community level, but it is present at Member State level, which is damaging to competition in that Member State. Therefore, competition policy impact assessments must pay particular attention to this, as signalled by recent examples. Accurate procedures will be able to resolve this difficult situation, and will also be able to ensure that oligopolistic conditions are truly excluded, without allowing them to be replaced by unilateral protectionism.

 
  
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  Margarita Starkevičiūtė (ALDE).(LT) Commissioner, I am very sorry that today, you did not understand why we raised this question and invited you to this Chamber. It certainly was not because we wanted more market rules, but because we lack political leadership backed up by the European Union's strategic guidelines for financial market development. We all know very well that the European Union has fine traditions of principles-based financial regulation. These principles must be proclaimed. We miss the declaration of these principles, and because of this feel confused in the market which leads to various rumours, various opinions. Hopefully, now that we have an excellent European model, which developing markets also follow readily, we will be able to protect it; however, at the moment, it seems that the Commission's, forgive me, hesitation is allowing that model to be washed away. Take, for example, those prospectus directive amendments which are now being debated. It seems that we are waiting for some sort of intermediate result – a transatlantic average, which will not mean anything good for either Europe or the USA. In truth, we ought to say honestly that we have different views and perhaps then we can try to respect and recognise each other's position. Talking of clearing and settlement market regulation, we must recognise that this is a complex matter which perhaps needs to be solved gradually. We should also have our own European view and not align ourselves with decisions made by large conglomerates. Because doing nothing is not a liberal position. When the regulator does nothing, then the law of the jungle takes root in the market and the market is ruined, and most importantly innovations are ruined, which we really do not want.

 
  
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  Piia-Noora Kauppi (PPE-DE). – Mr President, many colleagues have already asked what we are doing today in discussing stock exchange mergers in Europe. Of course it is not for the European Parliament to decide on the kinds of mergers that can occur and the kind of activity on the market. It is also up to the Commission to make judgements on whether the Euronext-Frankfurt Börse merger is better than the transatlantic one. We need to look at the kinds of opportunities the transatlantic merger might give us, especially in terms of the transatlantic financial services dialogue which, I think, has been the most fruitful example of what we can do together if we really cooperate with the US SCC.

I want to congratulate the Commissioner on the amount of progress made. I think if the market forces decide that we will have a transatlantic stock exchange, that will be a huge opportunity for regulatory convergence. It is not about extra-territorial Sarbanes Oxley rules coming to Europe; the point is also that we can put forward our strategic models, our very good technological platforms and put them to very effective use in the US.

We have been negotiating, for example, about the issue of electronic trading screens in the GATS negotiations. We have been trying to get our trading screens to US stock markets and vice versa, but this has not happened. That kind of transatlantic stock exchange merger would be a huge opportunity for regulatory convergence and allow the job that has been done so well to continue in the future.

 
  
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  John Purvis (PPE-DE). – Mr President, I only have two points. The first is: is there anything in the wording of paragraphs 9 and 26 that in any way gives comfort to the Berlin savings banks and the German savings banks system that they will be in any way stultified for the future? I ask that question of Mr McCreevy.

The second is whether we really think that yet another committee of wise men – asked for in the last paragraph – is necessary to look at this.

 
  
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  Charlie McCreevy, Member of the Commission. Mr President, a range of issues has been brought up this evening. I believe I have covered most of them in my introductory remarks, but let me stress a few points.

A lot of effort has gone into creating a harmonised legal framework for the EU’s financial markets. Indeed, a lot of work is still being done on that. The framework is aimed at creating a level playing field, promoting deeper and more liquid markets and ensuring that consumers’ and investors’ interests are safeguarded. Within that framework, we should allow the market to play its role. Regulators should steer away from intervening in decisions taken by market players. The fact that European companies are coveted by operators from other countries is a sign of the confidence they have in us and in our regulatory model. What we need are strong financial institutions that can stand their own in the global economy. We need state-of-the-art exchanges, and competition policy ensures that undue concentration and abuses of dominant positions are avoided. But beyond that, I believe that we should allow the market to play its role.

Mrs van den Burg raised a number of questions. She said that in her opinion it was not just a decision for the shareholders – referring to stock exchanges. Well, I believe it is. I do not agree with her. I agree with her that users of exchanges have an interest, but I have not noted any degree of consensus between them as to what they consider to be the best and most desirable combination of exchanges.

She also raised the question of the consequences of the possible mergers. It is too early to tell, but I made it clear that consolidation of exchanges should not lead to what I call ‘regulatory spill-over’. That issue has been referred to by other speakers too, such as Mr Klinz and others.

As I said in my opening remarks, in reply to Mrs Berès’ question on behalf of the committee, there are two separate issues. It is a matter, in my view, for the stakeholders and shareholders to decide what they want to do with their stock exchanges. That is a matter entirely for them. The market should decide that.

On the other hand, the question of our regulation is of great interest to us. We want to ensure that European regulators regulate European exchanges, and as I understand it, the proposal put to the New York Stock Exchange and Euronext will ensure a system where that will be allowed. I agree that it will be important to ensure that this remains the situation into the future – not just this year or next year, but four or five years hence – and that whatever procedures are put in place, they have to be followed through. As I said in m opening remarks, yes, we are taking an interest in that and will be involved in it.

Mrs van den Burg asked if I had read Mr Seifert’s book. I have not, but I have read various comments about it. I met Mr Seifert early on in my time as European Commissioner, just after he launched the tentative takeover by Frankfurt of the London Stock Exchange. I have read what he said in his book. Whereas the book is interesting, it is just one perspective on the subject.

I should like to say to Members of this House and others outside, who always seem to be concerned about outside influences contaminating the European experience, that I believe that some of the proposals on the table at present suggest to me that market players worldwide seem to want to be involved in the European experience and see it somewhat in the other way. Evidence seems to suggest that a lot of business is now done in Europe that used to be done on the other side of the Atlantic. There is a reason for that. Some people want to get involved in the European way. We should not always be so defensive.

Mr Hökmark and others referred to the regulatory matter. I would agree with what they say. We should let European rules and regulations apply to European companies. That is what our interest is going to be. The question of whether there should be takeovers or mergers of stock exchanges in different parts of the world is entirely a matter for the market players and one about which I am entirely agnostic.

 
  
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  Pervenche Berès (PSE). – (FR) Mr President, I am astonished at the Commissioner’s response. Some very precise questions were put to him. We are not asking him to intervene in the reality of the markets, we are asking him to play his part in initiating legislation. Failing to take a decision has an effect on the markets. Not taking decisions about decoupling or the application of the competition rules in a particular market affects the definition of the framework.

We also asked you specific questions about the impact assessment. When will Parliament be able to have this impact assessment, before it has been totally rewritten by your services, Commissioner?

 
  
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  John Purvis (PPE-DE). – Mr President, I do not think my question on the consolidation of the banking sector and whether there was anything in the Muscat report that could give comfort to the stultifying of the savings bank structure in Germany was answered.

 
  
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  President. The debate is closed.

The vote will take place on Tuesday at 12 noon.

 
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