Full text 
Verbatim report of proceedings
Monday, 12 December 2005 - Strasbourg OJ edition

15. Markets in financial instruments

  President.   The next item is the report (A6-0334/2005) by Mrs Kauppi, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a directive of the European Parliament and of the Council amending Directive 2004/39/EC on markets in financial instruments, as regards certain deadlines [COM(2005)0253 – C6-0191/2005 – 2005/0111(COD)].


  Charlie McCreevy, Member of the Commission. Mr President, I would like to start by thanking Piia-Noora Kauppi and the Committee on Economic and Monetary Affairs for the efficiency and speed shown on this dossier. This proposal is an essential complement to the Markets in Financial Instruments Directive – known as ‘MiFID’, which is most probably the most important piece of EU legislation recently adopted in the field of European securities law. The proposal is a simple one, namely to postpone the date of entry into force of the directive, with half of this extra time for industry to prepare, the other half for Member State transposition.

This proposal responds to a justified and legitimate request expressed by the industry and supported by all Member States and securities regulators. It is clear that additional time is needed to put in place the necessary arrangements so that the MiFID will work from the start.

The Commission proposed, in June 2005, the extension of the transposition deadline for Member States for six months and we added a further six months’ deadline for the industry to apply the directive in practice.

A series of improvements and clarifications concerning the various deadlines have been made, during negotiations in the European Parliament and the Council, to the text proposed by the Commission, and cooperation has been excellent between the three institutions. The European Parliament and Council propose that the extension becomes nine plus nine months, instead of six plus six. The Commission can go along with this, particularly because the technical implementing measures for the MiFID are essential for the effective application of this directive. These technical rules are complex and will not be adopted before May 2006. Member States and investment firms need to have the complete picture of the new framework, including the technical implementing details, before they can effectively apply them.

Let me stress that adoption of the ‘MiFID extension’ directive is a matter of urgency and we need a single reading. If the EU institutions are not able to conclude this debate quickly, or if a second reading is needed, the MiFID will enter into force in April next year and no one will be ready. There will be a lot of uncertainty because of the legal void that will be created, since the old ISD regime will be abrogated and the new regime will enter into force without the new MiFID having been transposed. We will have new rules without the necessary technical implementing details – not a good formula!

This codecision proposal is about extending the date of entry of MiFID, not about the wider question of the powers of the Council and the European Parliament in the comitology procedures. This House knows my views on the comitology issue and how important it is to resolve these matters as soon as possible in a balanced and fair way. Discussions are under way in the Council and I understand the European Parliament is working on its negotiating position. I welcomed this and I hope we can arrive at a good outcome as early as possible next year.

So, with the greatest respect, and in full understanding of Parliament’s overall position, I consider that the amendments put forward on comitology and on the sunset clause are neither necessary nor appropriate in the context of this proposal. And, as a matter of legal conformity, they do not explain any article of the text. The European Parliament’s requests for additional co-legislator powers are known. They are already recorded in the Capital Requirements Directive recently adopted. The broad substance of Amendment 2 is already included in the original MiFID, and Amendment 4 merely advances the date for the expiry of the Commission’s delegated powers by 29 days.

So I would urge you to consider again these amendments, which the Commission would prefer ideally to be withdrawn before the vote. I understand that the Council would also prefer this outcome. The Commission believes that a solution for this matter can only be found through a revision of the comitology decision. As a result of Parliament’s justified persistence, the Council has taken up work on the revision of this decision through a ‘Friends of the Presidency’ group. Progress is being made and I reiterate my invitation to Parliament to set out clearly its expectations and proposals for the ongoing discussions.

That said, the Commission will not stand in the way of an adoption at first reading of this proposed directive. Should Parliament maintain its amendments on comitology, the Commission will accept them in the interests of ensuring a smooth transposition and implementation of the MiFID. The Commission, from its side, will assist wherever it can to ensure that a real sense of urgency is given to this matter. The Commission has long recognised the need for a solution to be found and I believe the conditions are now ripe for this.

I look forward to hearing your comments.


  Othmar Karas (PPE-DE), deputising for the author. (DE) Commissioner, Mr President, ladies and gentlemen, I would like to start by conveying to the House the apologies of the rapporteur, Mrs Kauppi, who regrets her inability, due to travel problems, to be here on time for the debate on her own report. That does not mean that she has washed her hands of it, far from it; she has done a fine job of work, and I would like to thank her warmly for it.

What is this about? In the first part of his speech, the Commissioner, in effect, presented the draft report – thus demonstrating that rational explanations find Parliament with an open mind and ready to listen – and went on, in the second part, to point out that we both have a problem with comitology. I am glad that he concluded by saying that he is on our side if we adopt it as proposed – and I can tell him that we will. Where issues of this House’s fundamental rights, of democratic fundamental rights, and of right of codecision are concerned, it is good when Commission and Parliament pull together, especially in their dealing with the Council. The same can be said about the comitology procedure and the sunset clause. My colleague Mr Radwan will go into that in greater detail.

So what is MiFID – the Markets in Financial Instruments Directive – all about? Not everyone understands it. Firstly, it is intended to amend a Parliament and Council directive on markets in financial instruments. Secondly, it has to do with extending the deadlines for transposition. Why do we want to extend them? The reason is that the directive results in considerable changes for the participants in the market and for the national authorities, since transposition is dependent on the necessary technical measures being worked out and put into effect, the former of which is, unfortunately, only now being done, and the package of measures to implement the 17 provisions is due to be adopted only in 2006. The fact is that the implementing measures to be taken at Level 2 are being delayed, and they will actually only be completed at a time when MiFID ought already to have entered into force. What makes us favour the extension of the transposition deadlines is the fact that we are dealing here with what is termed the Lamfalussy procedure, and that the process has to be completed by means of comitology.

So what do we do now? What we do now is to extend, and for this reason, the transposition deadline, also keeping the old ISD directive in force until MiFID becomes effective, in other words until 1 November 2007. It follows that the changes we are making to the directive on markets in financial instruments are of form rather than of substance. The effect of these transposition deadlines is to prevent a legal vacuum. Alongside these outward adaptations to reality, though, we are also altering the comitology procedure within MiFID. Why is this so? I have to tell the Commissioner that I find his first objection incomprehensible. We are doing this because we want to adopt, in precisely the same form, the provisions on comitology that we agreed with the Council for the ‘Basel II’ directive on capital adequacy, which can be summed up in the word ‘sunset clause’. What that gives us is legal certainty, along with clarity about what we want.

The proposals we have received to date do not take account of this House’s legislative prerogatives, and it is right and proper that any agreement reached by us be extended to cover other directives dealing with the same subject matter. I therefore ask all the Members of this House, in the plenary vote tomorrow, to stick with the Committee’s resolution, for it will enable us not only to achieve a practical solution but also to strengthen this House’s hand.


  Alexander Radwan, on behalf of the PPE-DE Group. (DE) Mr President, Commissioner, there has already been frequent reference in this debate to the Lamfalussy procedure. One ought really to be grateful to the British Presidency, for the tenacity with which the British, whose country is regarded as the cradle of democracy – something to which Mr Karas has already alluded – have fought over a point already agreed on in the ‘Basel II’ directive by the Commission, the Council and Parliament is astounding.

If, though, you want to reinforce Parliament’s rights and campaign for that, you cannot but be grateful that every further action of this kind makes this House even more firmly united in the conviction that this is something about which we cannot give way.

The issue is that of how we handle the Lamfalussy procedure in future. There is also the question as to how seriously the Council is taking this. Had the British Presidency made even an attempt at doing something – perhaps with the aid of the ‘Friends of the Presidency’ – about sorting out the new inter-institutional agreement, and expended less energy on getting this through as it stood, we would be a good deal further ahead today. What I have to say to the Commission is this: we inserted a date into the ‘Basel II’ directive; that date was 1 April 2008, and until then this House will be backing the Lamfalussy procedure and comitology. We want to support it even after that date, but we do need agreement by then. Let me say, for the benefit of all those whom the news has not yet reached, that we will incorporate this sunset clause in all subsequent directives. When new proposals come from the Commission, we will not allow ourselves to be limited to considering only whether or not individual dates should be changed, but will instead claim the right to consider any directive that gets as far as this House in its entirety. We hope that the Commission will exert appropriate influence on the Council – indeed, we rely on it doing so. I am looking particularly to the Austrian presidency to secure us a solution that at last does justice to all the institutions and enable us to get back to doing our work properly.


  Pervenche Berès, on behalf of the PSE Group. (FR) Mr President, Commissioner, with this report, we are in the first phase of the European Parliament’s return to this Investment Services Directive, which has since been renamed the MiFID Directive.

There is a procedural issue here: you are aware of the conditions in which the European Parliament accepted the Lamfalussy Process. There is a fundamental question: in what conditions will the principles we enacted at level 1 be upheld by the measures being prepared at level 2? Something tells me that, for the first time, the European Parliament, as a result of having examined the level 2 measures contained in this directive, will have the opportunity to exercise its rights in full, hence the importance that we give, in this text, to pointing out the conditions in which the European Parliament can, through the sunset clause and the right of call back, intervene again following the implementation of the level 2 measures.

I believe that we are right to examine these measures because, when we observe the manner in which the debate has unfolded, there is clearly, following the European Parliament’s adoption of the measures, a legal ‘creativity’ that requires us to be vigilant. As regards the timetable, in fact, we observe that what was initially just a deadline has become a transposition deadline and an enforcement deadline. In other areas, I believe that the overall balance in this directive between transparency and opening up to competition is a sufficiently serious matter for Parliament to use all the resources necessary to examine, in credible conditions, the proposals that will be made at level 2 by the Commission.

It is for this reason, Commissioner, that I hope to be able to take advantage of your spirit of openness towards this Parliament and of your willingness to engage in dialogue with it so that I might, at the time when this directive – which is a directive aimed at changing the timetable – is adopted, fully reassert Parliament’s rights in a procedure in which, quite frankly, Parliament’s intervention has always focused on the principles and has never led to an extension of the deadlines, although we can quite imagine the difficulties involved in the other levels intervening on such a complex issue.

Well, quite frankly, Commissioner, I can put your mind at ease: Parliament will indeed vote in favour of the proposed amendments, and I am delighted that you can, in these conditions, support them.


  Margarita Starkevičiūtė, on behalf of the ALDE Group. (LT) The document under consideration is very important not only for the European financial market, but also for the European Parliament itself for two reasons. First, with this document Parliament makes it clear that it is able to respond promptly to the reasoned requests of market participants to review the terms of the coming into effect of the directive. Second, which is equally important, Parliament asserts the possibilities and the rights to waive certain provisions of the directive should it become evident that the chosen strategy does not meet the needs of the market. The directive is an umbrella instrument. In a way, it summarises all the achievements in the market and enforces its regulation; however, increased attention should perhaps be paid to the drafting of this specialised legislation.

Therefore, I would like to support the submitted proposal, but let me point out, on the other hand, that the present consideration has revealed significant flaws in the process of adoption of legal documents governing financial markets. We need to review the strategy for drafting these legal acts of the financial market: currently we frequently focus on technical details, while the real question here is about the process by which financial legal acts are approved. A number of options have been proposed, and yet none of them are adequate. Consider, for example, the changing of the deadline for the enforcement of a certain provision of the law even before it becomes operational. This means that during the preparatory stage market possibilities and needs were not properly considered. I would like to address the Commissioner on this point. He has been promising to reduce legal burden on the market, but I believe that this legal burden would abate provided we worked closer with market participants. We would then need fewer amendments to directives before they come into effect.


  Lars Wohlin, on behalf of the IND/DEM Group. (SV) Mr President, the June List supports the proposal concerning the internal market’s four freedoms. The free movement of capital is fundamental to an efficient internal market. If all this is to operate satisfactorily, common regulations are required. These must be designed simply and must not undermine the possibility of institutional competition between the Member States. It is a good thing that the deadlines in this report should be extended, as this will facilitate the preparations in the run-up to the regulations’ entering into force. We shall therefore vote in favour of the report.

Parliament’s proposed changes state, however, that the European Parliament has requested that Parliament and the Council be given an equal role in supervising the way in which the Commission exercises its powers to implement the changes. Parliament is again trying to increase its own power at the expense of the Member States. The Commission must not be some kind of federal government, and it should in the first place be supervised by the Member States. As it is important that an acceptable compromise be reached with the Council, it is unfortunate that Parliament should have chosen in this way to put an intra-institutional power struggle into the mix. We shall therefore vote against Amendments 1, 2, 4 and 11.


  Ieke van den Burg (PSE). – (NL) Mr President, as has already been said, the MiFID (Markets in Financial Instruments Directive), previously known as the ISD (Investment Services Directive), is a major legislative programme for the internal capital market. The aim is to introduce a level playing field for different kinds of investment services, with top priority given to enhancing transparency before and after, to consumer protection and to the promotion of keen prices at maximum liquidity. In Europe, those instruments will allow us to make a huge stride in the direction of a better investment climate, which is desperately needed at the moment.

The complexity of the directive requires careful consultation with the different market operators, much of which work is done by supervisors under the watchful eye of the CESR (Committee of European Securities Regulators). The European Commission, with its limited manpower, cannot do this on its own. I am a big fan of this careful approach and of this considerable role for the supervisors. They are our main allies in the service of the public interest and in preventing us from being guided by a handful of large market operators or national markets that serve their own interests, which, sadly, was what did sometimes happen at the time when the groundwork for this dossier was being done.

The European Parliament has struck a balance between the different interests and must now ensure that this balance is kept. This means that we must be able to continue to play our role. That is why we demand that an important right in the context of checking comitology, namely the right of revocation, be upheld. The Commission has indicated on a number of occasions that it will support us in this, and so has the Council, albeit somewhat reluctantly, except that this point in the treaty was not corrected in the course of the debate that was held on the subject. Now that things have ground to a halt, there is no reason why that point should be put on ice as well.

Since the Lamfalussy procedure increasingly applies to financial market dossiers, Parliament’s right of revocation should, as a matter of urgency, be regulated structurally. This is not a prestige project or prestige fight. It really is about remaining involved in what we laid down in broad lines at level 1 and seeing them reflected at the implementation stage that we have delegated.


  Charlie McCreevy, Member of the Commission. Mr President, I want to thank all Members for their observations. It is clear that we all want MiFID to enter into force under the best possible conditions, and an extension of the transposition and implementation deadlines is necessary and justified. While the Commission considers that the amendments relating to comitology are legally inappropriate in this context, the Commission will accept them to allow an adoption of this proposal in a single reading.

I understand that this issue will come back and that you will continue to include these amendments in future proposals. I attach high importance to finding a solution and in no way do I want the sense of urgency to be lost. I will therefore continue to take an open approach to the amendments. They are an important political signal of the strongly felt and legitimate requests of this House. However, flagging a problem politically is not enough: we need to solve it.


  President.   The debate is closed.

The vote will take place on Tuesday at 12 noon.

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