Council of the EU

Trialogue Agreement on MiFID II

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On January 14, the Council of the EU and the European Parliament reached political agreement in trialogue on the MiFID II legislative proposals (the proposed MiFID II Directive and the proposed Markets in Financial Instruments Regulation (MiFIR)).

Key elements of the agreement are:

o   The market structure framework;
o   Equity market transparency;
o   Strengthening supervisory powers;
o   Controls for algorithmic trading activities; and
o   Access to EU markets for firms from third countries.

The MiFID II legislative proposals will replace and recast the Markets in Financial Instruments Directive (2004/39/EC) (MiFID).

The Parliament press release sets out the agreements that were reached.  Press Release.

Council of the EU Announces Political Agreement on the Market Abuse Regulation (MAR)

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On June 26, following long running negotiations, the Council of the EU announced a compromise with the European Parliament on the proposed MAR.

The MAR proposal and the European Commission’s proposed Directive on criminal sanctions for insider dealing and market manipulation (CSMAD) will together revise and replace the current Market Abuse Directive.  Inter alia, the proposals broaden the scope of the regulatory framework to cover new trading exchanges and over-the-counter trading.  Press Release.

EU Agrees to Cap Bankers’ Bonuses

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On February 27, the Council of the EU and the European Parliament announced that they had reached preliminary agreement on the legislative proposals for the CRD IV reforms, including on the key contentious issue of bankers’ bonuses.  Bonus payments to bankers are to be capped at twice their annual salary and banks will be subject to a strict transparency regime.  The basic agreement is a 1:1 ratio on salary relative to variable pay, which can rise to 1:2 in the event of shareholder approval consisting of at least 65% of shareholders owning half the shares represented (or 75% of votes in the event that there is no quorum).  As well as the bonus cap, it was also agreed that banks must reveal their taxes and profits on a country-by-country basis from 2015, assuming that this measure is not judged as being an impediment to inward investment by the European Commission.

Member states will be required to transpose the CRD IV Directive by January 1, 2014, and it is expected that the European Parliament will vote on the provisional agreement, once formally endorsed by the Council, in its plenary session from April 15-18.

Council of the EU – General Approach Document on Freezing and Confiscating Proceeds of Crime in the EU

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On December 5, the Council of the EU published a general approach document on the European Commission’s proposed Directive on freezing and confiscating proceeds of crime in the EU.  Changes made to the Commission’s proposal include:

  •  limiting provisions relating to extended powers of confiscation to serious criminal offences which may give rise to economic benefit;
  • recognising that freezing may be ordered by certain competent authorities as well as judicial authorities; and
  • limiting the scope of the proposed Directive to offences listed in Article 83(1) of the Treaty on the Functioning of the European Union which are already subject to EU level approximation.

It is intended that a compromise on the text of the proposed Directive will be reached by the end of 2012.

ECOFIN Reaches Agreement on CRD IV

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On 15 May 2012, the Council of the EU announced that the Economic and Financial Affairs Council (“ECOFIN”) has reached agreement on the CRD IV proposals. CRD IV is a package of EU reforms on prudential requirements for credit institutions and investment firms intending address a number of issues arising from the financial crisis. The existing Capital Requirements Directive will be replaced with the CRD IV Directive and the Capital Requirements Regulation. The amendments agreed by ECOFIN were published on 17 May 2012 and are available here.