ECON

European Parliament Votes to Adopt Report on Decision on Increased Regulatory Powers for ECB over Clearing Systems

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On July 4, 2018, the European Parliament published the minutes of its plenary session, which confirms that it has voted (in plenary) to adopt a report on a draft decision amending Article 22 of the Statute of the European System of Central Banks and of the European Central Bank (“ECB“) (2017/0810(COD)).

The text of the amendments to the decision adopted by the Parliament has also been published.

The decision is in relation to the ECB’s recommendation for the decision made in June 2017, in which it asked for a greater role in regulating clearing systems for financial instruments, including central counterparties (“CCPs“), by amending Article 22 of the Statute

This amendment would enable the Eurosystem (i.e. the ECB and the national central banks of member states in the Eurozone) to monitor and assess risks posed by CCPs clearing significant amounts of euro-denominated transactions, and enable the ECB to adopt additional requirements for those CCPs.

The Parliament’s Economic and Monetary Affairs Committee (“ECON“) and Committee on Constitutional Affairs (“AFCO“) published the final version of a joint report containing proposed amendments to the decision in June 2018.

Once the Council has decided its own negotiating position, the Parliament will enter into interinstitutional negotiations with the Council of the EU on the decision.

Draft Report Published by ECON-AFCO on Decision to Increase Regulatory Power for ECB Over Clearing Systems

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The European Parliament’s Economic and Monetary Affairs Committee (“ECON“) and Committee on Constitutional Affairs (“AFCO“) have published a joint draft report on a decision to amend article 22 of the Statute of the European System of Central Banks and of the European Central Bank (“ECB“).

The decision relates to an ECB recommendation for a decision made in June 2017, where it sought a greater role in the regulation of clearing systems for financial instruments, including central counterparties (“CCPs“) by amending article 22 of the statute. This amendment would allow the Eurosystem (i.e. the ECB and the national central banks of Eurozone nations) to assess risks posed by CCPs clearing significant amounts of transactions made in Euros and also to enable the ECB to adopt additional requirements for those CCPs.

Two reporters, Gabriel Mato and Danuta Maria Hübner welcomed the ECB’s proposal. In particular, they highlighted:

  • As the ECB’s new powers will interact with those of other EU institutions, nations will be more inclined to respect the laws of other EU institutions by the acts adopted by the ECB under the amended article 22 of the statute.
  • The recitals of the amending decision should contain regulatory powers that can be used over CCPs by the ECB under article 22 of the statute, including allowing monetary concerns to be addressed.

ECON Drafts a Report on Proposed IFR

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The Economic and Monetary Affairs Committee (“ECON“) drafted a report dated April 11, 2018 on the proposal for a regulation on the supervision on investment firms. A link to the report is here.

In December 2017, the European Commission published proposals for the Investment Firms Regulation (“IFR“) and for a directive on the prudential requirements of investments firms, known as the Investment Firms Directive (“IFD“).

European Parliament to Expedite Process for Adopting Proposal to Delay Application Date for IDD and IDD Delegated Regulations

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European Parliament’s Committee on Economic and Monetary Affairs (“ECON”) published a letter (dated January 9, 2018) on January 16, 2018. The letter was sent by the ECON Chair to the Chair of the Council of the EU’s Permanent Representatives on the legislative proposal to postpone the application date of the Insurance Distribution Directive ((EU) 2016/97) (“IDD“) to October 1, 2018.

The proposal was adopted by the European Commission on December 20, 2017. ECON had urged the Commission to adopt a legislative proposal “swiftly” in November, to enhance legal certainty on the applicable provisions and to allow for the necessary organizational and technical changes needed to comply with the provisions introduced by the Delegated Regulations Legal update. ECON urged the Commission to take into account European Parliament’s recommendation to postpone the IDD application date to October 1, 2018.

In its latest letter, ECON confirms its support for a “postponement of the date of transposition of [the IDD] by a few months, such as 1 July 2018”. ECON goes on to confirm its intention to “steer the adoption of [the proposed amending Directive] in an expedited manner while respecting [Parliament] Rules of Procedure, and in order to avoid trialogue procedures”. ECON explains that it does not intend to object to the adoption of the proposed Directive to speed up its entry into force, and states that it trusts the Council will do the same.

Econ Draft Report on Proposed Regulation Amending CRR as Regards Transitional Period for Mitigating Impact on Own Funds of Introduction of IFRS 9

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On June 8, 2017, the European Parliament’s Committee on Economic and Monetary Affairs (“ECON“) published its draft report on the proposed Regulation amending the Capital Requirements Regulation (Regulation 575/2013) (“CRR“) regarding the transitional period for mitigating the impact on own funds of the introduction of International Financial Reporting Standard 9 (“IFRS 9“) and the large exposures treatment of certain public sector exposures denominated in non-domestic currencies of member states.

The European Commission’s November 2016 legislative proposal for a Regulation amending the CRR (“CRR II Regulation“) contained transitional provisions relating to IFRS 9 and the large exposures treatment of certain public sector exposures. The explanatory statement to the draft report explains that the Presidency of the Council of the EU proposed that these provisions should be split from the proposed CRR II Regulation and dealt with in a separate draft Regulation “to allow for a timely entering into force of these transitional provisions.” The European Parliament’s Conference of Presidents approved the proposed split in May 2017. On June 1, 2017, the Council of the EU published the final Presidency compromise proposal relating to the split-out Regulation.

The draft report contains a European Parliament legislative resolution on the Regulation, the text of which sets out suggested amendments to the proposed CRR II Regulation that reflect the splitting out of the transitional provisions into a separate Regulation. The amendments delete provisions in the CRR II Regulation that do not relate to the transitional provisions. The report states that the deleted parts will be covered in a separate ECON report. It also contains an explanatory statement by the rapporteur, Peter Simon.

ECON Objects to Delegated Regulation on RTS on Key Information Documents for PRIIPs

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The European Parliament published a press release on September 1, 2016 announcing that the Economic and Monetary Affairs Committee (ECON) has voted to object to the European Commission’s proposed Delegated Regulation supplementing the Regulation on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs) (Regulation 1286/2014) (PRIIPs KID Regulation). This market is worth up to €10 trillion in Europe.

The proposed Delegated Regulation sets the regulatory technical standards (RTS) on the presentation, content, review and revision of the KID, together with the conditions for fulfilling the requirement to provide such documents.

ECON’s concerns include the fact that the proposed formulas in the KID for predicting investment performance contain flaws which would make performance look far better than it was likely to be. As such, this would be potentially misleading for investors.

The Commission adopted the Delegated Regulation (C(2016) 3999 final) in June 2016. The resolution will now proceed for consideration by the European Parliament in a plenary session to be held September 12-15, 2016. The PRIIPs KID Regulation is to apply from December 31, 2016. The press release does highlight that the Commission is prepared “as a second best option” to allow the PRIIPs KID Regulation to apply without the RTS in place.

ECON Publishes Reports Postponing Application of MiFID II, MiFIR, MAR and CSDR

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The European Parliament’s Committee on Economic and Monetary Affairs (“ECON“) has published two draft reports on the proposed directive postponing application of the MiFID II Directive, the proposed regulation amending the Markets in Financial Instruments Regulation (“MiFIR“), the Market Abuse Regulation (“MAR“) and the Regulation on improving securities settlement and regulating central securities depositories (“CSDR“) as regards certain dates.

Both reports contain an explanatory statement, which expresses disappointment that, due to the failure of ESMA and the Commission to deliver regulatory technical standards and delegated acts by the deadline set out in the legislation, and to launch the necessary procurement procedures in time, MiFID II will not be applicable as initially scheduled on January 3, 2017. The rapporteur acknowledged that the delay of the application by a year to January 2018 was sensible and justified, given the scale of the tasks yet to be completed before implementation.

The reports can be found here and here.

ECON Votes in Favor of the MIF Regulation

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On January 27, the Economic and Monetary Affairs Committee (“ECON”) released a press release stating that it had voted in favour of the proposed Regulation on multilateral interchange fees (“MIF Regulation”). This vote confirms an informal deal struck with the Council of Europe in December and will enforce a cap on the fees that banks can charge retailers for processing shoppers’ payments.

The European Parliament as a whole is expected to vote on the deal at the second plenary session in April.  Press Release.

ECON Publishes Draft Reports on Regulation on Banking Structural Reforms and Regulation on Securities Financing Transactions

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The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published two draft reports on (i) the proposed Regulation on banking structural reforms and (ii) the proposed Regulation on securities financing transactions.

Each of the draft reports contains a European Parliament legislative resolution on each of the Regulations which set out suggested amendments to the European Commission’s original proposals. The draft reports are to be considered by ECON during March 2015 and the European Parliament is scheduled to consider the Regulations at its plenary session on April 27 – 30, 2015.  Report (i).  Report (ii).

ECON Publishes Draft Report on MMF Regulation

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On November 17, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft report on the proposed Regulation on Money Market Funds (the MMF Regulation).

Money market funds are a type of investment fund that invests in short-term debt such as money market instruments issued by banks, governments and companies (MMFs).  If adopted, the MMF Regulation will introduce a general framework of requirements to enhance the liquidity and stability of MMF funds.

The draft report sets out suggested amendments to the European Commission’s original proposal and an explanatory statement. The statement comments that:

  • there is still significant scope for improvement relating to liquidity and maturity transformation and in making MMFs more stable;
  • a new category of EU government constant net assets value money market fund (CNAV MMF) should be established, which would invest a majority of assets into EU government debt; and
  • the net asset value of CNAVs should be subject to daily disclosure requirements, stress tests should take place on a quarterly basis and there should be stronger investor warnings.

The Parliament is scheduled to consider the MMF Regulation at its plenary session on March 25, 2015. Draft report.