On 21 June 2012, the Presidency of the Council of the EU published compromise proposals (dated 21 June 2012) on MiFID II and EMIR. Both compromise proposals state that the proposals have been prepared following discussions in meetings of the working party on financial services. Compromise Proposal on MiFID II. Compromise Proposal on EMIR.
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EU Council Compromise Proposal on MAR
On 12 June 2012, the Presidency of the Council of the EU published a new compromise proposal (dated 11 June 2012) on the proposed Regulation on insider dealing and market manipulation (MAR). Compromise Proposal.
Additions and changes to the previous proposal of 22 May 2012 are shown in mark-up, however, it does not indicate where text in the European Commission’s proposal has been deleted.
The MAR proposal, together with the European Commission’s proposed Directive on criminal sanctions for insider dealing and market manipulation (CSMAD), will revise and replace the Market Abuse Directive (2003/6/EC) (MAD). These proposals are known as “MAD II”.
European Commission President Calls for Banking Union
José Manuel Barroso, president of the European Commission, commented in an interview with the FT this week that all 27 EU countries should submit their big banks to a single cross-border supervisor as part of a banking union. He said that the EU needs to take “a very big step” towards deeper integration if it is to learn lessons from the sovereign debt crisis. Mr Barroso thought that the changes, which would also include an EU-wide deposit guarantee scheme and a rescue fund paid for by levies on financial institutions, could be achieved in 2013 without changes to existing treaties.
The UK chancellor, George Osborne does not want Britain to be part of any banking union which would make taxpayers liable for recapitalising eurozone banks. However, he thinks that the union is desirable, so long as Britain is not obliged to take part. Mr. Barroso considered that it would be right to allow Britain to opt out of the banking union, so long as it did not block the union’s progress.
The Commission published a memorandum on the proposed banking union on 6 June 2012. Memorandum on banking union.
Council of the European Union Adopts Rules for AIFM
On May 27, the Council of the European Union adopted a directive to establish common requirements for the authorization and supervision of alternative investment fund managers (AIFM) and provide a coherent approach to risk management and the impact thereof on investors and markets in the European Union (EU). Key features of the directive include: (i) minimum capital requirements; (ii) requiring an AIFM to appoint independent depositories to ensure that a fund’s assets are appropriately protected; (iii) authorizing member states to establish leverage limits and requiring AIFM using leverage on a systematic basis to disclose aggregate leverage to their member state regulatory authority; (iv) authorization requirements for non-EU funds, managed by either EU AIFM or AIFM based outside of the EU; and (v) authorizing member states to exempt AIFM from compliance with the directive, though not from minimum registration and reporting requirements, if they have managed assets below €100 million, if they use leverage, or below €500 million, if they do not. Publication in the Official Journal is expected in mid-June. Council Press Release.
Rating Agency Developments
On April 14, Moody’s said that the proposals to give EU-based authorities wide-ranging powers to intervene in the operation of failing credit institutions will be credit neutral for structured finance transactions involving EU banks if the final legislation incorporates appropriate safeguards and policy objectives. Moody’s Release.
On April 11, Fitch released updated rating guidelines for commercial paper note programs with external support. Fitch Release. Fitch Report.
On April 8, Moody’s extended the comment period from April 8 to April 22 for proposed changes to its modeling framework for cash-flow CLOs. Moody’s Release.
On April 8, S&P published its methodology for rating nonsovereign issuers and structured finance transactions above the related sovereign in the 17-member European Monetary Union. S&P Release.
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