European Parliament

European Parliament Adopts Legislative Resolution on Financial Transaction Tax

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On 23 May 2012, the European Parliament approved an amended version of the European Commission’s proposal of 23 September 2011 for a Council Directive on a common system of financial transaction tax (FTT). The Resolution states that such a FTT should go ahead even if only some member states would opt for it.

The Resolution:

  • Retains the Commission proposal timetable: 31 December 2013 deadline for member states to adopt implementing laws and 31 December 2014 for entry into force of these laws.
  • Retains the original Commission proposal to exempt transactions made on the primary market, purchasing of securities from the issuer when such securities are first placed on the market.
  • Inserts an “issuance principle” to the Commission’s proposal, whereby financial institutions located outside the EU would also be obliged to pay the FTT if they traded securities originally issued within the EU.
  • Exempts pension funds from the FTT.

The resolution can be found here.

Directive Amending Solvency II Transposition and Application Dates Published

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On 21 May 2012, the European Commission published a legislative proposal for a directive to amend the Solvency II Directive. The proposals extend the date by which Solvency II must be transposed by member states into national law from 31 October 2012 to 30 June 2013. It also states that Solvency II will apply from 1 January 2014 (the application date) and Solvency I will no longer apply on this date.

The proposals were made as a result of delays in the adoption of the Omnibus II Directive and to allow a smooth transition into the new law under Solvency II. The Commission has requested that the European Parliament and Council of the European Union adopt the proposed Directive urgently so that it can enter into force as soon as possible. Legislative Proposal.

New Structure for European Financial Supervision

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On September 22, the European Parliament approved a new structure for financial supervision. Three European Supervisory Authorities are established with broader powers than the current supervisory committees they replace, including the power to settle disputes among national financial supervisors and to impose temporary bans on risky financial products and activities. A European Systemic Risk Board is also established to monitor and warn about the general build-up of risk in the EU economy. Press Release.

European Parliament Approves Stricter Rules on Bankers’ Bonuses and Capital Requirements

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On July 7, the European Parliament approved stricter rules on bankers’ bonuses and capital requirements.  The adopted resolutions call for, among other things: (i) capping upfront cash bonuses at 30% of the total bonus and at 20% for particularly large bonuses, (ii) deferring between 40% and 60% of any bonus for at least three years, and (iii) awarding at least 50% of the total bonus in non-cash instruments.  The more stringent capital requirements are expected to result in banks having to hold three to four times more capital against their trading risk than at present, and will tighten capital reserve requirements for resecuritizations. The EU Council of Ministers is set to formally approve the resolutions next week.  The rules on bonus provisions will take effect in January 2011 and the rules on capital requirements will take effect by the end of 2011. Release. Resolution.