European Parliment

Money Market Funds Regulation Adopted by the European Parliament

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On April 5, 2017, it was announced that the European Parliament voted to adopt the Money Market Funds Regulation (“MMFR“). The MMFR focuses on increasing regulation on shadow banking and investment funds and creates new rules that regulate money market funds. The MMFR intends to enhance the liquidity profile and stability of the funds it regulates. Now that the MMFR has been through the European Parliament, the next step is for the regulation to be formally adopted by the Council before being published in the Official Journal of the EU. It would then come into force shortly thereafter.

European Parliament Votes to Delay PRIIPS Regulation Application Date

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On December 1, 2016, the European Parliament published a press release announcing that it has voted to delay the Regulation on key information documents (“KIDs“) for packaged retail and insurance-based investment products (“PRIIPs“) (Regulation 1286/2014) (PRIIPs Regulation).

The press release highlights that MEPs had criticized previous proposed standards requiring providers of PRIIPs to produce a KID as “flawed and misleading.” The Parliament has also published the text of the legislative resolution delaying the application date of the PRIIPs Regulation to January 1, 2018. This additional time is to enable those concerned to comply with the new requirements.

In September 2016, the Parliament announced that it had rejected the Delegated Regulation that the European Commission had adopted supplementing the PRIIPS Regulation with regard to regulatory technical standards (RTS) on the presentation, content, review and revision of KIDs. The Commission also proposed to extend the application of the PRIIPS Regulation by one year earlier in November 2016.

European Parliament Adopts Resolution on Finalization of Basel III

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On November 23, 2016, the European Parliament published a provisional version of the text of the resolution it has adopted on finalization of Basel III.

Among other things, in the resolution, the Parliament:

  • Underlines the importance of sound global standards and principles for the prudential regulation of banks and welcomes the post-crisis work of the Basel Committee on Banking Supervision (“BCBS“) in this area. The Parliament notes the BCBS’ ongoing work to finalize the Basel III framework and underlines the need for greater transparency and accountability to enhance the legitimacy and ownership of the BCBS’ deliberations.
  • Stresses that the current revision should respect the principle of not significantly increasing overall capital requirements, while at the same time strengthening the overall financial position of EU banks. The Parliament also underlines the equally important principle to be respected of promoting the level playing field at the global level, by mitigating rather than exacerbating the differences between jurisdictions and banking models, and by not unduly penalizing the EU banking model.
  • Is concerned that early analysis of recent BCBS drafts indicates that the reform package at its current stage might not comply with the principles mentioned above. As a result, the Parliament calls on the BCBS to revise its proposals accordingly, and calls on the European Central Bank (“ECB“) and the Single Supervisory Mechanism (SSM) to ensure respect of the principles in finalizing and monitoring the new standard. The Parliament underlines that this approach would be instrumental in ensuring consistent implementation of the new standard by the Parliament as co-legislator.
  • Calls for dialogue and an exchange of best practices among regulators concerning the application of the principle of proportionality to be established at EU and international levels.
  • Calls on the European Commission to prioritize work on a “small banking box” for the least risky banking models. The Parliament also calls on the Commission to extend this work to an assessment of the feasibility of a future regulatory framework consisting of less complex and more appropriate and proportional prudential rules specifically adapted to different types of banking models.
  • Stresses the importance of the role of the Commission, the ECB and the EBA in engaging in the BCBS’ work, and in providing transparent and comprehensive updates on developments in the BCBS’ discussions. The Parliament calls for this role to be given stronger visibility during meetings of the European Economic and Financial Affairs Council (ECOFIN), and for enhanced accountability to its Economic and Monetary Affairs Committee (ECON).

The Parliament has instructed its President to forward the resolution to the Commission.

European Commission Work Program 2017

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On October 25, 2016, the European Commission issued a communication outlining its 2017 Work Program (COM(2016) 710 final). The communication is addressed to the European Parliament, the Council of the EU, the European Economic and Social Committee (“EESC”) and the Committee of the Regions. Alongside the communication, the Commission has published a Q&As document, together with the following Annexes to the communication.

In Annex 1 of the Work Program, the Commission proposes 21 key initiatives for 2017 to implement 10 priorities for the year. In respect of finance matters, the Commission proposes to:

  • Follow up on a review of the European System of Financial Supervision to strengthen the effectiveness and efficiency of oversight at both macro- and micro- prudential levels; and
  • Present a mid-term review of the Capital Markets Union Action Plan identifying obstacles and any additional measures required in Q2 of 2017. New CMU measures will include a framework for an EU personal pension product in Q2 2017, a REFIT revision of EMIR (the Regulation on OTC derivatives, central counterparties and trade repositories) (Regulation 648/2012) in Q1 2017 and an action plan on retail financial services in Q1 2017. The Commission notes that the adoption of the Prospectus Regulation and the Securitization Regulation should be accelerated.

Annex 2 sets out 18 new REFIT initiatives being launched, and it complements the items listed with new initiatives in Annex I. REFIT is the Commission’s regulatory fitness and performance program. This is designed to make EU law simpler and reduce regulatory costs without compromising policy objectives. One of the new initiatives relates to the Regulation on cross-border payments in the Community (Regulation 924/2009).

The Commission has also published a scoreboard that shows the current state of play in the implementation of 231 REFIT initiatives, together with a summary of the key developments and results of REFIT.

Annex 3 sets out 35 priority‑pending proposals in relation to which the Commission wants the Parliament and the Council to take swift action. These include the proposals for a European deposit insurance scheme (“EDIS”) and the CMU reforms. For more information on the EDIS, see Practice note, European deposit insurance scheme (EDIS).

Annex 4 lists the intended withdrawal of 19 pending proposals. These are proposals assessed as no longer relevant, as they have either been blocked or no longer meet the Commission’s criteria.

Annex 5 contains a list of existing legislation that the Commission intends to repeal.

The Commission has also published a document that summarizes the legislation that will become applicable in 2017. This includes the Regulation on transparency of securities financing transactions (2015/2365/EU).