1993/0471(COD) Financial services: investor-compensation schemes
Lead committee dossier:
Progress: Procedure completed
| Role | Committee | Rapporteur | Shadows |
|---|---|---|---|
| Former Responsible Committee | JURI |
JANSSEN VAN RAAY James L. ( PPE)
|
Lead committee dossier:
Legal Basis:
EC before Amsterdam E 057-p2
Legal Basis:
EC before Amsterdam E 057-p2Events
2000/02/16
EC - Follow-up document
Details
Directive 97/9/EC on investor-compensation schemes (ICS Directive or ICSD) aims to provide a European passport to investment firms authorised in one of the Member States. It lays down prudential rules which investment firms must observe at all times, including organisational provisions aimed at preventing investment firms from using instruments and money belonging to investors.
The report recalls that the ICSD is modelled after Directive 94/19/EC on deposit-guarantee schemes (DGSD). The purpose of this is to grant a minimum protection to depositors in the event of the closure of an insolvent credit institution. But, whereas in the DGSD a protection is provided for deposits arising from normal banking transactions, money claims arising from investment business carried out with a credit institution can be covered according to the provisions of the ICSD.
This report complements the one prepared for the DGSD on the same subject. Under the terms of the ICSD, the Commission is required to report on the export prohibition clause and to discuss the opportunity to extend its validity beyond 1999, which is the purpose of this report.
A basic principle set out in the ICSD is that if an investment firm belongs to a scheme, the scheme will also cover its investors at branches set up in other Member States. This provision extends to investment-compensation schemes the general principle of “mutual recognition”. In other words, the home country provisions applied to the head office of an investment firm are extended also to its EU branches. The assumption is that these form, within the Internal Market, a single entity subject to single authorisation and centralised supervision of its activities. However, the Directive itself imposes two important exceptions to this principle:
-the first is that, at least during a transitory period, and in order to avoid possible market disturbances, a scheme offering a higher or wider protection must downgrade its cover at branches located in other Member States where ICS are less generous. This clause, known as “export-ban” or “export prohibition clause”, exists also for deposit-guarantee schemes;
-the second exception, known as the “topping-up” clause, is that an investment firm belonging to a scheme offering a lower or narrower protection will have the right to adhere to a host scheme in order to upgrade its cover at branches located in other Member States where ICS are more generous. A similar clause also exists for deposit-guarantee schemes.
Both clauses aim at avoiding unequal conditions of competition based on the cover offered to investors. The relevant difference is that the export prohibition clause reduces the level of protection for some investors, who would otherwise receive a higher protection, whereas the topping-up works in favour of an upgrade of the protection (though the decision to effectively increase the cover remains with the investment firm itself, which may decide not to join the host country scheme).
The export-ban clause represents a relevant exception to the principle of the Single Market for investment services, in that it discriminates between investors of the same investment firm in case of insolvency. In addition, it is estimated that market disturbances may be expected only for a short period of time. That is why the “export prohibition clause” is envisaged in the Directive only as a transitory measure and is due to expire at the end of 1999, unless the European Parliament and the Council decide otherwise, following a proposal from the Commission to extend its validity.
The Commission looks at various justifications for maintaining the export prohibition clause and at the justifications for not extending it.
The report states that t he investor compensation schemes in Member States have now been harmonised according to the principles and objectives of the Directive. Against this background, it seems disproportionate to prolong the export prohibition clause in order to avoid market disturbances that nobody could estimate or specify and which seem highly unlikely to happen.
A prolongation of the export prohibition clause would mean that the protection for such a remote risk would be considered more important than the completion of the Single Market for financial services.
The Commission is aware that not all the Member States have implemented the ICSD early enough to have benefited from practical experience with the operation of its provisions. In this respect, the strong links between the ICSD and the DGSD should be considered.
First of all, because the ICSD is actually a transposition of the DGSD rules and principles in the securities field. Not only are the two directives complementary in some aspects (the 97/9/EC on investor-compensation schemes also applies to banks as far as investment services are concerned); they are also identical with regard to the articles concerning the cross-border provision of services. This is why any experience of problems or questions arising from the banks’ side might be used to supply useful information for investment firms.
Secondly, European regulator should have a comprehensive picture of how the “twin” directives work. In this regard, it is important to keep in mind that, though the DGSD was approved in 1994 and the ICSD only in 1997, the deadline for the Commission to produce the reports on the export-ban clause is the same (31/12/1999).
Moreover, the Commission is of the opinion that consistency with the DGSD should be preserved. Here, on the basis of the report adopted by the Commission on DGSD, the export-ban clause is going to expire for deposit-guarantee schemes. It would be difficult to justify, after 1999, the “export-ban” clause in the ICSD and not in the DGSD. As far as customers’ protection is concerned, considering that some schemes cover deposits and investors’ claims, discrimination would be introduced between depositors and investors of the same foreign branch of an institution.
However, after the clause has expired, the Commission will closely monitor the evolution of the situation, with particular attention to serious market disturbances, on the basis of elements supplied by the national authorities of Member States according to their preferences. The Commission can then consider the possibility of proposing appropriate legislative measures.
Documents
1997/03/26
Final act published in Official Journal
Documents
1997/03/03
CSL - Final act signed
1997/03/03
EP - End of procedure in Parliament
1997/02/19
EP - Text adopted by Parliament, 3rd reading
1997/02/19
EP - Decision by Parliament, 3rd reading
Documents
1997/02/18
EP - Debate in Parliament
Documents
1997/02/17
CSL - Decision by Council, 3rd reading
1997/02/17
CSL - Council Meeting
1997/02/12
EP - Report tabled for plenary by Parliament delegation to Conciliation Committee, 3rd reading
Documents
1997/02/11
EP - Report tabled for plenary, 3rd reading
Documents
1997/01/28
CSL/EP - Joint text approved by Conciliation Committee co-chairs
Documents
1997/01/27
EP/CSL - Joint text approved by Conciliation Committee co-chairs
Documents
1996/12/18
EP/CSL - Formal meeting of Conciliation Committee
1996/12/18
EP/CSL - Final decision by Conciliation Committee
1996/05/13
CSL - Parliament's amendments rejected by Council
Details
Noting that it was not possible to take over the eight amendments to the common position as voted for by Parliament at second reading during its sitting of the previous March, the Council decided to convene the Conciliation Committee under the terms of Article 189b(3) of the Treaty.
1996/05/13
CSL - Council Meeting
1996/05/08
EC - Commission opinion on Parliament's position at 2nd reading
Documents
1996/03/12
EP - Text adopted by Parliament, 2nd reading
1996/03/12
EP - Debate in Parliament
Details
In recalling the main aims of the proposal the rapporteur, Mr Janssen van Raay (EPP, NL), touched on the subject of protection for small investors in the event that small investment companies were no longer able to honour their commitments. The rapporteur welcomed the fact that an agreement had already been reached with the Commission on all the main points. He also raised some of the less significant aspects of the proposal that had still to be resolved (non-compliance with obligations should not solely be linked to financial problems, the question of considering the monetary value, etc.). Commissioner Monti considered that the text being proposed would constitute one of main pillars of the internal market in respect of the protection of securities. He went on to state that the Commission could not accept the amendments tabled by Parliament and thought that Amendments Nos 1 to 3 and 5 to 7 would create serious distortions in relation to the directive on bank guarantee funds. Amendment No 4, which referred to the ‘market value’, would prove extremely difficult to implement and the Commissioner preferred to leave it to the Member States to define the criteria for determining market value. The Commissioner also took the view that Amendment No 8 provided no additional protection for investors. Finally, Commissioner Monti welcomed the fact that Parliament had adopted the text in its original form. Had this not been the case he could have foreseen a long and difficult process of conciliation with the Council.
Documents
1996/03/12
EP - Decision by Parliament, 2nd reading
Documents
1996/02/21
EP - Committee recommendation tabled for plenary, 2nd reading
Documents
1996/02/21
EP - Vote in committee, 2nd reading
1996/02/20
EP - Committee recommendation tabled for plenary, 2nd reading
Documents
1995/12/14
EP - Committee referral announced in Parliament, 2nd reading
1995/11/28
EC - Commission communication on Council's position
Documents
1995/10/23
CSL - Council position
Documents
1995/10/23
CSL - Council Meeting
1995/10/22
CSL - Council position published
Documents
1995/05/22
CSL - Council Meeting
1994/12/14
EC - Modified legislative proposal
Documents
1994/12/13
EC - Modified legislative proposal published
Documents
1994/07/26
EP - JANSSEN VAN RAAY James L. (PPE) appointed as rapporteur in JURI
1994/04/19
EP - Text adopted by Parliament, 1st reading/single reading
1994/04/19
EP - Debate in Parliament
Documents
1994/04/19
EP - Decision by Parliament, 1st reading
Documents
1994/04/05
EP - Committee report tabled for plenary, 1st reading/single reading
Documents
1994/04/05
EP - Vote in committee, 1st reading
1994/04/04
EP - Committee report tabled for plenary, 1st reading
Documents
1994/01/26
ESC - Economic and Social Committee: opinion, report
Documents
1993/11/16
EP - Committee referral announced in Parliament, 1st reading
1993/11/10
EC - Reconsultation
Documents
1993/09/22
EC - Legislative proposal
Documents
1993/09/21
EC - Legislative proposal published
Documents
Documents
- Follow-up document: EUR-Lex
- Follow-up document: COM(2000)0081
- Final act published in Official Journal: Directive 1997/9
- Final act published in Official Journal: OJ L 084 26.03.1997, p. 0022
- Text adopted by Parliament, 3rd reading: OJ C 085 17.03.1997, p. 0055-0063
- Text adopted by Parliament, 3rd reading: T4-0044/1997
- Decision by Parliament, 3rd reading: T4-0044/1997
- Debate in Parliament: Debate in Parliament
- Report tabled for plenary by Parliament delegation to Conciliation Committee, 3rd reading: A4-0047/1997
- Report tabled for plenary by Parliament delegation to Conciliation Committee, 3rd reading: OJ C 085 17.03.1997, p. 0005
- Report tabled for plenary, 3rd reading: A4-0047/1997
- Joint text approved by Conciliation Committee co-chairs: 3602/1997
- Joint text approved by Conciliation Committee co-chairs: 3602/1997
- Commission opinion on Parliament's position at 2nd reading: EUR-Lex
- Commission opinion on Parliament's position at 2nd reading: COM(1996)0169
- Text adopted by Parliament, 2nd reading: OJ C 096 01.04.1996, p. 0017-0028
- Text adopted by Parliament, 2nd reading: T4-0113/1996
- Debate in Parliament: Debate in Parliament
- Decision by Parliament, 2nd reading: T4-0113/1996
- Committee recommendation tabled for plenary, 2nd reading: A4-0047/1996
- Committee recommendation tabled for plenary, 2nd reading: OJ C 078 18.03.1996, p. 0004
- Committee recommendation tabled for plenary, 2nd reading: A4-0047/1996
- Commission communication on Council's position: EUR-Lex
- Commission communication on Council's position: SEC(1995)1898
- Council position: 09637/1/1995
- Council position: OJ C 320 30.11.1995, p. 0009
- Council position published: 09637/1/1995
- Modified legislative proposal: EUR-Lex
- Modified legislative proposal: OJ C 382 31.12.1994, p. 0027
- Modified legislative proposal: COM(1994)0585
- Modified legislative proposal published: EUR-Lex
- Modified legislative proposal published: COM(1994)0585
- Text adopted by Parliament, 1st reading/single reading: OJ C 128 09.05.1994, p. 0036-0085
- Text adopted by Parliament, 1st reading/single reading: T3-0218/1994
- Debate in Parliament: Debate in Parliament
- Decision by Parliament, 1st reading: T3-0218/1994
- Committee report tabled for plenary, 1st reading/single reading: OJ C 128 09.05.1994, p. 0010
- Committee report tabled for plenary, 1st reading/single reading: A3-0209/1994
- Committee report tabled for plenary, 1st reading: A3-0209/1994
- Economic and Social Committee: opinion, report: CES0098/1994
- Economic and Social Committee: opinion, report: OJ C 127 07.05.1994, p. 0001
- Reconsultation: EUR-Lex
- Reconsultation: COM(1993)0570
- Legislative proposal: EUR-Lex
- Legislative proposal: OJ C 321 27.11.1993, p. 0015
- Legislative proposal: COM(1993)0381
- Legislative proposal published: EUR-Lex
- Legislative proposal published: COM(1993)0381
- Legislative proposal: EUR-Lex OJ C 321 27.11.1993, p. 0015 COM(1993)0381
- Reconsultation: EUR-Lex COM(1993)0570
- Economic and Social Committee: opinion, report: CES0098/1994 OJ C 127 07.05.1994, p. 0001
- Committee report tabled for plenary, 1st reading/single reading: OJ C 128 09.05.1994, p. 0010 A3-0209/1994
- Text adopted by Parliament, 1st reading/single reading: OJ C 128 09.05.1994, p. 0036-0085 T3-0218/1994
- Modified legislative proposal: EUR-Lex OJ C 382 31.12.1994, p. 0027 COM(1994)0585
- Council position: 09637/1/1995 OJ C 320 30.11.1995, p. 0009
- Commission communication on Council's position: EUR-Lex SEC(1995)1898
- Committee recommendation tabled for plenary, 2nd reading: A4-0047/1996 OJ C 078 18.03.1996, p. 0004
- Text adopted by Parliament, 2nd reading: OJ C 096 01.04.1996, p. 0017-0028 T4-0113/1996
- Commission opinion on Parliament's position at 2nd reading: EUR-Lex COM(1996)0169
- Joint text approved by Conciliation Committee co-chairs: 3602/1997
- Report tabled for plenary by Parliament delegation to Conciliation Committee, 3rd reading: A4-0047/1997 OJ C 085 17.03.1997, p. 0005
- Text adopted by Parliament, 3rd reading: OJ C 085 17.03.1997, p. 0055-0063 T4-0044/1997
- Follow-up document: EUR-Lex COM(2000)0081
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