Securities reform schedule at risk, MEPs warned

Date: 15/11/01

By Peter Chapman

THE European Parliament has been told it must work overtime to prevent the timetable for reform of EU securities markets from plunging into chaos.

The warning follows the decision by two main political groups not to ratify an accord granting MEPs power to oversee a securities committee, made up of Commission and member state officials, which is charged with fine-tuning the new laws.

MEPs have been negotiating for months with Financial Services Commissioner Frits Bolkestein after they complained they would be shut out of the process.

Bolkestein said demands for a 'call-back' mechanism, allowing MEPs to block decisions they did not like, fell foul of strict EU rules governing the assembly's role in committees known as 'comitology'.

Nevertheless, they appeared to have won a four-year 'sunset clause' after which MEPs could take away the committee's remit if they thought it had failed to take their views into account. But instead of seizing the concession offered by the Commission, the Socialist and Christian Democrat groups referred the deal to the Parliament's constitutional committee for its opinion - a process which could take three months.

Supporters of a fast adoption of new rules governing EU stock markets by the end of next year fear this could delay legislation due to be in place by the end of 2003. Rejection of the agreement would also lose the Parliament bargaining power both on securities market reforms and the EU's Treaty, up for re-negotiation in 2004.

The first two directives to use the committee procedure, tabled by former banker Baron Alexandre Lamfalussy earlier this year, are draft rules on prospectuses and market abuse.

British Liberal MEP Chris Huhne, rapporteur for the prospectuses rules, said the constitutional committee's report, to be drawn up by Christian Democrat Karl von Wogau, must be finished before Christmas if the timetable for reforms was not to slip.

But he took heart from calls by all key parties for the committee to focus on financial markets issues, not comitology concerns. Von Wogau was one of the members of the Parliament's monetary affairs committee who thrashed out the deal with Bolkestein.

The European Parliament has been told it must work overtime to prevent the timetable for reform of EU securities markets from plunging into chaos.