Firms await detail of single market plan

Date: 24/06/1999

By Renée Cordes
THE EU's financial services industry has applauded the European Commission's five-year programme to create a true single market for pensions, banking and capital markets.

But it will be keeping a close eye on the new Commission team as it waits for this to be followed up with firm proposals for legislation.

"We welcome this action plan, which emphasises that financial markets in different countries have to more or less have the same rules," said Nikolaus Bömcke, secretary-general of the European Banking Federation. However, he stressed that it was important to set a timetable for removing obstacles both in the medium and short-term and warned that the devil would be in the detail.

The action plan unveiled by Acting Internal Market Commissioner Mario Monti last month is aimed at reforming the EU's financial services sector to enable it to take full advantage of the euro. The plan and a parallel pensions reform package were rushed through the caretaker Commission, despite its pledge to refrain from launching new policy initiatives, at the request of German Finance Minister Hans Eichel and two European Parliament committee chairmen.

The plan urges member states to agree Union-wide legislation to tackle "market manipulation" such as insider trading or illegal share support operations, update a ten-year-old law governing public stock sales and fine-tune definitions of securities which can be used as security against cross-border loans.

"It is crucial that the single market for financial services delivers its full potential for consumers, in terms of a broad range of safe, competitive products," said Monti. At the same time, he emphasised that it was important to offer industry easier access to a rich, liquid market for investment capital.

Monti believes that this is becoming increasingly important as the prospect of a pan-EU stock and bond market comes closer, and the amount of European citizens' cash flowing into mutual fund schemes doubles to more than €200 billion. His remarks came just days after the London and Frankfurt stock exchanges penned a deal with the Amsterdam, Brussels, Madrid, Milan, Paris and Zurich markets aimed at creating an electronic trading platform for blue-chip stocks.

The Commission's report also calls for a "more balanced application of local consumer protection rules".

Article forms part of a survey 'Financial Services'.