Quantum leap’ needed to meet single capital market deadline

Date: 09/11/00

By Tim Jones

EU INSTITUTIONS have been set the daunting task of driving 20 draft financial services laws and guidelines through the bloc's notoriously slow decision-making process within six months if they are to have any chance of creating a single EU capital market by the January 2005 deadline.

A report published today (9 November) by Alexandre Lamfalussy, chairman of the EU's committee of wise men on the regulation of European securities markets, and another by Internal Market Commissioner Frits Bolkestein warn that without a "quantum leap" in implementing outstanding laws, the target will be missed.

Central to both approaches is a plan to create an EU securities committee to match the work of the advisory banking panel, and oversee supervision of the stock and bond markets. "While I am pleased to note progress in many sectors, there are still logjams that must be cleared," said Bolkestein. "We must act faster if we are serious about helping the European economy grow faster, perform better and create more jobs."

The reports were commissioned after EU leaders set the five-year deadline for implementing their financial services action plan (FSAP) at the Lisbon summit in March, with the aim of matching the US economy's job and business-generating performance over the past decade.

Lamfalussy acknowledges that changes are needed to the Union's regulatory framework to introduce greater conformity in stock-listing, market admission, trade reporting and exchange governance to cope with the merger frenzy between the EU's stock markets and increased online business.

The European Commission has set itself ten priorities for the next six months, including proposals to upgrade directives on stock prospectuses, new laws on cross-border use of collateral, prudential rules for financial conglomerates, a capital framework for banks and investment firms, and laws to combat market manipulation.

Added to this will be legislation to bed down the common "accounting strategy" and guidelines on updating the Investment Services Directive, e-commerce policy and the creation of a securities committee.

This panel will carry out interim pooled supervision of the securities markets in the absence of a Union version of the US securities and exchange commission, an agency which has civil and penal powers. Paris had hoped the Lamfalussy group would recommend the immediate establishment of a Euro-SEC.

Over the same six-month period, ministers and MEPs will be expected to approve directives on the prudential supervision of supplementary pension funds, harmonised investment funds, marketing of financial services, reorganisation and liquidation of insurance undertakings and banks, savings taxation and laundering. Long-outstanding proposals for a European company statute and rules governing take-over bids are also included.

EU institutions have been set the daunting task of driving 20 draft financial services laws and guidelines through the bloc's notoriously slow decision-making process within six months if they are to have any chance of creating a single EU capital market by the January 2005 deadline.