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The European Union is liberalising access to stock-exchange membership and financial markets in host Member States for investment firms authorised to provide the services concerned in their home Member State.
The Directive applies to all investment firms. However, some of its provisions are not applicable to credit institutions whose authorisation covers one or more of the investment services listed in the annex.
Criteria for granting and withdrawing authorisation of investment firms in the home Member State. The competent authorities in each Member State must ensure that:
- the investment firm has sufficient initial financial resources for the proposed activities;
- the persons directing the business have sufficient professional integrity and experience;
- holders of qualifying participations are suitable persons.
Authorisation applications have to be accompanied by a programme of operations. Member States have to grant or refuse authorisation within six months of submission of a complete application.
Introduction of a procedure for reciprocity with third countries. Member States must inform the Commission of any authorisation of a direct or indirect subsidiary of one or more parent undertakings in third countries and of any holding acquired by a parent undertaking in a Community investment firm such that the latter would become its subsidiary.
Whenever it appears to the Commission that a third country is not granting Community investment firms effective market access comparable to that granted by the Community to investment firms from that country, it may initiate negotiations in order to secure comparable competitive opportunities for Community investment firms.
The competent authorities of the home Member State are responsible for the prudential supervision of an investment firm. However, responsibility for implementing the rules of conduct and for monitoring compliance with them remains within the competence of the host Member State, which, when applying the rules, has to respect the principle of the public interest.
Proposed changes in qualifying holdings in an investment firm must be notified to the supervisory authorities so as to enable them to assess the suitability of the new shareholders/members.
The investment firm is required to indicate to investors which compensation scheme applies. It is envisaged that the various compensation schemes will be harmonised as soon as possible.
An investment firm authorised in another Member State is permitted to advertise by all means of communication available in the host Member State.
Member States must permit investment firms from other Member States to carry out in their territory the activities authorised by the home country, either by establishing a branch or by providing services without a branch.
Host Member States may not make the establishment of a branch or the provision of services by an investment firm authorised by its home Member State subject to further authorisation or to a requirement to provide endowment capital or any other measure having equivalent effect.
In certain circumstances, a Member State may require that the transactions connected with investment services be carried out on an organised market. However, investment firms, irrespective of whether they are banks, may become members of such an organised market.
Rules for notification to be made and formalities to be completed when either a branch is opened or services are provided in a host Member State.
Procedures to be followed by the authorities of either the home or the host Member State where an investment firm having an established branch or providing services fails to comply with the legal provisions in force in the host Member State.
Annex defining the investment activities, other services and financial instruments coming within the scope of the Directive.
Directive 95/26/EC amends the Directive to coordinate all the provisions concerning communications between authorities for the entire financial sector.
Directive 97/9/EC amends the Directive to establish an investor compensation scheme.
Directive 2000/64/EC amends the Directive to extend the rules on the exchange of confidential information, pursuant to a cooperation agreement with a non-member country, with competent authorities or bodies which, by virtue of their duties, help to strengthen the stability of the financial system. The scope for exchanging confidential information only with the corresponding competent authorities of non-member countries proved to be too restrictive.
Directive 2002/87/EC introduces specific prudential legislation for financial conglomerates as back-up for the sectoral prudential legislation applicable to credit institutions, insurance companies and investment firms. It provides for minimum alignment of the prudential legislation for homogeneous groups active in a single sector (banking, insurance, investment) on that applicable to financial conglomerates, both with a view to protecting consumers, depositors and investors and with a view to strengthening the European financial market.
With effect from 1 November 2007, Directive 2004/39/EC will repeal Directive 93/22/EEC (see Directive 2006/31/EC). References to Directive 93/22/EEC will then be construed as references to Directive 2004/39/EC.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Directive 93/22/EEC [adoption: cooperation]||01.07.1995||31.12.1995||OJ L 141 of 11.06.1993|
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Directive 95/26/EC||18.07.1996||-||OJ L 168 of 18.07.1995|
|Directive 97/9/EC||26.03.1997||26.09.1998||OJ L 84 of 26.03.1997|
|Directive 2000/64/EC||17.11.2000||17.11.2002||OJ L 290 of 17.11.2000|
|Directive 2002/87/EC||11.02.2003||11.08.2004||OJ L 35 of 11.02.2003|
|Directive 2004/39/EC||30.04.2004||30.04.2006||OJ L 145 of 30.04.2004|