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MEMO/01/213

Brussels, 6th June 2001

Commission Decisions establishing the European Securities Committee and the Committee of European Securities Regulators

Frequently Asked Questions (see also IP/01/792)

Why has the Commission taken the initiative to establish these two Committees ?

The adoption of the two Decisions establishing the European Securities Committee and the Committee of European Securities Regulators constitutes a political reply from the Commission to the Resolution adopted by the European Council at its Stockholm summit on more effective securities market regulation in the European Union. This Resolution was adopted following publication of the Final Report of the Committee of Wise Men on the Regulation of European Securities Markets (see IP/01/215).

What is the Committee of Wise Men ?

The Committee of Wise Men on the Regulation of Securities Markets, chaired by Alexandre Lamfalussy, was set up by the Ecofin Council, in July 2000. It was mandated to examine the current conditions for implementation of the regulation of the securities markets in the EU and to assess how the mechanism for regulating these markets can best respond to market developments. With the goal of eliminating barriers and obstacles, this Committee was invited to propose scenarios for adapting current practices in order to ensure greater convergence and co-operation in day-to-day implementation and take into account new developments on the securities markets. The Committee of Wise Men delivered its final report in February 2001.

For further information of the Committee of Wise Men and its reports, see the Europa website at http://ec.europa.eu/internal_market/en/finances/mobil/index.htm

What do the Committee of Wise Men say in their Final Report on the Regulation of European Securities Markets ?

The report proposed regulatory reform based on a four-level approach and on the establishment of two advisory committees, the European Securities Committee (ESC) and the Committee of European Securities Regulators (CESR), to assist the Commission. The four-level regulatory approach can be described as follows :

  • Level 1 will consist of legislative acts, namely Directives or Regulations, adopted under Co-decision procedure by the Council and the European Parliament on the basis of the EC Treaty. The Council and the Parliament will agree on a case-by-case basis on the nature and extent of technical implementing measures to be decided at Level 2 on the basis of Commission proposals;

  • Level 2 implementing measures will be used more frequently to ensure that technical provisions can be kept up to date with market and supervisory developments. They will be adopted in application of the 1999 Council Decision on Comitology, laying down the procedures for the exercise of implementing powers conferred on the Commission;

  • Level 3 measures will have the key objective of improving significantly the common and uniform implementation of Level 1 and 2 acts in the Member States;

  • Level 4, the Commission will strengthen the enforcement of Community law.

This regulatory approach will be implemented by the Commission assisted by the ESC and by the CESR.

What is the European Securities Committee (ESC) ?

The European Securities Committee is composed of representatives of Member States, chaired by the European Commission. It may invite experts and observers to participate in its meetings. The Committee will be chaired by the Commission, which will also provide the secretariat.

It will be consulted by the Commission when drafting legislative proposals on securities policy issues. In this respect, it will take on the functions of the existing High Level Securities Supervisors Committee established by the Commission on an informal basis in 1985.

This Committee may also act as a regulatory committee in the context of work on future legislative proposals conferring implementing powers on the Commission, which must be decided by Co-decision. In its future regulatory capacity, it will vote on draft technical implementing measures that develop basic legislation submitted to it by the Commission.

What is the Committee of European Securities Regulators (CESR) ?

The Committee of European Securities Regulators is composed of high-level representatives of the national public authorities competent in the field of securities. This Committee may invite experts or observers to participate in its meetings. It will set out its own operational arrangements.

The CESR will advise the Commission on securities policy issues. After consulting the ESC, the Commission may mandate the CESR to prepare draft implementing measures. In so doing, it will act in a transparent manner, fully involving market participants, consumers and end-users on a regular basis.

The CESR will also play an important role for the transposition of community law in the Member States. It will enhance consistent and timely day-to-day implementation of the Community law through reinforced co-operation between national regulators.

Why two Committees? How do they differ?

Both Committees will advise the Commission on securities policy issues, but their roles will nevertheless be different. The ESC and the CESR may be consulted by the Commission when drafting legislative proposals. When preparing draft implementing measures, the Commission may consult the ESC before mandating the CESR to prepare technical details. Implementing measures will then be submitted to the ESC in application of the Council Decision on comitology. It will then act as a regulatory committee.

What is the relationship between the two committees and between the Commission and the committees ?

In order to ensure close links between both Committees, the chairperson of the CESR will participate at the meetings of the ESC as an observer. The Commission will chair the ESC and will be represented at all meetings of the CESR, where it will be entitled to participate in debates.

Are these Committees the precursor of a European Securities Exchange Commission (i.e. an independent administrative agency competent in the field of securities)?

Establishment of these two Committees is a stand-alone decision by the Commission, in the context of implementing the Stockholm European Council Resolution. There will be a full and open review in 2004, as decided in the Stockholm Resolution. What is important now is to make the new system work efficiently, as soon as possible, to improve the flow of balanced, well thought out legislation to complete the Financial Services Action Plan on time by 2005 (2003 for securities markets).

Who will nominate the members of each committee?

The Member States.


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