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Brussels, 21st September 2001

Financial Services Policy Group discusses the impact of the events in USA on the financial sector

The 12th meeting of the Financial Services Policy Group, comprising personal representatives of EU Finance Ministers, took place on 20 September in Brussels under the chairmanship of Internal Market Commissioner Frits Bolkestein. The Group concentrated on 5 points: (i) the impact of the events in the US on the financial sector, (ii) the forthcoming proposal for a Takeover Bids Directive (iii) clearing and settlement, (iv) a mid-term progress report by the Belgian Council Presidency and (v) enlargement. The Group also exchanged views on the proposal for a regulation on cross-border payments.

The FSPG meets regularly to forge consensus between national ministries involved in financial services regulation and to review progress on the implementation of the Financial Services Action Plan (FSAP). The FSAP was endorsed by the Cologne European Council in June 1999 and at the Lisbon European Council in March 2000. The Stockholm European Council strongly reaffirmed the importance of implementing the Action Plan by 2005 and set the new deadline of 2003 for the full integration of the European Securities markets.

Impact of the events in the US on the financial services sector

The FSPG exchanged views on the initial effects on the financial sector: markets, industry and public authorities appear to have responded well. Vigilance is however required in monitoring further possible impact on financial markets and institutions.

Takeover Bids Directive

On 4 July 2001, the European Parliament, after an equal vote on both sides, rejected the Takeover Bids Directive (see IP/01/943). The failure of the Takeovers Directive, after 12 years of negotiation, was a major disappointment and set back for the creation of an integrated financial services and capital market by 2005. However, the Commission firmly believes that a clear set of pan-EU rules for the conduct of takeovers stands to benefit European companies and shareholders, especially minority shareholders, by clarifying their rights and obligations. It would also facilitate the goal set by the Lisbon Summit of restructuring the European economy to make it the most competitive in the world by 2010. The Commission therefore intends to come forward as soon as possible in 2002 with a new proposal that takes account of the broadest range of views.

As part of its preparations for this new proposal, the Commission has asked a Group of High Level Company Law Experts to provide guidance on takeover bids (see IP/01/1237). In particular, the group will consider three important issues concerning takeover rules:

  • the definition of an equitable price

  • the "squeeze out" procedure (i.e. the right of a majority shareholder to acquire the shares of the minority)

  • the need for a level playing field for shareholder rights in the EU.

Clearing and settlement

Clearing and settlement of securities transactions is attracting ever more interest. The Commission issued a consultation document on this issue in April 2001 (see IP/01/487). The issue of competition in this field was raised in the report of the Wise Men chaired by Alexandre Lamfalussy and is being investigated by the Commission services. In parallel the Commission is considering how best to update the Investment Services Directive and ensure access to markets.

FSPG considered the need to analyse and evaluate the need for additional EC legislation to reduce further the risks associated with the cross border use of and participation in clearing and settlement systems. The Group agreed that a forthcoming Commission Communication on clearing and settlement should identify the key issues at stake and suggest appropriate solutions. The Communication will be subject to a wide consultation with Member States and the market.

Mid-term report by the Belgian Council Presidency

The Belgian Council Presidency reported on the principal initiatives taken in the Council in the field of financial services since the beginning of July. The general ambition of the Presidency is to see the implementation of the Financial Services Action Plan cross a "critical threshold" by the end of the year.

The Presidency identified the proposal for a Directive on Money Laundering as a particular concern. The proposal is currently the subject of a conciliation procedure between the European Parliament and the EU's Council of Ministers launched on 18th September. The key point is the necessity to find a balanced compromise with the Parliament on the question of the obligations applicable to the legal professions.

The Draft Regulation on the Statute for a European Company is on the agenda of the Internal Market, Consumers and Tourism Council of 27 September 2001 for adoption. Work is continuing in the Council working groups on the proposals for legal frameworks on prospectuses (see IP/01/759 and MEMO/01/204), market abuse (see IP/01/758 and MEMO/01/203), collateral (see IP/01/464 and MEMO/01/108), financial conglomerates (see IP/01/609) and International Accounting Standards (see IP/01/200 and MEMO/01/40). The Presidency has presented a new compromise on the proposal for a Directive on distance marketing of financial services and may reach political agreement in the Council on 27 September. The Presidency is pursuing the first reading of the proposal for a Directive on supplementary pension funds (see IP/01/1141 and MEMO/00/62), and a questionnaire has been sent to Member States in order to obtain additional information on the monitoring systems in the different countries. The proposal for a Regulation on Cross-border Payments in Euro (see IP/01/1084 and MEMO/01/279) will be presented by the Commission at 27th September Internal Market, Consumers and Tourism Council. Work will commence shortly in a Council working group.


The Göteborg European Council in June 2001 concluded that enlargement is irreversible and that negotiations with those candidate countries that are ready should be completed by the end of 2002, provided that progress towards meeting the accession criteria continues. The objective is for the first countries to participate in the European Parliament elections of 2004 as members. This momentum must be matched by continued progress in the candidate countries in transposing, implementing and enforcing the Community law. Compliance is particularly important in the sphere of financial services: inadequate implementation of Community legislation or substandard regulatory structures or supervision could expose policyholders, borrowers, investors, and intermediaries in existing Member States to unacceptable risk.

FSPG discussed the importance of progress on the enlargement process in the field of financial services and agreed that FSPG members have a valuable role to play:

  • by ensuring that the sensitivity of financial services aspects of enlargement are both well understood and receive sufficient attention in national capitals; and

  • by appreciating the importance of allocating adequate resources to this process as well as continued and reinforced support for the peer reviews that still needs to be carried out. The peer review process was initiated by the Commission and provides for experts from the banking, insurance and securities supervisory agencies of Member States to visit their counterparts in candidate countries and to evaluate the efficiency of day-to-day supervisory practice on the spot, in view of ironing out shortcomings before financial institutions from the accession countries get full and uncontrolled access to the Single Market.

The Group may consider concrete and specific concerns for finance ministries at a later stage.

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