Financial service priorities and progress Third report
Date: 2000-11-08
Institutions: European Commission
Subjects: action programme, activity report, financial cooperation, financial market, financial policy

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 8.11.2000
COM(2000) 692 final

FINANCIAL SERVICES PRIORITIES AND PROGRESS

THIRD REPORT

(presented by the Commission)

FINANCIAL SERVICES PRIORITIES AND PROGRESS
THIRD REPORT

SUMMARY

This third report on the progress in implementing the Financial Services Action Plan
(FSAP) confirms that, across the board, the situation remains satisfactory but with
important qualifications. There is yet to be the quantum leap needed to achieve the
2005 deadline set by Heads of State and Government at
the Lisbon European
Council. The Commission cannot allow any significant slippage in bringing forward
the many initiatives, legislative and non-legislative, promised in the FSAP. Progress
in agreeing and implementing these proposals must be rapid, particularly in respect
of those legislative proposals that have either recently been made or will come
forward in the near future.

The Commission has, at the request of the Ecofin Council, reviewed the FSAP in
order to refine its priorities and indicated for each the critical path that must be
achieved if the 2005 deadline is to be met. The Commission suggests a set of critical
priorities for the coming six months for each institution. These could be reviewed, and
added to, in successive progress reports in order to maintain the momentum towards
the 2005 deadline. In doing so, however, the Commission underlines the fact that all
the measures in the Action Plan require parallel progress to ensure that the Union
does not face a sub-optimal situation in its capital markets and financial services
policies.

the Group of Wise men under the
This report also notes the establishment of
chairmanship of Baron Lamfalussy whose interim report will be considered at the 27
November ECOFIN Council (when the present report will also be discussed). In order
to improve co-ordination between the institutions the so-called ‘2005 Group’ has
been set up. An exercise to introduce benchmarking has also been launched. The
Commission believes that these developments will help in meeting the challenges of
the Action Plan.

2

INTRODUCTION

role of efficient

financial markets for

long term European competitiveness and for

The Lisbon European Council took an important political step in March towards an integrated financial
services and capital market in the European Union. Heads of State and Government recognised the
central
the
development of the New Economy - the strategic aim over the next decade being for the Union to
become “…the most competitive and dynamic knowledge based economy in the world capable of
sustainable economic growth with more and better jobs and greater social cohesion…”. The Lisbon
European Council therefore asked that the FSAP should be completed by 2005. It also emphasised
for an acceleration of their
priority measures relating to wholesale financial markets and the call
implementation reflect the important contribution they can make to economic growth and the need to
keep up with rapid market developments. The introduction of the Euro, by removing one major source of
market segmentation – different currencies – has increased the potential benefits of a single financial
services market. It is also a major catalyst for integration of EU financial markets.

returns on their

Financial services is one of the sectors where Europe has the most potential for stimulating economic
growth, improving economic productivity and job creation. The integration of financial markets will result
in widespread benefits for all sectors of the economy while giving consumers more choice, better
opportunities for more value for money and higher
investments. Efficient and
transparent financial markets also help to optimise the allocation of capital. Facilitating the access to
equity financing and risk capital will allow SMEs and start-up companies to fully exploit their growth and
job creation potential. Substantial progress has been made, although Europe still has some way to go to
achieving the full benefits of the Single Market in financial services. The Financial Services Action Plan
(FSAP)1 details the work that has to be accomplished to reap the benefits of a fully integrated European
financial services and capital market. The Council has invited the Commission to report on a regular
basis on the progress made. This report, the third, is presented in a period of rapid changes to the
infrastructure of EU securities markets. The establishment of the Group of Wise men under the
chairmanship of Baron Lamfalussy which is examining the current conditions for implementation of the
regulation of the Union’s securities markets will unveil its initial report on 9 November (the final report is
due mid-February).

Given the urgency of implementing the FSAP, the Commission in this report, at the request of the Ecofin
Council on 27 July has reviewed and refined the priorities indicating for each the critical path that must
be achieved if the 2005 deadline is to be met. The ten measures that are prioritised for an integrated
wholesale market will vastly improve the climate for investing and raising capital on an EU basis and
creating a transparent environment for cross-border restructuring. A priority legal framework is required
to equip EU consumers with the necessary information and safeguards to allow new distribution
channels and marketing technologies to be put to work on a pan-European scale. Priorities are
suggested for sound prudential rules to meet the challenges of industry consolidation and financial
market developments and maintain financial stability in the Union. In order to improve co-ordination
between the Commission, the Council and the European Parliament a high-level group (‘2005 Group’)
has been set up to help improve institutional co-ordination. The next few months are vital. Many
regulatory texts will be carried forward from the Commission. Now is the time to find the political will to
progress sufficiently.

1 Financial Services -
COM(1999)232

Implementing the Framework for financial markets: Action Plan.

Commission Communication of 11.05.1999

3

I PROGRESS ON IMPLEMENTING THE FINANCIAL SERVICES ACTION PLAN2

This third report on the progress in implementing the FSAP has again been prepared
with the assistance of personal representatives of Ecofin ministers meeting in the
Financial Services Policy Group. Overall the situation remains satisfactory although
there are a number of serious concerns and the worry that, without more effort in next
few months the FSAP will
to maintain sufficient momentum to achieve the
ambitious 2005 deadline. The Annex sets out a measure by measure analysis and
assessment of progress. Seven areas have been successfully completed. For 29 of
the 42 measures progress has been made to achieve the Action Plan targets. For 6
measures the Commission considers that insufficient (or no) progress has been
registered.

fail

Areasrequiringurgentaction

Despite successive political commitments at the most senior level,
there is little
progress on the European Company Statute. This has had implications for two other
measures in the field of company law (10th Company Law Directive and the 14th
Company Law Directive). The Regulation itself does not now pose any problems on
substance. The Directive, on the other hand, is blocked by a refusal
from one
Member State to allow employees, in the case of a merger, to participate in company
bodies if such participation is demanded by more than 25% of the employees. The
blocking member state accepts participation of employees only if this is requested by
a majority of
the
Commission Communication on Fraud and Counterfeiting in Payment Systems. This
will be presented by the Commission before the end of the year. Three Member
States (FR, IT, LUX) are late in transposing the Settlement Finality Directive. The
Commission has instituted infringement procedures against these Member States.

the employees. There is also lack of progress in respect of

Steadyprogressisbeingmade

On consumer and retail issues the Commission has been accelerating its work to
enhance consumer confidence in an EU market for retail financial services. The
for insurance intermediaries was presented in September.
legislative proposal
Discussions in the Council and the European Parliament on the distance marketing
proposal
financial services are continuing as a presidency priority. The
Commission’s Communication on an e-commerce policy for financial services is
expected around the end of this year.

for

Concrete efforts between Commission and national bodies to agree procedures
underpinning effective outofcourtredresson a cross-border basis throughout the EU
are progressing rapidly. A network of national bodies dealing with complaints from
consumers will co-operate in providing assistance in cases of cross-border problems.
National bodies are currently elaborating a Memorandum of Understanding as a
necessary basis for good co-operation between such schemes. Cross-border
payments continue to receive the highest degree of attention after the introduction of

2

First report, see : Financial Services Action Plan - Progress Report, November 1999. Second Report, see Financial
Services
Internet:
Plan
http://europa.eu.int/comm/internal_market.

Available

Progress

Second

Report,

Action

2000

June

on

–

.

4

the Euro. The Commission and the ECB are strongly encouraging the banking sector
to improve their cross-border payment arrangements for services in this field. Good
progress has been made in standardising the necessary information to be given for
cheap straight-through processing of cross-border payments. The Commission and
the ECB have also suggested the abolition of reporting requirements of banks in
respect of cross-border payments for monetary policy purposes.

for listed companies to report

As for wholesale markets,
reasonable progress has been made. Political
agreement has been reached on 17 June on the proposal for a Take Over Bids
Directive although the parliamentary processes are as yet not completed. A
Commission Communication on the Union’s future accounting strategy was strongly
supported by the July Ecofin Council. The Commission will shortly make a legislative
proposal
financial statements in accordance with
International Accounting Standards (IAS). The Commission proposed on 11 October
a Directive on the Prudential Supervision of Supplementary Pension Funds. A
Commission Communication on the Application of Conduct of Business Rules under
Article 11 of the ISD and the Communication on the Investment Services Directive
(ISD) will be issued in the coming months alongside proposals for directives on
‘market manipulation’ and on the cross-border use of collateral. Political agreement
was reached on the first UCITS proposal at the 17 October Ecofin.

On prudentialrules, The Council and the European Parliament have adopted the E-
Money Directive and a Directive amending the insurance directives and the ISD to
permit information exchange with third countries. Political agreement has been
reached on the proposed directives on the winding-up and reorganisation of credit
institutions and of insurance undertakings. Political agreement has also been
reached on the proposal for amendments to the Money Laundering Directive. The
Commission has proposed a directive for new insurance solvency requirements and
adopted its Recommendation on the Disclosure of Financial Instruments. The review
of bank capital rules (in parallel with the G-10 Basel Committee on Banking
Supervision) continues. Work on the supervision of financial conglomerates is on
schedule for a draft directive early next year. The Commission is examining the
development of a possible framework for reinsurance, where at present there is no
legislative framework.

Taxation–progressafterFeira

the European Council

reached an agreement on the step-by step
In Feira,
development towards exchange of information as the basis for taxation of savings
income of non- residents. Work in Council is progressing steadily in order to achieve
agreement on the substantial content of the Directive, possibly before the end of this
year. Work in the Council group on the implementation of the Code of Conduct on
business taxation is also continuing. In the Taxation Policy Group,
the issue of
taxation of supplementary pensions is continuing to be discussed as a priority
subject.

TheRiskCapitalActionPlan(RCAP)isalsomakingprogress…..

The Lisbon European Council identified the development of a pan-European market
for
the
implementation of the RCAP (Risk Capital Action Plan) by 2003. On 18 October the

risk capital as a high priority.

the Council called for

In particular

5

Commission has adopted two Communications. The first reviews the strategy for
developing the EU risk Capital market in view of the Lisbon conclusions and reports
on the RCAP progress. It contains an Annex which describes a monitoring and
benchmarking mechanism which will be the basis for an incoming RCAP
implementation report. The second Communication is a report on the on-going review
the European Investment Bank and European Investment Fund financial
of
instruments and on the coherence of Community financial
instruments. The
measures in the RCAP of financial nature were incorporated into the FSAP and
therefore they should cater also for the needs of the fast-growing SMEs. Of particular
importance for developing the EU risk capital market will be the timely adoption of
the: (i) directive on the prudential supervision of supplementary pension funds; (ii)
two directives on UCITS; (iii) amendment of the two directives on prospectuses; and
(iv) legislative follow-up to the EU Accounting Strategy Communication

II

GETTING OUR PRIORITIES RIGHT

The FSAP already sets indicative timetable and priorities. Ecofin Ministers, however,
invited the Commission to come forward with a more refined (and limited) number of
specific priorities and to provide an indicative critical path for each. This the
Commission has done, but a number of important considerations remain. The FSAP
must, in the view of the Commission, remain as the basis for our work in order to
achieve the 2005 deadline. Highlighting a number of key dossiers (in the annex by a
(cid:1)
) should not detract from this overarching requirement. Secondly, although the
priorities identified are rather numerous, the Commission has found it impossible to
shorten the length of
the heavy
responsibility that currently rests on the Commission to bring forward ten proposals,
of which seven legislative, over the next six months will, of course, then shift to the
Council and the Parliament. These institutions must do everything possible to
minimise bottlenecks and delays.

lest key policies are omitted. Thirdly,

the list,

Newdevelopments

the Chair of

The introduction of the 2005Group should help us in this respect. This informal group
the Economic and Monetary Affairs Committee,
comprises
representatives of the present and incoming presidencies and the Commissioner in
charge of financial services. The Commission has anticipated new priorities reflecting
the evolution in financial services since the FSAP was originated. In particular, the
financial services legislation that can adapt adequately to the rapid
need adopt
changes in financial markets is a matter of key concern to the industry and the
European legislator. Many calls have been made to accelerate work on the FSAP
and to bring forward the date of completion to 2004. Subject to the agreement of all
three institutions, on specific dossiers, efforts may be made to accelerate the date of
agreement.

The Committee of Wise Men presided over by Baron Lamfalussy may add to this.
The Committee was set up at the 17 July Ecofin, in a joint initiative of the French
Presidency and the Commission. It will produce its initial report on 9 November and
its final report around mid-February 2001. The Group is examining the current
conditions for implementation of the regulation of securities markets in the EU, the
Union’s regulatory capacity to cope with developments on securities markets and

6

scenarios for adapting current practices in order to ensure greater convergence and
co–operation in day to day implementation.

Endorsement

The Commission invites the institutions to endorse these priorities and to take every
action necessary to ensure that
they are accorded top priority without affecting
adversely the other FSAP actions.

7

THE TEN COMMISSION PRIORITIES FOR THE NEXT SIX MONTHS

SingleEUwholesalemarket:
(cid:1)

(cid:1)

Upgrading the two Directives on Prospectuses

(cid:1)

(cid:1)

Legislative follow-up to the EU Accounting Strategy Communication

Directive on Cross-Border Use of Collateral

Commission Communication on the Upgrading of

the Investment

Services Directive
(cid:1)

Commission Communication on The Application of Conduct of

Business Rules Under

Article 11 of the ISD
(cid:1)

Directive on Market Manipulation
(cid:1)

Open,secureretailmarkets:

Commission Communication on an e-commerce policy for

financial services

Soundprudentialrules:

(cid:1)

(cid:1)

(cid:1)

Creation of a Securities Committee

; Directive on Prudential Rules for Financial Conglomerates

Directive Governing the Capital Framework for Banks and Investment

Firms

8

THE COMMISSION´S TEN PROPOSED PRIORITIES FOR THE COUNCIL AND
THE EUROPEAN PARLIAMENT FOR THE NEXT SIX MONTHS

(cid:1)

SingleEUwholesalemarket:

Directive on the Prudential Supervision of Supplementary

Pension Funds

(cid:1)

(cid:1)

(cid:1)

The two UCITS Directives

European Company Statute (long outstanding)

Open,secureretailmarkets:
(cid:1)

Soundprudentialrules:

(cid:1)

(cid:1)

(cid:1)

Directive on Take Over Bids (long outstanding)
(cid:1)

Directive on Distance Marketing of Financial Services

Directive on the Re-organisation and liquidation of
Undertakings (long outstanding)

Insurance

Directive on the Winding-up and reorganisation of Banks (long
outstanding)

Amendments to the Money Laundering Directive

Widerconditions:
(cid:1)

Directive on Savings Tax

Implementing the December 1997 Code of Conduct on business taxation (Council)

Major economic benefits can be achieved from an integrated wholesale market.
The ten measures that are prioritised will vastly improve the climate for investing and
raising capital on an EU basis (directives on Prospectuses, Pension Funds, UCITS, Market
Manipulation, European Company Statute, Take Over Bids Directive, a Securities Committee and the
follow-up to the Accounting Communication; Comunications on upgrading and clarifying the ISD. They
would constitute a significant step towards establishing a common legal framework
for securities markets and introducing a single set of financial statements for EU
listed companies. At the same time, EU consumers should benefit from cross-border
competition. This will only be the case if they are sufficiently protected and have
confidence in the on-line and off-line EU financial marketplace.

Open and secure retail markets are required to equip EU consumers with the
necessary information and safeguards. A legal framework is needed which will allow
new distribution channels and marketing technologies to be put to work on a pan-
European scale. We need a clear and coherent policy, which takes account of
existing rules and technological progress. (Distance Marketing of Financial Services Directive,
and E-commerce and Financial Services Green Paper).

the art prudential rules and supervision to meet

State of
the challenges of
consolidation in the industry and financial market developments are prerequisites to
maintain financial stability in the Union. Maintaining the financial integrity is also a
priority area of attention (Directives on the Capital Framework for Banks and Investment Firms,
Prudential Rules for Financial Conglomerates and amendments to the Money Laundering Directive).
Finally, the protection of policyholders and depositors and orderly market exits are
important cornerstones for financial stability (Directives on the Winding-up and liquidation of
Insurance Undertakings and Winding-up and reorganisation of Banks).

9

Establishinga’criticalpath’toimplementtheseprioritymeasures

the ‘critical path’

invited the Commission to set out

The Ecofin Council
for the
adoption and implementation of each of its proposed priorities. These are presented
in the chart on the next page which sets out the stages and deadlines for the
Commission, the European Parliament, the Council and the Member States to adopt
the measures. The deadlines set for the institutions and the Member States are taken
the three EU
from the Action Plan itself. They reflect
institutions and the Member States. Succesful implementation of the actions identified in the
critical path will ensure that
financial markets contribute fully to economic growth and
employment creation.

the joint responsibility of

10

Proposed Critical Path for the implementation of priority related measures
of the Financial Services Action Plan

Lisbon deadline
1/1/2005

The Commission Priorities

Ten priorities have been identified for the next six months

07/00

01/01

07/01

01/02

07/02

01/03

07/03

01/04

07/04

Upgrading the two Directives on Prospectuses

Legislative follow-up to EU Accounting Strategy Communication

Adopting a Directive on Cross-border Use of Collateral

Issuing a Commission Communication on Upgrading the Investment Services Directive

Issuing a Commission Communication on the Application of Conduct of Business Rules Under Art. 11 of the ISD

Creation of a Securities Committee

Issuing a Commission Communication on E-commerce Policy for Financial Services

Adopting a Directive on Prudential Rules for Financial Conglomerates

Adopting a Directive Governing the Capital Framework for Banks and Investment Firms

Adopting a Directive on Market Manipulation

The Commission's proposed Priorities for the Council and the EuropeanParliament

Adopting the Directive on the Prudential Supervision of Supplementary Pension Funds

Adopting the two Directives on UCITS

Adopting the European Company Statute

Adopting the proposed Directive on Take Over Bids

Adopting the Directive on Distance Marketing of Financial Services

Adopting the Directive on the Reorganisation and Winding-up of Insurance Undertakings

Adopting the Directive on the Winding-up and liquidation of Banks

Adopting the Amendments to the Money Laundering Directive

Adopting a Directive on Savings Tax

Implementing the December 1997 Code of Conduct on business taxation (Council)

Primary action lies with :

Commission

delay

EP & Council

implementation by Member States

11

Indicatorsofprogress

invited the Commission ‘to propose possible indicators of
The Ecofin Council
progress in realising economic benefits’ of an integrated EU financial services
market. The availability of a constant stream of reliable data, and the development of
reliable econometric models are key. Yet for the financial services sector, such data
and models are not readily available. Work is ongoing in the Commission to define
indicators of economic benefits. In the meantime, personal representatives of finance
ministers in the FSPG are of the view that it is possible to monitor the key trends
towards financial market integration in the EU, where appropriate compared to the
US, thus providing a useful insight into the developments in key areas. The following
non-exhaustive list of indicators could contribute to a monitoring process3:

Trends in the admission and capitalisation of new companies to EU stock

exchanges;

Trends in foreign investment in the EU;

Developments in the use of cross-border collateral in the EU financial markets;

Mergers & acquisitions in the EU financial services sector and trends towards

consolidation in the market;

The development of funded pension schemes in EU Member States;

Development in the use of IAS and US-GAAP accounting principles by EU

listed companies;

Comparison among Member States of financing costs (debt, equity), asset
management costs (acquisition, sale of shares), and of standard financial products
costs, and

On-line provision, penetration and transaction costs of financial services in the

EU, in particular in the retail sector.

If the Council agrees, the Commission will come forward with a set of key indicators
based on data mentioned above.

III

OTHER KEY ISSUES

Globalissues

In an increasingly integrated global financial market, rules on supervision are of
importance. The EU must play its part in encouraging high standards of
crucial
regulation world wide. The EU continues to play a full and active role in forging an
international consensus and widespread implementation of best practice in financial
regulation. Its support for the work of the IASC (International Accounting Standards

3

These indicators are in addition to the series of benchmarks, related to risk capital, proposed by the Commission in
the Annex to its Communication “Progress report on Risk Capital Action Plan” of 18 October 2000 addressed to the
ECOFIN of 7 November 2000.

12

r
r
r
r
r
r
r
r
Committee) to secure a globally accepted set of financial reporting standards that will
enhance financial transparency and facilitate the task of financial supervisors is a
good example.

Core elements of existing EU bank capital requirements are now being re-examined
to bring them up-to-date with supervisory practices and banking trends. This process
takes place in parallel with similar discussions in the Basel Committee on Banking
Supervision in which the regulators of our main banking competitors participate 4. The
EU is continuing its efforts to take a leading role in tackling issues to maintain a level
playing field (taking into account the heterogeneous structure of the EU banking
sector).

Enlargement

The pre-adhesion policies of the Union, especially in the perspective of its impending
enlargement to Central and Eastern European Countries (CEECs), Cyprus and Malta
and Turkey continue to receive attention. Precise rules on prudential supervision, in
line with EU standards, should lay adequate foundations for a wider Internal Market
for financial services as it will exist after enlargement. Greater emphasis is being
placed on institution-building and supervisory assistance in the context of
preparations for accession. The Commission, in co-operation with national experts, is
making progress in preparing proposals for a “peer review” process for beginning
2001.

Tradeconcernsareemerging

As the EU moves towards its objective of a fully integrated financial services market,
it is essential that European financial organisations have proper unfiltered access to
the markets of its major competitors as they have to the EU’s. However, barriers to
entry remain high in many markets,
including the United States. There is an
increasing concern that recent approaches to screen dealing have the unintended
side-effects of closing the US financial services market for EU competitors. Rules
that prevent overseas investment through trading screens and for UCITS continue to
distort capital flows. EU stock exchanges trading equities can not establish trading
screens in the US, even though the core principles protecting investors and ensuring
fairness and transparency are similar in both jurisdictions. Furthermore, even though
US investment funds can be freely marketed in the EU, EU funds are required to
establish ‘mirror funds’
in the US before they can market their products with US
investors, despite the fact that EU and US regulations are broadly equivalent. Similar
concerns exist for bank regulation (the Gramm-Leach Bliley Bill) which may prevent
EU financial
institutions from benefiting from recent changes to US banking
legislation to the same extent as US firms. The Commission is pursuing bilateral
discussions with US authorities to make progress on these issues. The relevant
committees (BAC, IC, HLSS) are kept abreast of developments.

Longstanding concerns already exist about certain elements of the (state) regulation
of US insurance markets which effectively act as barriers to entry to important parts

4

Membership of the Basel Committee includes 8 Member States: Belgium, France, Germany, Italy, Luxembourg, the
Netherlands, Sweden, and the UK. The Commission and the ECB have an observer role

13

of the insurance market (commercial
lines insurance, trust fund requirements for
reinsurance companies). Efforts are being made in the context of the Trans- Atlantic
Economic Partnership (TEP) to make headway in these insurance related areas.

The EU must now co-ordinate its efforts to determine a well researched list of
external trade barriers it will seek to remove in the next Trade Round.

14

ANNEX

PROGRESS ON THE ACTION PLAN FOR FINANCIAL SERVICES

This annex provides a third overview of progress on actions included in the Action Plan for Financial
Services (COM(1999) 232). It tracks progress over the first eighteen months since the adoption of the
Action Plan. The reporting date is October/November 2000. The tables summarise the current situation
and provide the Commission’s assessment of the degree to which Community institutions and Member
States are achieving the objectives set out in the Action Plan (note that the timeframes indicated in the
table may diverge in some cases from those in the FSAP. This reflects the dynamic nature of this annex
and Commission decisions (often after discussion in the FSPG) to accelerate certain measures or to
delay their adoption in order to permit
further consideration of new developments. The optimal
timeframe for their implementation remains however unchanged. Where appropriate a comment has
been added in the final column, notably to indicate the next steps to be taken. The fourth progress
report will be made to the Ecofin Council and the European parliament mid 2001.
H
:
set in the Action Plan
▬
(cid:1)

The star indicates an action which has been successfully completed
The cross indicates that progress has been achieved in meeting the targets

The minus sign indicates no progress

The bell indicates proposed priority measures of the FSAP which represent
the key regulatory areas for an integrated financial services sector and for which a
critical path has been established

Mechanisms&process

The mechanisms for implementing the Action Plan are critical to its achievement.
Over the past six months, and in line with the suggestions in the Action Plan, the
Commission relies on the following mechanisms.

• The Financial Services Policy Group (FSPG), comprising personal representatives of
economic and finance ministers, continues its tasks as a forum to forge consensus between
national ministries involved in financial services regulation. The FSPG has met four times
since the adoption of the action plan and has assisted the Commission in monitoring
progress and preparing this report.

• Informal discussions take place between representatives of the European Parliament, the
present (French) and the next (Swedish) presidencies of the Council, and the European
Commission. The objectives of this informal ‘2005 Group’ are to align working calendars
to avoid delays in FSAP measures, to exchange views on key political issues in FSAP
measures, and to update on progress.

• Six ‘Forum Groups’, composed of market experts, have been set up to consider the
practical and technical aspects of FSAP measures. A number of forum groups have now
accomplished their tasks (groups focusing on market manipulation, the ISD, collateral, and
market obstacles) and have been discontinued. Work continues in the Forum Groups
concerned with consumer information and cross-border cash pooling.

15

STRATEGIC OBJECTIVE 1: A SINGLE EU WHOLESALE MARKET

RaisingcapitalonanEU-widebasis:

Action

Timeframe

StateofPlay

Assessment

Follow-up

Upgrade the two
Directives on
Prospectuses
through a possible
legislative
amendment
(cid:1)

Update the Directive
on Regular Reporting

Draft proposal for
directive under
preparation in close co-
operation with FESCO.

Work continuing in the
Commission in close co-
operation with parties
concerned.

Proposal
beginning
2001

Adoption
2002

Proposal
spring
2001

Adoption
2002

.

.:

:

Adoption of
FESCO position
paper in the
autumn.

Commission’s
Contact
Committee
meeting
beginning 2001.

Establishing a common legal framework for integrated securities and
derivativesmarkets:

Commission
Communication on
The Application of
Conduct of Business
Rules Under Article
11 of the ISD
(distinction between
professional and
retail investors)
(cid:1)

Directive on Market
Manipulation

.
(cid:1)

.

Commission
Communication on
upgrading the ISD

.
(cid:1)

.

For issue

October
2000

FESCO paper on
categorisation of investors
adopted March 2000.Draft
in internal consultation for
Commission adoption.

Proposal
beginning
2001

FESCO presented
recommendations in July
2000.

Adoption
2003

Draft proposal for
directive under
preparation. Work is
conducted in close co-
operation with FESCO.

Issue
Communi
-cation
Novembe
r 2000

Work continuing in close
co-operation with
securities supervisors and
market practitioners.

.

.
.:

.
.:

.

.:

Member State and
industry
consultation second
quarter 2000.

Industry ‘Forum
Group’ to complete
work by autumn
2000.

Preparatory
discussion with
FSPG, HLSS and
Industry.

Consultation
process to be
concluded in first
quarter 2001.

16

Towardsasinglesetoffinancialstatementsforlistedcompanies:

Action

Timeframe

StateofPlay

Assessment

Follow-up

Amend the 4th and 7th
Company Law
Directives to allow
fair value accounting

Adoption
2001

Proposal adopted by
the Commission on
24 February 2000
(Com(2000)80 final).

Commission
Communication
updating the EU
Accounting Strategy

.

.And

.

.

.

.

Legislative follow-up
to EU Accounting
Strategy
Communication
(cid:1)

Legislative
proposal
before
2000

end

Modernisation of the
accounting
provisions of the 4th
and 7th Company
Law Directives

Proposal end
2001

Adoption
2002

Commission
Recommendation on
EU auditing practices

For issue by
autumn 2000
and

.

.Summer
2001

Communication
adopted by the
Commission on 13
June 2000
(Com(2000) 359
final) and backed by
July 2000 Ecofin.

.

.

Legislative proposal
to implement IAS
requirement.

Communication on
accounting strategy
(see above) adopts
this action as part of
its implementation
program.

a) Recommendation
on quality assurance.

.
.

b) Recommendation
on auditor
independence
scheduled summer
2001.

:

H

.

.

.

:

:

:

.

.

:

Discussion in the
Council Working
Party and in the
European
Parliament.

Discussion in the
Accounting
Contact
Committee are
continuing.

a) Commission
Inter-service
Consultation
launched;
Adoption: October
2000.

b) Draft:
November 2000;
further
consultations with
Committee on
Auditing and
Accounting
Contact
Committee: fourth
quarter 2000 –
first quarter 2001.

17

Containingsystemicriskinsecuritiessettlement:

Action

Timeframe

StateofPlay

Assessment

Follow-up

Commission to
continue monitoring
of implementa-tion
in a working Group.

Spring 2001
interpretation
meeting Member
States´ experts.

Implementation of the
Settlement Finality
Directive

Commission
report to
Council end
2002

Directive on Cross-
Border Use of
Collateral

Proposal
before end
2000

Adoption 2003

.

.

.
(cid:1)

Implementation date 11
December 1999.

Transposition of the
Directive completed in:
BE, IRL, NL, S, UK,
DE, AT, PT, FI, GR,
ES, DA.

Infringement
procedures started
against, FR, IT, LUX.

The Commission has
finalised discussions
with the industry. A
working document on
collateral from the
Commission to relevant
bodies for consultation
has been prepared
including legislative
provisions suggested
for a draft Directive.

.

.-

.

.:

Towardsasecureandtransparentenvironmentforcross-borderrestructuring:

Action

Timeframe

StateofPlay

Assessment

Follow-up

Adoption on the
proposed Directive on
Take Over Bids
(cid:1)

Adoption
2001

Council reached common
position on 19 June
2000.

Political agreement on
the European Company
Statute
(cid:1)

Adoption
2001

No further progress.

Review of EU corporate
governance practices

Amend the 10th
Company Law Directive

14th Company Law
Directive

Launch
review in
autumn 2000

Tender procedure has
been launched in spring;
contract should be signed
in November.

New
proposal
spring 2001
Adoption
2002

Awaiting political
agreement on the ECS.
The present proposal is
obsolete and needs to be
updated.

Proposal
spring 2001
Adoption
2002

Awaiting political
agreement on the ECS.

:

-

:

-

-

Second reading EP
autumn 2000.

Progress in Council
required

Completion of study
in autumn 2001.

Reassessment if no
further progress in
Council on ECS
before the end of
2000.

Reassessment if no
further progress in
Council on ECS
before the end of
2000.

18

ASingleMarketwhichworksforinvestors:

Commission
Communication on
funded pension
schemes

Directive on the
Prudential
Supervision of
Supplementary
Pension Funds
(cid:1)

Adoption of the two
Directives on UCITS

.

.

(cid:1)

Issued on 11 May 1999 Com
(1999)134 final

Adoption
2002

Proposal adopted on 11
October Com (2000) 507
provisional).

Political
agreement
on second
UCITS
proposal
spring 2001

Adoption of
both
directives
2001

EP finished its first reading
17 February 2000.
Commission adopted
amended proposals in May
2000.

Political agreement on first
UCITS proposal (‘product’) at
Ecofin 17 October. Political
agreement on second UCITS
proposal (‘service provider
directive’) expected in spring
2001.

H

:

.

.

:

Technical
discussions
should start in
the Council
this autumn.

Technical
discussions
progressing in
the Council
with a view to
achieving a
common
position on
both
directives.

19

STRATEGIC OBJECTIVE 2: OPEN AND SECURE RETAIL MARKETS

Action

Timeframe

StateofPlay

Assessment

Follow-up

Political agreement
on proposal for a
Directive on the
Distance Marketing of
Financial Services
(cid:1)

Political
agreement
end 2000
Adoption
end 2000

Commission
Communication on
clear and
comprehensible
information for
purchasers

Commu-
nication
2001

Commission has completed
inventory of information
requirements.

Discussions with industry
(‘Forum Group’) and
consumers in progress.
Further meeting planned for
autumn 2000 after
finalisation of information
gathering exercise in the
context of the Distance
Marketing Directive and
finalisation of Mortgage
Credit Dialogue.

Recommendation to
support best practice
in respect of
information
provision (mortgage
credit)

Commission report
on substantive
differences between
national
arrangements
relating to consumer-
business
transactions

Interpretative
Communication on
the freedom to
provide services and
the general good in
insurance

Proposal for
amendment of
Insurance
Intermediaries
Directive

Commission
Communication on a
single market for
payments

For issue
beginning
2001

Dialogue in progress and
encouraging.

Ongoing
review
within the
Commis-
sion service

Discussions with industry
(‘Forum Group’) and
consumers are being
concluded.

Adopted 16 February 2000
(COM (2000) 43).

Adoption
2002

Proposal for a Directive
was adopted 20 September
2000 (COM(2000)511
final).

Adopted 31 January 2000
(COM(2000)36 final).

.

.:

.

.-

:

.

.:

H

:

H

20

Lisbon European
Council has re-
affirmed goal of
adopting
directive by end
2000.

Information
gathered will
prove useful for a
number of
Commission
initiatives,
including work on
e-commerce +
financial services.

Recommendation
planned on
successful
completion of
dialogue.

Information
gathered will be
used for further
Commission
initiatives in the
field of retail
financial services.

Technical
discussions to
start in Council.

Round-Table on 9
November 2000.
Industry is
requested to
implement the
Recommen-
dations.

.

Action

Timeframe

StateofPlay

Assessment

Follow-up

Commission Action
Plan to prevent fraud
and counterfeiting in
payment systems

For issue
by end
2000

Commission
Communication on
an e-commerce
policy for financial
services
(cid:1)

For issue
beginning
2001

Draft Communication
being finalised.

Follow-up will
be done in the
light of the
Action Plan of
the
communicatio
n to be
adopted.

-

:

STRATEGIC OBJECTIVE 3 : STATE-OF-THE-ART PRUDENTIAL RULES AND
SUPERVISION

Action

Timeframe StateofPlay

Assessment Follow-up

EP´s second
reading within
the next months.

Common
position
2000

July

EP started
second reading
in September
2000.

Adopt the proposed
Directive on the
Reorganisation and
Winding-up of
Insurance
undertakings
(cid:1)

Adopt the proposed
Directive on the
Winding-up and
Liquidation of Banks
(cid:1)

Adopt the proposal
for an Electronic
Money directive

Amendment to the
Money Laundering
Directive
(cid:1)

Commission
Recommendation on
disclosure of

Final
adoption
first half of
2001

Common position in
Council 10 October
2000. Commission’s
communication ready to
be adopted.

Adoption
2001

Commission has sent its
communication to EP.

Adoption
2001

Directive adopted in
autumn 2000.

EP delivered first
reading opinion in July.
Political agreement on
main issues reached in
Council on 29
September.

Adopted on 23 June
2000 Com (2000) 1372

21

.

.:

:

H

:

financial instruments

final

Amend the Directives
Governing the
Capital Framework
for Banks and
Investment Firms

.

.

.

.

(cid:1)

Results of Commission
consultation directed at
banks and securities
has been factored into
development of work.
Overview of revised
framework to be
debated by BAC in mid
October.

Proposal
for
directive:
2001,
pending
develop-
ments in
Basel

Adoption
2003

H

.

.:

Further
consultation on
issues where
there has been
most significant
development
will be
necessary by
next January, to
be in parallel
with second
round Basel
consultation.
Work on draft
legislative
proposals to
begin in
Autumn.

Action

Timeframe

StateofPlay

Assessment

Follow-up

Amend the solvency
margin requirements
in the Insurance
Directives

Proposal
autumn
2000

Adoption
2002

First proposal adopted
October 2000 (for legal
reasons split into
separate life and non-life
proposals)

Adopted by Commission
in autumn 2000.

Amendment of the
Insurance Directives
and the ISD to permit
information
exchange with third
countries

Adopting a Directive
on Prudential Rules
for Financial
Conglomerates

.

.

(cid:1)

Proposal
beginning
2001

Adoption
2002

The mixed technical
group of experts will
present its
recommendations in
November 2000 to the
Commission’s regulatory
committees (BAC, HLSS
and IC).

Creation of a
Securities Committee

.

.

(cid:1)

Proposal
beginning
2001

Adoption
2002

The Commission is
assessing the possible
role of the committee as
part of its overall
analysis of the needs of
the European regulatory
framework in this area.

22

:

H

.

.:

:

Recommendati
on from the
technical group
will be
discussed in the
BAC, HLSS and
IC. The
Commission will
draw
conclusions
from those
deliberations.

The
Commission will
define the
structure and
content of a
proposal for a
directive.

OBJECTIVE:WIDER CONDITIONS FOR AN OPTIMAL SINGLE FINANCIAL
MARKET

.

Action

Timeframe

StateofPlay

Assess-
ment

Follow-up

Adopt a Directive for
ensuring taxation of
interest income from
cross-border
investment of savings

.

.

.
(cid:1)

Agreement
at the
Council
level on the
substantial
content of
the
Directive by
end 2000

Adoption
before end
2002

An agreement has been
reached at the
European Council in
Feira (P) for a step-by-
step development
towards exchange of
information as the basis
for taxation of savings
income of non-residents.
Work in Council is
progressing steadily in
order to achieve
agreement on the
substantial content of
the Directive and is a
priority under the French
Presidency.

Commission initiative
on the taxation of
supplementary
pensions

First half of
2001

Review of taxation of
financial service products

Discussions in
Taxation
Policy Group

Discussions have taken
place with Member
States in the Taxation
Policy Group and a
technical sub group

Steps were taken insofar as
discussions on
supplementary pensions were
broadened to cover all cross-
border pension provisions

Commission initiative on the
taxation of supplementary
pensions

First half of
2001

Discussions have taken place
with Member States in the
Taxation Policy Group and a
technical sub group

As soon as
agreement has
been reached
by the Council
on the
substantial
content of the
Directive and
before its
adoption, the
Presidency and
the Commission
will enter into
discussions with
the US and key
third countries to
promote the
adoption of
equivalent
measures

A draft initiative
is under
preparation

The Commission
aims to explore the
scope for extending
mutual assistance
and information
exchange to all
financial products

A draft initiative is
under preparation

.

.

:

:

:

:

23