WRITTEN QUESTION E-1214/02 by Theresa Villiers (PPE-DE) to the Commission. Investment Services Directive and execution-only services.
Date: 2002-04-29
Institutions: European Parliament, Provisional data
Subjects: consumer protection, financial institution, financial legislation, financial occupation, investment company, securities

C 155 E/2

Official Journal of the European Union

EN

3.7.2003

supporting the European Bureau for Lesser-Used Languages and the Mercator information network. One of
the objectives of the European Year of Languages 2001 is to draw attention to the value of the rich variety
of
financed initiatives
involving regional and minority languages under other Community programmes.

languages that exists in Europe. The Commission has also, where applicable,

However, the principle of subsidiarity means that the legal status of languages within national boundaries
is the competence of the individual Member States, with due regard to their obligations under international
treaties. Moreover, Article 149 (ex Article 126) of the EC Treaty clearly states that the Member States are
responsible for the content of teaching and the organisation of education systems and their cultural and
linguistic diversity.

(2003/C 155 E/002)

WRITTEN QUESTION E-1214/02

by Theresa Villiers (PPE-DE) to the Commission

(29 April 2002)

Subject: Investment Services Directive and execution-only services

Has the Commission discussed the introduction of a ‘fact find’ with the Committee of European
1.
Securities Regulators, whereby, before investments are bought and sold, investors would have to provide
information on the risks they are prepared to take, and the financial strategy they wish to pursue?

Is the Commission aware that the introduction of such a ‘fact find’ would add significantly to the

2.
costs and bureaucracy of carrying out execution-only services?

Does the Commission agree with the Committee of European Securities Regulators that

3.
introduction of a ‘fact find’ is desirable?

the

4.
Has the Commission considered any alternative versions of the rules which would allow for the
continuance of execution-only business to continue? In particular, has the Commission considered
allowing firms to continue to sell execution-only services without a ‘fact find’ so long as clients are clearly
informed that no investment advice is being given and that they should rely on their own judgment in
deciding whether to make the trade?

Answer given by Mr Bolkestein on behalf of the Commission

(3 June 2002)

The Committee of European Securities Regulators (CESR) (cid:1) after having conducted extensive
1.
consultations with all interested parties (cid:1) has recently published its final proposals for the harmonisation
of conduct of business rules under the existing article 11 of the Investment Services Directive (ISD).

The Commission welcomes the outcome of CESR’s work.

CESR’s standards cover, among other things,
‘know your customer’ and the duty of care of investment
firms towards their clients. These provisions represent detailed implementation of the existing ISD.
Article 11 of the ISD provides that an investment firm,
‘seeks from its clients information
regarding their financial situation, investment experience and objectives as regards the services requested’.
Furthermore, the same article states that investment firms have to act with due skill, care and diligence in
the best interests of their clients. These principles apply to any provision of services to any customer,
regardless of their nature.

inter alia,

2.
Costs of regulation must be compared with benefits. The Commission is unaware of any compelling
evidence that the CESR standards will add significantly to compliance costs. The fact that many investment
firms, as a normal practice, already collect information from their clients on their financial knowledge,
experience and investment objectives, suggests that the standard will not prevent or render such business
commercially unattractive.

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Official Journal of the European Union

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Furthermore, investor protection would be enhanced by the CESR standards, with a positive impact on
consumer confidence, particularly for those services conducted on-line.

3.
Article 11 of the ISD obliges investment firms to know their customers, with particular regard to
their knowledge and experience in the investment field, investment objectives and financial situation. This
principle applies to any investment service. It is a basic principle of securities regulation that intermediaries
should be required to provide services in the best interests of their clients.

In addition to the general ‘know your customer’ standard, CESR has adopted a specific rule on the duty of
care that investment firms have to comply with when providing execution-only services. This proposal
consists of a light-touch regime based on the definition of an appropriate service to the customer,
including investment parameters on the basis of information collected from customers. Information to be
required at the outset of the client relationship concerns notably knowledge and experience in the
investment field, financial situation, investment objectives and risk profile, which are needed to estimate
the investment parameters within which investors can trade. When transactions for customers fall within
these parameters they do not require on-going duty of care by the investment firm. Suitability is conducted
at the level of the service at the onset of the relationship, instead of being conducted for each and every
transaction.

CESR’s standards for ‘know your customer’ and duty of care have been carefully considered as a basis for
allowing execution-only brokers to meet obligations incumbent on them under the existing ISD, without
calling into question their business model. These requirements have been broadly accepted by a large
majority of brokers across the Union and correspond to existing commercial practice for many brokers.

4.
The Commission has recently published the revised orientations on the upgrading of the ISD and has
launched a second round of open consultation. By conducting the revision of the ISD on the basis of the
Lamfalussy procedure, the Commission intends to introduce high-level principles of regulation in the
revised directive (level 1) and detailed rules at level 2, adopted under the comitology procedure.

The Commission, at present, has not introduced any regulation of execution-only business. This might
become subject to regulation under the revision of the ISD, particularly under level 2, with the adoption of
detailed implementing measures. Before finalising its position, the Commission is waiting for the results of
the public consultation, due to end on 31 May 2002.

(2003/C 155 E/003)

WRITTEN QUESTION E-1345/02

by Elspeth Attwooll (ELDR) to the Commission

(13 May 2002)

Subject: Contributions to the UNHCR

What have been the annual contributions of the European Union to the budget of the UNHCR since 1990?
Could the Commission justify the trends that these figures demonstrate?

Answer given by Mr Nielson on behalf of the Commission

(2 August 2002)

As Parliament is aware, centralised data on the Commission’s funding of the United Nations (UN) and its
agencies began to be assembled directly by the Commission services from the year 2001. In the meantime,
and to ensure the compatibility of figures, those sent to the Honourable Member and to Parliament’s
Secretariat are taken from the United Nations High Commissioner for Refugees (UNHCR) sources. They
illustrate the extent to which the Commission has sought to fulfil
its mission to provide relief and
rehabilitation to refugees and internally displaced people in humanitarian crises over the last decade.
A number of such urgent situations arose in the early 1990s as reflected in the data supplied. These