European Parliament resolution on the implications of signing the Hague Securities Convention
Date: 2006-12-14
Institutions: European Parliament
Subjects: financial market, free movement of capital, impact study, international convention, private international law, the EU's international role

C 317 E/904

EN

Official Journal of the European Union

23.12.2006

Thursday, 14 December 2006

P6_TA(2006)0608

Hague Convention on securities

European Parliament resolution on the implications of signing the Hague Securities Convention

The European Parliament,

— having regard to the Hague Convention on the law applicable to certain rights in respect of securities
held with an intermediary (hereinafter the ‘Hague Securities Convention’), and its Explanatory Report,

— having regard to the proposal for a Council decision (COM(2003)0783) concerning the signature of the

Hague Securities Convention,

— having regard to the Commission working document on a legal assessment of certain aspects of the

Hague Securities Convention,

— having regard to Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002

on financial collateral arrangements (1), and in particular Article 9 thereof,

— having regard to Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on
settlement finality in payment and securities settlement systems (2), and in particular Article 9(2) thereof,

— having regard to Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001
institutions (3), and in particular Article 24 and

on the reorganisation and winding up of credit
Article 31, third indent, thereof,

— having regard to the opinion of the European Central Bank of 17 March 2005 (4) on the signature of

Hague Securities Convention,

— having regard to its resolution of 7 September 2006 on the involvement of the European Parliament in

the work of the Hague Conference following the accession of the Community (5),

— having regard to its resolution of 15 January 2003 on the communication from the Commission to the
Council and the European Parliament entitled ‘Clearing and settlement in the European Union: main
policy issues and future challenges’ (6),

— having regard to Articles 300(2), first subparagraph, and 300(3), second subparagraph, of the EC Treaty,

— having regard to Rule 108(5) of its Rules of Procedure,

A. whereas the Hague Securities Convention is incompatible with Directives 2002/47/EC, 98/26/EC and

2001/24/EC,

B. whereas the Commission is therefore proposing to revise these three Directives, which were adopted by

Parliament by means of the co-decision procedure,

C. whereas these Directives laid down a principle known as ‘PRIMA’ (‘Place of the Relevant Intermediary
Approach’) seeking to guarantee the legal certainty of payments and effective supervision of financial
intermediaries,

D. whereas, in the absence of harmonisation of material rights on property matters, voting rights and the
rights and obligations of central depositaries in respect of account holders, particularly the distinction
between the assets held on own account and those held on behalf of a client, it is necessary, before aban-
doning the PRIMA principle, effectively to consult Parliament on the basis of a prior in-depth examina-
tion by all its committees concerned,

(1) OJ L 168, 27.6.2002, p. 43.
(2) OJ L 166, 11.6.1998, p. 45.
(3) OJ L 125, 5.5.2001, p. 15.
(4) OJ C 81, 2.4.2005, p. 10.
(5) Texts adopted, P6_TA(2006)0353.
(6) OJ C 38 E, 12.2.2004, p. 265.

23.12.2006

EN

Official Journal of the European Union

C 317 E/905

Thursday, 14 December 2006

E. whereas Parliament's assent is required for the ratification of the Hague Securities Convention,

1. Reiterates the need for democratic checks on the negotiations carried on in the context of the Hague
Conference on Private International Law;

Stresses the need for upstream consultation of Parliament prior to ratification, particularly on draft

2.
mandates for negotiation and the need for disconnection clauses;

3. Reiterates its commitment to the PRIMA principle, to defining a common framework for clearing
and settlement activities, to effectively combating money laundering and to respect for shareholders' voting
intentions;

4. Considers it crucial to guarantee ex-ante legal certainty as regards the law applicable to certain matters
relating to the holding, perfection and disposition of securities credited to an account and held with interme-
diaries and the collateralisation of such securities, in an international context, and to reduce the systemic
risks which might result from uncertainties in this respect;

5.
Expresses its extreme concern at the reservations repeatedly expressed by the European Central Bank
regarding systemic risk and the risk of an exponential growth in litigation on the enforcement of securities,
in which courts will have to apply a foreign law with a view, in particular, to determining the priority of the
security;

6. Considers that the property aspects of all securities credited to the accounts of participants in the
clearing and settlements system should be governed by a single legal system, and, similarly, that a single
legal system should govern the contractual aspects of the relationship between the clearing and settlement
system and each of its participants, in order to protect the finality of transactions and the security and trans-
parency of the clearing and settlement system;

7. Considers that ensuring the security of intra-European transactions must take precedence over the facili-
tation of transactions between the European Union and the rest of the world;

8. Regrets the highly inadequate nature of the reality test (Article 4(1) of the Hague Securities Convention)
and the exemptions with regard to public policy rules (Article 11(3) of the Hague Securities Convention),
which risk encouraging the choice of the least restrictive law and creating distortions in the internal market
in financial services;

9. Calls on the Commission to submit to Parliament a comprehensive impact study on the implications of
accession to the Hague Securities Convention for the law and economy of the European Union; requests
that this study specify in particular the fiscal consequences of acceding to the Convention, the implications
of the transfer of risks between entities (central depositaries, banks, depositors) resulting from the abandon-
ment of the PRIMA principle, the implications for the exercise of voting rights attached to securities, the
effects on the remuneration of the ultimate owner of securities, on combating market abuses, on combating
money-laundering and on the funding of terrorism, the effectiveness of clearing and settlement systems and
the identification of risks of the insolvency of credit institutions;

10. Calls for this impact study to be adopted by the College of Commissioners before the Hague Securities
Convention is signed on behalf of the Community;

11.

Instructs its President to forward this resolution to the Council and Commission.