On Wednesday 16 May, the committee on economic and monetary affairs (ECON) of the European Parliament discussed two draft reports by the MEP Markus Ferber (EPP, Germany) comprising the 'investment companies' legislative package.
The package, which was presented in December 2017, is made up of a proposed directive on the prudential supervision of investment companies and a proposed regulation on the prudential requirements applicable to them (see EUROPE 11930).
A key element of the new framework is a three-category classification of investment companies on the basis of their size, nature and complexity.
Broadly, the MEPs support this proposal, but consider that the new regime proposed is still excessively influenced by the requirements applicable to the banking sector. Ferber considers that the keyword should be proportionality.
“We have to wonder whether the categories were established on the basis of the right criteria”, said Sven Giegold (Greens/EFA, Germany). The boundaries between the three categories will certainly be debated between the political groups.
One critical point for the rapporteur is movement between categories two and three, which should be as easy as possible for investment companies. To ensure this, the rapporteur considers that category three companies should not be prevented from applying stricter rules, to give them regulatory security whilst coming into line early with the requirements that apply to category two.
The rapporteur also proposes to simplify – and, in some cases, remove – the rules on reporting, governance and remuneration for certain companies. Some of the rules are too strict and unjustified given the nature of the businesses in question, he said, with particular reference to country-by-country reporting.
Equivalence rules. As it stands, the proposal pays too little attention to what is a very important issue for European investment businesses, Ferber argues.
The MEP called for a more robust and appropriate equivalence regime to ensure that EU banks can never be in a less favourable situation than investment companies from third countries.
The report also extends the scope of requirements on third-country companies to all those applicable to EU investment firms.
The European Parliament should, furthermore, have a say on decisions to grant and withdraw equivalence – a debate already underway in Parliament in the framework of the 'Hayes' report on the harmonised framework for decisions on equivalence with third countries (see EUROPE 12008), the S&D group stressed.
Timetable issues. The political groups are supposed to have until 24 May to table their amendments to these two reports, ahead of a vote at the ECON committee in September. However, the deadline for amendments to be submitted may be extended to one month, by request of the S&D group, which would prefer to await the outcome of the 'Hayes' report. The rapporteur has proposed an extra week.
Over at the Council, the timetable is equally uncertain. The forthcoming Austrian Presidency of the Council hopes to reach an agreement at the Ecofin Council of December, the deputy chair of the ECON committee, Ludek Niedermayer (EPP, Czech Republic), announced. However, Ferber considers that enough progress has already been made under the Bulgarian Presidency of the Council to allow the initial trialogue negotiations may be held in the autumn. (Original version in French by Marion Fontana)