As announced (see EUROPE 12187), on Wednesday 6 February, the Member States' ambassadors to the EU (Coreper) endorsed a political agreement in principle on the reform of the three European financial supervisory authorities (ESA - see EUROPE 11864).
This is a reversal of the situation, since, on 22 January last, the European Finance Ministers discussed at length the proposal of the Romanian Presidency of the Council of the EU to start talks with the European Parliament to enter into negotiations only on the "anti-money laundering" aspect of the reform. A partial political agreement in the Council on this point had indeed been adopted at the end of December (see EUROPE 12164).
Pressure from the European Parliament (see EUROPE 12173), the European Commission and France, Germany, Portugal, Spain, Italy, the Netherlands, Austria and Slovakia to negotiate on the whole reform therefore seems to have worked (see EUROPE 12177).
The agreement covers all the texts of the package, namely: the proposal amending the founding regulations of the three ESAs, the proposals amending the MiFIR Regulation, the MiFID Directive and the Solvency II Directive as well as the proposal on the European Systemic Risk Board (ESRB).
The compromise text, dated 4 February, of which EUROPE has had a copy, is weaker on the consumer protection side than that of the Parliament (see EUROPE 12169).
In particular, ESAs are granted the power to prohibit or temporarily restrict the marketing, distribution or sale of certain financial products that may cause significant harm to customers or threaten the proper functioning of the Union's financial system.
ESMA's direct competences. With regard to the direct competences of the European Securities and Markets Authority (ESMA), the Council, like the Parliament, has maintained ESMA's power to grant and withdraw the authorisation of data reporting service providers. ESMA would also be responsible for authorising new critical benchmarks.
On the other hand, Member States have abolished the transfer of direct supervisory competence from the competent national authorities to ESMA for certain categories of prospectuses from European issuers and all prospectuses drawn up in accordance with EU rules by third-country issuers, as proposed by the Commission. In contrast, MEPs have maintained this competence for certain well-defined categories of prospectuses.
Governance. The Council text also provides for certain changes in the composition of the independent management board set up in each of the ESAs, which will be responsible for preparing the decisions to be taken by the board of supervisors.
The Commission proposed that the Executive Boards should consist of a President and three full-time members, appointed by an open call for applications, following which the Commission establishes a short list of qualified candidates and submits it to the European Parliament for approval and to the Council for adoption.
The Parliament has taken over this composition while the Council proposes that it be composed of a President, six members from the Board of Supervisors - elected by members with voting rights on the Board of Supervisors - and two full-time members.
The text also provides that the President is a non-voting member, except in the event of a tie in decision-making, where his or her vote would then be decisive.
Financing. The Commission's proposal to involve industry in the budget of the European authorities does not seem to have attracted either the Council or the Parliament, which both preferred to keep the current functioning divided between a contribution from the general budget of the Union and a contribution from the competent national authorities, while setting percentage limits.
The agreement will be fully reflected at the Ecofin Council meeting on Tuesday 12 February, where a general approach is expected to be agreed. According to a European source, the item was mainly kept on the agenda for procedural reasons and should not be a real discussion.
A first 'trilogue' with the European Parliament is expected to take place next week. (Original version in French by Marion Fontana)