The European Parliament’s Committee on Economic and Monetary Affairs (ECON) was asked to vote on Tuesday 27 October and Wednesday 28 October on adjustments to the Markets in Financial Instruments Directive (MiFID II) as regards disclosure requirements, product governance and position limits, proposed by the Commission in July to help the post-Covid-19 economic recovery (see EUROPE 12535/11).
According to our information, negotiations between the political groups on the draft report prepared by Markus Ferber (EPP, Germany) had been completed the day before. The results of the votes on the amendments were not yet known at the time of going to press, but, according to the compromises reached between the political groups and seen by EUROPE, the position adopted by MEPs should be relatively close to the Commission’s original proposal.
This should in particular be the case with regard to product governance. In order to reduce unnecessary administrative burdens in EU legislation to facilitate the recapitalisation of European companies in the financial markets, the Commission proposed that investment firms should no longer be required to carry out certain product governance assessments for certain types of products considered as non-complex.
After having considered several options, the political groups finally decided to return to a solution close to the Commission’s initial text on this point.
MEPs are also expected to endorse the Commission’s proposal to allow investment firms to make a single payment for brokerage and research services for small and mid-cap issuers in order to encourage research activities on SMEs.
However, the compromise specifies that an agreement must first be concluded between the investment firm and the research provider determining which part of the joint payment is attributable to investment research. Furthermore, the text adds that these services must relate exclusively to issuers whose market capitalisation has not exceeded €1 billion in a period of 36 months prior to the provision of the service, as opposed to the 12 months proposed by the Commission. It also clarifies the definition of investment research, within the meaning of this article.
One of the key points of the vote should be on position limits. In order to revive emerging euro-denominated energy markets, the Commission had effectively proposed to relax the position limit regime for these derivative contracts.
The rapporteur proposed a compromise, supported by the ECR group, which would be very close to the Commission proposal. The text further clarifies that the changes to the position limit regime are intended to support the development of energy derivative contracts, but are not intended to relax the regime for agricultural derivative contracts.
For their part, the S&D and Greens/EFA groups, who believe that this position would considerably weaken the current regime of position limits, proposed an alternative compromise, also supported by the GUE/NGL. The compromise preserves the current regime while giving some flexibility for derivative contracts. It also gives a mandate to the Commission to provide a full report on the position limits regime before considering any substantial legal changes. On this issue, the Renew Europe group could tip the balance by voting on one or other of the compromises. The issue could also influence the final vote of certain groups on the report, which is due to take place on Wednesday.
It should be noted that the GUE/NGL group has proposed to reject the Commission’s legislative proposal “since this proposal, which may have considerable consequences for investor protection, is not subject to an adequate impact assessment”.
Next votes
These targeted amendments to the MiFID II directive are part of a broader package, which also includes adaptations to the Securitisation Regulation, the Capital Requirements Regulation (CRR) and the Prospectus Regulation.
Unlike the EU Council, which adopted its position on the whole package in one go (see EUROPE 12584/12), the individual legislative proposals are dealt with separately in the European Parliament.
Originally scheduled for 27 and 28 October, the votes on the adaptations to the Securitisation Regulation and the CRR Regulation were ultimately postponed.
The vote on the draft report on securitisation, drawn up by Paul Tang (S&D, the Netherlands), is due to take place on 9 November. According to one parliamentary source, there are still important discussions among the political groups on how to include sustainability considerations in the framework, how to deal with collateral and how to ensure that the macro-prudential risks of any increase in synthetic securitisation can be minimised.
As for the draft report from Ondřej Kovařík (RE, the Czech Republic) on the Prospectus Regulation, the deadline for tabling amendments has been set at 28 October. The date of the vote in the ECON Committee has not yet been set, but, according to our information, the dates of 19 November and 2 December are being considered. (Original version in French by Marion Fontana)