Brussels, 26/02/2002 (Agence Europe) - On Tuesday, the European Parliament's Economics Committee adopted three reports - one on prospectuses, one on market abuse and a third on conglomerates - on vital aspects of the integrated securities market that the Member States committed themselves at the Stockholm Summit to implement by 2003. The reports will be put to the vote in first reading in the codecision procedure at the 11/14 March plenary session in Strasbourg.
Unanimously adopting the report by Chris Huhne on prospectuses, the Economics Committee made considerable changes to the text that was agreed upon politically by the Council in December 2001, which should lead to a second reading, acknowledged the rapporteur. The directive being discussed will oblige companies listed on the stock exchange or subject to a public offering to publish a prospectus to enable their assets to be assessed. It sets out a mutual recognition procedure for the Member States. The MEPs introduced an amendment whereby Member States that so desire, may exempt companies only quoted in their state of establishment from this obligation as long as they are capitalised at less than EUR 350 million. This is a compromise between the rapporteur's suggestion (EUR 500 million) and the Socialists' (EUR 100 million). The European Commission did not set a ceiling on the grounds that it could exclude a lot of companies, but according to the rapporteur, 90% of companies on the stock exchange would be covered. In practice, this would make it possible for the UK to keep its simplified prospectus scheme for the London small company stock exchange, AIM.
The Economics Committee also retained an amendment whereby the obligation to keep prospectus information up to date becomes optional; and an amendment to allow companies the choice of the regulatory authority to deal with their request for their prospectus to be authorised. According to the rapporteur, this will allow bidders to continue their practice of requesting the authorisation of prospectuses by the competent authorities that have particular expertise in complex securities. This issue is of particular relevance to complicated products like debt securities and equity security which London and Luxembourg specialise in. The Spanish Presidency said that the Council would prefer to restrict this option to debt securities alone. The EP's Committee excluded Eurobonds traded by professional investors from the scope of the directive.
Adopting the Goebbels report on insider trading and market abuse (Goebbels is a Luxembourg Socialist) by a large majority, the Economics Committee distanced itself from the Council's line at its December meeting. The amendments retained soften the "objective" approach set out by the European Commission for defining insider trading, enabling in some instances the use of an approach based on "intention". The MEPs scrapped a paragraph on insider dealing covering journalists which had given rise to a heated controversy in the British media. They incorporated into the directive the list of various types of market manipulations that the European Commission had put in an annex. They called on the Commission to put forward an indicative list of penalties in order to ensure a level of coherence despite the different legal systems in the Member States. The adoption of the directive had been proposed in May 2001 as part of the Commission's Financial Service Action Plan but is being speeded up following the September 11 attacks and the speculation following that date that appears to be linked to the attacks (funding terrorism). The rapporteur hopes to reach agreement with Council in first reading.
Adopting the report by French Green Alain Lipietz on prudential supervision of financial conglomerates, the Economics Committee broadly followed the same line as the European Commission. The directive introduces prudential capital rules for conglomerates and qualitative standards for intra-group transactions. During a difficult and at times contradictory sitting, the Economics Committee rejected virtually all the amendments defended mainly by German Christian Democrats that would have restricted the directive's scope, and even extended it to groups where at least 40% of their assets are financial sector entities, instead of the 50% proposed by the Commission. The MEPs introduced changes to bring the legislation in line with the Lamfalussy procedure approved by Parliament (along with Council and the Commission) at the last EP plenary session (the von Wogau report).