1 european commission, technical assistance information exchange unit (taiex), dg enlargement in...

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European Commission, Technical Assistance Information European Commission, Technical Assistance Information Exchange Unit (TAIEX), DG Enlargement Exchange Unit (TAIEX), DG Enlargement

in co-operation with the Union of Chambers and Commodity in co-operation with the Union of Chambers and Commodity

Exchanges of TurkeyExchanges of Turkey

Seminar on Financial ServicesSeminar on Financial Services

Ankara, 1 March 2005Ankara, 1 March 2005

Securities: Securities:

main elements of the EU Directivesmain elements of the EU Directives

Dr. jur. Dimitris Tsibanoulis Dr. jur. Dimitris Tsibanoulis Legal Advisor, Bank of GreeceLegal Advisor, Bank of Greece

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EU EU Securities Securities Directives ensure the Directives ensure the development of a single securities market development of a single securities market

for bothfor both new issues and trading of securitiesnew issues and trading of securities

These These Directives Directives regulate the initial and on-going conditions for regulate the initial and on-going conditions for service providers (investment firms), service providers (investment firms), establish requirements for the issuance of establish requirements for the issuance of securities (both as regards public offers of securities (both as regards public offers of securities and requirements for securities to be securities and requirements for securities to be listed on a stock exchange) and listed on a stock exchange) and co-ordinate the conditions applicable to co-ordinate the conditions applicable to investment funds. investment funds.

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Investment services providers:Investment services providers:Banks and Investment firmsBanks and Investment firms

The conditions for the setting-up of The conditions for the setting-up of investment firms and their on-going investment firms and their on-going business are similar to those for banks, business are similar to those for banks, and provide for a level playing field and provide for a level playing field between non-bank investment firms and between non-bank investment firms and banks providing investment services. banks providing investment services.

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Provision of Investment ServicesProvision of Investment Services

Directive 93/22/EEC on investment services in the Directive 93/22/EEC on investment services in the securities fieldsecurities fieldDirective 2004/39/EC on markets in financial Directive 2004/39/EC on markets in financial instruments, amending Directives 85/611/EEC instruments, amending Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC and repealing and 93/6/EEC and Directive 2000/12/EC and repealing Directive 93/22/EEC;Directive 93/22/EEC;Directive 93/6/EEC of 15 March 1993 on capital Directive 93/6/EEC of 15 March 1993 on capital adequacy of investment firms and credit institutions adequacy of investment firms and credit institutions [amended by Directive 98/31/EC and Directive [amended by Directive 98/31/EC and Directive 98/33/EC of 22 June 1998]98/33/EC of 22 June 1998]

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Objective of Directive 93/22/EEC Objective of Directive 93/22/EEC

Liberalisation of the access to stock-exchange Liberalisation of the access to stock-exchange membership and financial markets in host Member membership and financial markets in host Member States for investment firms authorised to provide the States for investment firms authorised to provide the services concerned in their home Member States. services concerned in their home Member States.

The Directive provides for:The Directive provides for:

harmonisation of essential standards; harmonisation of essential standards; mutual recognition by the national supervisory mutual recognition by the national supervisory authorities of the controls applied in the country in authorities of the controls applied in the country in which the head office is situated;which the head office is situated;coordination of the work of supervisory authorities coordination of the work of supervisory authorities by the home country.by the home country.

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Provision of Investment Services (cont.)Provision of Investment Services (cont.)

The competent authorities in each Member State must The competent authorities in each Member State must ensure that: ensure that:

- the investment firm has sufficient initial financial - the investment firm has sufficient initial financial resources for the proposed activities; resources for the proposed activities;

- the persons directing the business have sufficient - the persons directing the business have sufficient professional integrity and experience; professional integrity and experience;

- holders of qualifying participations are suitable persons. - holders of qualifying participations are suitable persons.

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Directive 2004/39/EC on markets in Directive 2004/39/EC on markets in financial instruments financial instruments (MifiD)(MifiD)

It is a crucial part of the Financial Services Action Plan. It is a crucial part of the Financial Services Action Plan. The Directive allowThe Directive allowss investment firms, banks and investment firms, banks and exchanges to provide their services across borders on exchanges to provide their services across borders on the basis of their home country authorisation. It bringthe basis of their home country authorisation. It bringss closer into line national rules on the provision of closer into line national rules on the provision of investment services and the operation of exchanges, investment services and the operation of exchanges, with the ultimate aim of creating a single European with the ultimate aim of creating a single European "securities rule book". It benefit"securities rule book". It benefitss investors, issuers and investors, issuers and market participants by promoting efficient and market participants by promoting efficient and competitive markets, notably by allowing banks and competitive markets, notably by allowing banks and other investment institutions to compete fairly with stock other investment institutions to compete fairly with stock exchanges. exchanges.

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"Investment firm" means any legal person whose "Investment firm" means any legal person whose regular occupation or business is the provision regular occupation or business is the provision of one or more investment services to third of one or more investment services to third parties and/or the performance of one or more parties and/or the performance of one or more investment activities on a professional basis; investment activities on a professional basis;

"Market operator" means a person or persons "Market operator" means a person or persons who manages and/or operates the business of a who manages and/or operates the business of a regulated market. The market operator may be regulated market. The market operator may be the regulated market itself; the regulated market itself;

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"Regulated market" means a multilateral system "Regulated market" means a multilateral system operated and/or managed by a market operator, operated and/or managed by a market operator, which brings together or facilitates the bringing which brings together or facilitates the bringing together of multiple third-party buying and selling together of multiple third-party buying and selling interests in financial instruments - in the system interests in financial instruments - in the system and in accordance with its non-discretionary and in accordance with its non-discretionary rules - in a way that results in a contract, in rules - in a way that results in a contract, in respect of the financial instruments admitted to respect of the financial instruments admitted to trading under its rules and/or systems, and trading under its rules and/or systems, and which is authorised and functions regularly and which is authorised and functions regularly and in accordance with the provisions of Title III; in accordance with the provisions of Title III;

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"Multilateral trading facility (MTF)" means "Multilateral trading facility (MTF)" means a multilateral system, operated by an a multilateral system, operated by an investment firm or a market operator, investment firm or a market operator, which brings together multiple third-party which brings together multiple third-party buying and selling interests in financial buying and selling interests in financial instruments - in the system and in instruments - in the system and in accordance with non-discretionary rules - accordance with non-discretionary rules - in a way that results in a contract in in a way that results in a contract in accordance with the provisions of Title II; accordance with the provisions of Title II;

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AUTHORISATION AND OPERATING AUTHORISATION AND OPERATING

CONDITIONS FOR INVESTMENT FIRMSCONDITIONS FOR INVESTMENT FIRMS

RequirementRequirementss for authorisation for authorisation Persons who effectively direct the business Persons who effectively direct the business

Shareholders and members with qualifying holdings Shareholders and members with qualifying holdings

Membership of an authorised Investor Compensation Membership of an authorised Investor Compensation Scheme Scheme

Initial capital endowment Initial capital endowment

Organisational requirements Organisational requirements

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Capital Adequacy of Investment Firms and Credit Capital Adequacy of Investment Firms and Credit InstitutionsInstitutions

DiDirective rective 93/6/EEC93/6/EEC on capital adequacy of investment firms and on capital adequacy of investment firms and credit institutionscredit institutions

OBJECTIVEOBJECTIVETo achieve equality of treatment between credit institutions To achieve equality of treatment between credit institutions and investment firms by harmonizing capital requirementsand investment firms by harmonizing capital requirements ..

CONTENTSCONTENTSInvestment firms which hold clients' money and/or securities and Investment firms which hold clients' money and/or securities and which receive, transmit and/or execute investors' orders for financial which receive, transmit and/or execute investors' orders for financial instruments and/or manage portfolios of investments in financial instruments and/or manage portfolios of investments in financial instruments must have initial capital of EURO 125 000. instruments must have initial capital of EURO 125 000. All other investment firms must have initial capital of EURO 730 000. All other investment firms must have initial capital of EURO 730 000. In order to guarantee the ongoing financial soundness of such firms, In order to guarantee the ongoing financial soundness of such firms, capital requirements are laid down to cover the market risks to capital requirements are laid down to cover the market risks to which they are exposed.which they are exposed.

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Regulatory capitalRegulatory capital

Proposal presented by the CommissionProposal presented by the Commission forfor

DIRECTIVES OF THE EUROPEAN PARLIAMENT AND DIRECTIVES OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILOF THE COUNCIL

Re-casting Directive 2000/12/EC of the European Re-casting Directive 2000/12/EC of the European Parliament and of the Council of 20Parliament and of the Council of 20 March 2000 March 2000 relating to the taking up and pursuit of the business relating to the taking up and pursuit of the business of credit institutionsof credit institutions and Council Directive 93/6/EEC and Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of of 15 March 1993 on the capital adequacy of investmentinvestment firms and credit institutions.firms and credit institutions.

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AUTHORISATION AND OPERATING AUTHORISATION AND OPERATING CONDITIONS FOR INVESTMENT FIRMSCONDITIONS FOR INVESTMENT FIRMS

OPERATING CONDITIONS FOR INVESTMENT OPERATING CONDITIONS FOR INVESTMENT FIRMS FIRMS Regular reviewRegular review by the competent authorities by the competent authorities of of compliance with the compliance with the conditions for initial conditions for initial authorisation authorisation (Art. 16) (Art. 16)..General obligation General obligation of the competent authorities of the competent authorities in respect of on-going supervision in respect of on-going supervision (Art. 17).(Art. 17).Avoidance of cAvoidance of conflicts of interest onflicts of interest (Art. 18)(Art. 18)

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AUTHORISATION AND OPERATING AUTHORISATION AND OPERATING CONDITIONS FOR INVESTMENT FIRMSCONDITIONS FOR INVESTMENT FIRMS

Provisions to ensure investor protection Provisions to ensure investor protection Conduct of business obligations when Conduct of business obligations when

providing investment services to clients providing investment services to clients (Art. (Art. 19)19)

All information, including marketing All information, including marketing communications, addressed by the investment communications, addressed by the investment firm to clients or potential clients shall be fair, firm to clients or potential clients shall be fair, clear and not misleading. Marketing clear and not misleading. Marketing communications shall be clearly identifiable as communications shall be clearly identifiable as such. such.

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Conduct of business obligations (cont.)Conduct of business obligations (cont.)

Appropriate information shall be provided in a Appropriate information shall be provided in a comprehensible form to clients or potential clients about:comprehensible form to clients or potential clients about:- the investment firm and its services,- the investment firm and its services,- financial instruments and proposed investment - financial instruments and proposed investment strategies; this should include appropriate guidance on strategies; this should include appropriate guidance on and warnings of the risks associated with investments in and warnings of the risks associated with investments in those instruments or in respect of particular investment those instruments or in respect of particular investment strategies,strategies,- execution venues, and- execution venues, and- costs and associated charges- costs and associated chargesso that they are reasonably able to understand the so that they are reasonably able to understand the nature and risks of the investment service and of the nature and risks of the investment service and of the specific type of financial instrument that is being offered specific type of financial instrument that is being offered and, consequently, to take investment decisions on an and, consequently, to take investment decisions on an informed basis. This information may be provided in a informed basis. This information may be provided in a standardised format.standardised format.

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Conduct of business obligations (cont.)Conduct of business obligations (cont.)

Obligation to execute orders on terms most Obligation to execute orders on terms most favourable to the client favourable to the client (Art. 21)(Art. 21)

Client order handling rulesClient order handling rules (Art. 22) (Art. 22)

Obligations of investment firms when appointing Obligations of investment firms when appointing tied agents tied agents (Art. 23)(Art. 23)

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OPERATING CONDITIONS FOR INVESTMENT FIRMSOPERATING CONDITIONS FOR INVESTMENT FIRMS

Market transparency and integrityMarket transparency and integrityObligation to uphold integrity of markets, report Obligation to uphold integrity of markets, report transactions and maintain recordstransactions and maintain records (Art. 25) (Art. 25)Post-trade disclosure by investment firms Post-trade disclosure by investment firms (Art. (Art. 28)28)Pre-trade transparency requirements for MTFsPre-trade transparency requirements for MTFs (Art. 29)(Art. 29)Post-trade transparency requirements for MTFsPost-trade transparency requirements for MTFs (Art. 30)(Art. 30)

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RIGHTS OF INVESTMENT FIRMSRIGHTS OF INVESTMENT FIRMSFreedom to provide investment services and Freedom to provide investment services and activitiesactivities (Art. 31) (Art. 31)Establishment of a branch Establishment of a branch (Art. 32)(Art. 32)Access to regulated markets Access to regulated markets (Art. 33)(Art. 33)Access to central counterparty, clearing and Access to central counterparty, clearing and settlement facilities and right to designate settlement facilities and right to designate settlement system settlement system (Art. 34)(Art. 34)

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List of Services and Activities coming within List of Services and Activities coming within the Scope of Directive 2004/39/ECthe Scope of Directive 2004/39/EC

Section ASection AInvestment services and activitiesInvestment services and activities

(1) Reception and transmission of orders in relation to (1) Reception and transmission of orders in relation to one or more financial instruments.one or more financial instruments.(2) Execution of orders on behalf of clients.(2) Execution of orders on behalf of clients.(3) Dealing on own account.(3) Dealing on own account.(4) Portfolio management.(4) Portfolio management.(5) Investment advice.(5) Investment advice.(6) Underwriting of financial instruments and/or placing (6) Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis.of financial instruments on a firm commitment basis.(7) Placing of financial instruments without a firm (7) Placing of financial instruments without a firm commitment basiscommitment basis(8) Operation of Multilateral Trading Facilities.(8) Operation of Multilateral Trading Facilities.

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List of Services and Activities coming within the Scope List of Services and Activities coming within the Scope of Directive 2004/39/EC (cont.)of Directive 2004/39/EC (cont.)

Section BSection BAncillary servicesAncillary services

(1) Safekeeping and administration of financial instruments for the (1) Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such account of clients, including custodianship and related services such as cash/collateral management; as cash/collateral management; (2) Granting credits or loans to an investor to allow him to carry out a (2) Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction; granting the credit or loan is involved in the transaction; (3) Advice to undertakings on capital structure, industrial strategy and (3) Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the related matters and advice and services relating to mergers and the purchase of undertakings; purchase of undertakings; (4) Foreign exchange services where these are connected to the (4) Foreign exchange services where these are connected to the provision of investment services; provision of investment services; (5) Investment research and financial analysis or other forms of (5) Investment research and financial analysis or other forms of general recommendation relating to transactions in financial general recommendation relating to transactions in financial instruments; instruments; (6) Services related to underwriting.(6) Services related to underwriting.(7) Investment services and activities as well as ancillary services of (7) Investment services and activities as well as ancillary services of the type included under Section A or B of Annex 1 related to the the type included under Section A or B of Annex 1 related to the underlying of the derivatives included under Section C - 5, 6, 7 and 10 - underlying of the derivatives included under Section C - 5, 6, 7 and 10 - where these are connected to the provision of investment or ancillary where these are connected to the provision of investment or ancillary services.services.

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List of Financial InstrumentsList of Financial Instrumentscoming within the Scope of Directive coming within the Scope of Directive

2004/39/EC2004/39/ECSection CSection C

Financial InstrumentsFinancial Instruments

(1) Transferable securities; (1) Transferable securities; (2) Money-market instruments; (2) Money-market instruments; (3) Units in collective investment undertakings; (3) Units in collective investment undertakings; (4) Options, futures, swaps, forward rate agreements (4) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivatives currencies, interest rates or yields, or other derivatives instruments, financial indices or financial measures instruments, financial indices or financial measures which may be settled physically or in cash; which may be settled physically or in cash; (5) Options, futures, swaps, forward rate agreements (5) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to and any other derivative contracts relating to commodities that must be settled in cash or may be commodities that must be settled in cash or may be settled in cash at the option of one of the parties settled in cash at the option of one of the parties (otherwise than by reason of a default or other (otherwise than by reason of a default or other termination event);termination event);

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2004/39/EC (cont.)2004/39/EC (cont.)

(6) Options, futures, swaps, and any other derivative (6) Options, futures, swaps, and any other derivative contract relating to commodities that can be physically contract relating to commodities that can be physically settled provided that they are traded on a regulated settled provided that they are traded on a regulated market and/or an MTF; market and/or an MTF; (7) Options, futures, swaps, forwards and any other (7) Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in C.6 and not physically settled not otherwise mentioned in C.6 and not being for commercial purposes, which have the being for commercial purposes, which have the characteristics of other derivative financial instruments, characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are settled through recognised clearing houses or are subject to regular margin calls; subject to regular margin calls; (8) Derivative instruments for the transfer of credit risk; (8) Derivative instruments for the transfer of credit risk; (9) Financial contracts for differences.(9) Financial contracts for differences.

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2004/39/EC (cont.)2004/39/EC (cont.)(10) Options, futures, swaps, forward rate agreements and (10) Options, futures, swaps, forward rate agreements and

any other derivative contracts relating to climatic any other derivative contracts relating to climatic variables, freight rates, emission allowances or inflation variables, freight rates, emission allowances or inflation rates or other official economic statistics that must be rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default one of the parties (otherwise than by reason of a default or other termination event), as well as any other or other termination event), as well as any other derivative contracts relating to assets, rights, obligations, derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this indices and measures not otherwise mentioned in this Section, which have the characteristics of other Section, which have the characteristics of other derivative financial instruments, having regard to derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market whether, inter alia, they are traded on a regulated market or an MTF, are cleared and settled through recognised or an MTF, are cleared and settled through recognised clearing houses or are subject to regular margin calls.clearing houses or are subject to regular margin calls.

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REGULATED MARKETS REGULATED MARKETS

Authorisation Authorisation (Art. 36)(Art. 36)Requirements for the management of the Requirements for the management of the regulated marketregulated market (Art. 37) (Art. 37)Requirements relating to persons exercising Requirements relating to persons exercising significant influence over the management of significant influence over the management of the regulated marketthe regulated market (Art. 38) (Art. 38)Organisational requirementsOrganisational requirements (Art. 39) (Art. 39)

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Directive 2004/39/EC on markets in financial Directive 2004/39/EC on markets in financial instruments instruments (MifiD) –(MifiD) – Regulated MarketsRegulated Markets

Admission of financial instruments to tradingAdmission of financial instruments to trading (Art. 40)(Art. 40)Suspension and removal of instruments from Suspension and removal of instruments from trading trading (Art. 41)(Art. 41)Access to the regulated market Access to the regulated market (Art. 42)(Art. 42)Monitoring of compliance with the rules of the Monitoring of compliance with the rules of the regulated market and with other legal obligationsregulated market and with other legal obligations (Art. 43)(Art. 43)Pre-trade Pre-trade and post-trade and post-trade transparency transparency requirements for regulated marketsrequirements for regulated markets (Art. 44-45) (Art. 44-45)

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Investor Compensation Schemes Investor Compensation Schemes Directive Directive 97/9/EC97/9/EC

OBJECTIVE

To protect investors following the failure of an investment firm.

The compensation scheme operates where:

-the competent authorities have determined that in their view an investment firm appears, for the time being, to be unable to meet its obligations arising out of investors' claims and has no early prospect of being able to do so; or

- a judicial authority has made a ruling which has the effect of suspending investors' ability to make claims against an investment firm.

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Investor Compensation Schemes (cont.)Investor Compensation Schemes (cont.)

Cover must be provided for claims arising out of an investment firm's inability to:

- repay money owed to or belonging to investors and held on their behalf in connection with investment business; or - return to investors any instruments belonging to them and held, administered or managed on their behalf in connection with investment business The Directive sets a Community minimum level of compensation per investor of EURO 20 000, while at the same time authorising Member States to provide for a higher level of compensation if they so wish.An investor's claim must be met within a maximum of three months of the establishment of the eligibility and the amount of the claim.Obligations are laid down regarding information that must be supplied to investors.

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Conditions for the Admission of Securities Conditions for the Admission of Securities to Official Stock Exchange Listingto Official Stock Exchange Listing

Directive Directive 2001/34/EC2001/34/EC of the European Parliament and of the of the European Parliament and of the Council on the admission of securities to official stock Council on the admission of securities to official stock exchange listings and on information to be published on those exchange listings and on information to be published on those securitiessecurities

OBJECTIVE:OBJECTIVE: The Directive aims to codify existing measures The Directive aims to codify existing measures concerning the conditions for the admission of securities to concerning the conditions for the admission of securities to official stock exchange listing and the financial information official stock exchange listing and the financial information that listed companies must make available to investors. The that listed companies must make available to investors. The existing measures are:existing measures are:coordinating the conditions for the admission of securities to official coordinating the conditions for the admission of securities to official stock-exchange listing; stock-exchange listing; information to be published on a regular basis by companies the information to be published on a regular basis by companies the shares of which have been admitted to official stock-exchange shares of which have been admitted to official stock-exchange listing; listing; information to be published when a major holding in a listed information to be published when a major holding in a listed company is acquired or disposed of. company is acquired or disposed of.

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Prospectus for Public Offerings of Securities Prospectus for Public Offerings of Securities

Directive 2003/71/EC on the prospectus to be Directive 2003/71/EC on the prospectus to be published when securities are offered to the public published when securities are offered to the public or admitted to trading and amending Directive or admitted to trading and amending Directive 2001/34/EC 2001/34/EC

A prospectus is a disclosure document containing A prospectus is a disclosure document containing essential financial and non-financial information that an essential financial and non-financial information that an issuer makes available to potential investors when it issuer makes available to potential investors when it issues securities (shares, bonds, derivatives, etc.) to issues securities (shares, bonds, derivatives, etc.) to raise capital and/or when it wants its securities admitted raise capital and/or when it wants its securities admitted to trading on stock markets.to trading on stock markets.

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Prospectus for Public Offerings of SecuritiesProspectus for Public Offerings of Securities (cont.)(cont.)

OBJECTIVES:OBJECTIVES:

- To improve the quality of information provided - To improve the quality of information provided to investors by companies wishing to raise to investors by companies wishing to raise capital in the European Union (EU). capital in the European Union (EU).

- To increase the harmonisation of rules governing - To increase the harmonisation of rules governing the drafting and content of prospectuses. the drafting and content of prospectuses.

- To introduce a single authorisation system for - To introduce a single authorisation system for prospectuses which may be used in all EU prospectuses which may be used in all EU Member States (a "single passport for issuers").Member States (a "single passport for issuers").

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Prospectus for Public Offerings of SecuritiesProspectus for Public Offerings of Securities(cont.)(cont.)

Prospectuses may serve as "single passports" for Prospectuses may serve as "single passports" for issuers of securities wishing to offer their securities in issuers of securities wishing to offer their securities in more than one Member State. As a result of the more than one Member State. As a result of the modernisation of Community rules on content and modernisation of Community rules on content and distribution, prospectuses should contain better-quality distribution, prospectuses should contain better-quality information that is more easily accessible, e.g. via the information that is more easily accessible, e.g. via the Internet.Internet.

The principle of automatic mutual recognition means that The principle of automatic mutual recognition means that companies will no longer have to ask each Member companies will no longer have to ask each Member State for regulatory approval of their prospectus for State for regulatory approval of their prospectus for potential investors. This ensures better-quality potential investors. This ensures better-quality information that is available on the Internet in several information that is available on the Internet in several languages.languages.

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Prospectus for Public Offerings of SecuritiesProspectus for Public Offerings of Securities(cont.)(cont.)

With effect from 1 July 2005, Directive 2003/71 will With effect from 1 July 2005, Directive 2003/71 will repeal Directive repeal Directive 89/298/EEC89/298/EEC and so replace the previous and so replace the previous mutual recognition system, which was partial and mutual recognition system, which was partial and complex since it did not meet the objective of providing a complex since it did not meet the objective of providing a single passport. single passport.

It is one of the key elements of the Financial Services It is one of the key elements of the Financial Services Action Plan, which advocates the establishment of an Action Plan, which advocates the establishment of an integrated financial services market by 2003.integrated financial services market by 2003.

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Transparency Directive 2004/109/ECTransparency Directive 2004/109/EC

The Directive on transparency requirements revises and The Directive on transparency requirements revises and replaces provisions of Directive 2001/34/EC.replaces provisions of Directive 2001/34/EC.

The goal is to upgrade the information available to The goal is to upgrade the information available to investors, thus helping them to allocate their funds on investors, thus helping them to allocate their funds on the basis of a more informed assessment. the basis of a more informed assessment. The Directive aims to ensure that investors receive The Directive aims to ensure that investors receive interim management statements from those share interim management statements from those share issuers who do not publish quarterly reports, and half–issuers who do not publish quarterly reports, and half–yearly financial reports from issuers of new bonds. yearly financial reports from issuers of new bonds. In addition, all securities issuers will have to provide In addition, all securities issuers will have to provide annual financial reports within four months after the end annual financial reports within four months after the end of the financial year. The Directive is also expected to of the financial year. The Directive is also expected to improve dissemination of information on issuers.improve dissemination of information on issuers.

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Transparency Directive 2004/109/ECTransparency Directive 2004/109/EC

Implementing measures (level 2)Implementing measures (level 2)

COMMISSION REGULATION (EC) No 809/2004 COMMISSION REGULATION (EC) No 809/2004 of 29 April 2004 implementing Directive of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of 2003/71/EC of the European Parliament and of the Council as regards information contained in the Council as regards information contained in prospectuses as well as the format, prospectuses as well as the format, incorporation by reference and publication of incorporation by reference and publication of such prospectuses and dissemination of such prospectuses and dissemination of advertisements advertisements

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Market AbuseMarket AbuseDirective 2003/6/EC on insider dealing Directive 2003/6/EC on insider dealing

and market manipulationand market manipulation

OBJECTIVEOBJECTIVE

To strengthen the integrity of financial markets by limiting To strengthen the integrity of financial markets by limiting opportunities for insider dealing and market opportunities for insider dealing and market manipulation, to define common standards to increase manipulation, to define common standards to increase investor confidence and to strengthen cooperation investor confidence and to strengthen cooperation between the appropriate national authorities within the between the appropriate national authorities within the European Union.European Union.There are two main categories of market abuse: There are two main categories of market abuse: insider dealing and insider dealing and market manipulation. market manipulation.

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Market Abuse – Directive 2003/6/ECMarket Abuse – Directive 2003/6/EC

The definition of what constitutes market abuse is a general The definition of what constitutes market abuse is a general one and is flexible enough to last as long as possible. Market one and is flexible enough to last as long as possible. Market abuse may arise in circumstances where investors have been abuse may arise in circumstances where investors have been unreasonably disadvantaged, directly or indirectly, by others unreasonably disadvantaged, directly or indirectly, by others who: who:

- have used information which is not publicly available (insider - have used information which is not publicly available (insider trading); trading);

- have distorted the price-setting mechanism of financial - have distorted the price-setting mechanism of financial instruments; instruments;

- have disseminated false or misleading information. - have disseminated false or misleading information.

This type of conduct can undermine the general principle that This type of conduct can undermine the general principle that all investors must be placed on an equal footing. all investors must be placed on an equal footing.

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COMMISSION DIRECTIVE 2003/124/EC of 22 December COMMISSION DIRECTIVE 2003/124/EC of 22 December 2003 implementing Directive 2003/6/EC of the European 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of public disclosure of inside information and the definition of market manipulationmarket manipulation

Commission Directive 2004/72/EC of 29 April 2004 Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of derivatives on commodities, the drawing up of lists of insiders, the notification of managers' transactions and the insiders, the notification of managers' transactions and the notification of suspicious transactions notification of suspicious transactions

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COMMISSION REGULATION (EC) No 2273/2003 COMMISSION REGULATION (EC) No 2273/2003 of 22 December 2003 implementing Directive of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back Council as regards exemptions for buy-back programmes and stabilisation of financial programmes and stabilisation of financial instrumentsinstruments

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Collective Investment Undertakings (UCITS)Collective Investment Undertakings (UCITS)

Directive 85/611/EEC on the coordination of Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions laws, regulations and administrative provisions relating to undertakings for collective investment relating to undertakings for collective investment in transferable securities (UCITS) amended by:in transferable securities (UCITS) amended by:

Directive 88/220/EEC;Directive 88/220/EEC;Directive 95/26/EC;Directive 95/26/EC;Directive 2001/107/EC;Directive 2001/107/EC;Directive 2001/108/EC.Directive 2001/108/EC.

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Collective Investment Undertakings (UCITS)Collective Investment Undertakings (UCITS)

OBJECTIVEOBJECTIVETo achieve approximation at Community level of the To achieve approximation at Community level of the conditions of competition between UCITS and to give conditions of competition between UCITS and to give unit-holders more uniform and more effective protection.unit-holders more uniform and more effective protection.

CONTENTSCONTENTS

UCITS are undertakings whose sole object is the UCITS are undertakings whose sole object is the collective investment in transferable securities of capital collective investment in transferable securities of capital raised from the public and the units of which are, at the raised from the public and the units of which are, at the request of the holders, repurchased or redeemed out of request of the holders, repurchased or redeemed out of the undertaking’s assets.the undertaking’s assets.

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Collective Investment Undertakings (UCITS) Collective Investment Undertakings (UCITS) (cont.)(cont.)

UCITS must be authorised by the Member State in which UCITS must be authorised by the Member State in which they are situated. The authorisation is valid for all they are situated. The authorisation is valid for all Member States.Member States.

Requirement to publish a prospectus, regular reports, Requirement to publish a prospectus, regular reports, and information on the sale price of units.and information on the sale price of units.

Designation of authorities responsible for authorisation Designation of authorities responsible for authorisation and supervision in each Member State.and supervision in each Member State.

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Directive 2001/108/EC widens the scope Directive 2001/108/EC widens the scope of Directive 85/611/EEC to include of Directive 85/611/EEC to include collective investment undertakings which collective investment undertakings which invest in financial instruments other than invest in financial instruments other than transferable securities, such as money transferable securities, such as money market instruments, bank deposits, market instruments, bank deposits, options and standardised financial-futures options and standardised financial-futures contracts, and units of other collective contracts, and units of other collective investment undertakings.investment undertakings.

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Directive 2001/107/EEC introduces harmonised Directive 2001/107/EEC introduces harmonised rules on market access and conditions for rules on market access and conditions for conducting business, together with prudential conducting business, together with prudential requirements on management companies. requirements on management companies.

It sets up a "European passport" system, It sets up a "European passport" system, whereby a management company authorised to whereby a management company authorised to provide its services in one Member State may do provide its services in one Member State may do so throughout the single market without having so throughout the single market without having to apply for a new authorisation. to apply for a new authorisation.

1 european commission, technical assistance information exchange unit (taiex), dg enlargement in...

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