*

Latest developments in EU legislation concerning the

financial services are 10th edition

*Brussels, 8 December 2005

FEDERATION BANCAIRE DE L’UNION EUROPEENNEBANKING FEDERATION OF THE EUROPEAN UNION

18 most recent issues

• Adopted measures (-4-)

• Recent proposals (-4-)

• Consultations (-10-)

Adopted measures

• Regulation endorsing the IAS 39 Fair Value Option (November 2005)

• Capital Requirements Directive (October 2005)

• 8th Company Law Directive on statutory audit (October 2005)

• Anti-Money Laundering Directive (June 2005)

1. Regulation endorsing the IAS 39 Fair Value option

The Regulation was adopted on 15 November 2005.

It endorses the IAS 39 on financial instruments: Recognition and Measurement, the Fair Value Option;

Legally binding retroactively: as of 1 January 2005.

IAS 39 was adopted already in November 2004, but had two carve-outs;

Hedge accounting carve-out still remains.

2. Capital Requirements Directive

CRD consisting of 2 Directives was adopted by ECOFIN Council on 11 October 2005.

Will introduce a state of the art supervisory framework in the EU;

Reflects the BASEL II rules on capital measurement and capital standards agreed at the G-10 level;

Member States will have to apply the Directive from the start of 2007, for most sophisticated approaches from 2008.

3. 8th Company Law Directive on statutory audit

Also this Directive was adopted by ECOFIN Council on 11 October 2005.

Aiming at reinforcing and harmonising the statutory audit function throughout the EU;

Sets out principles for public supervision in Member States;

Requires application of the IASs;These measures should help to restore faith in the

profession and its independence.

4. Anti-Money Laundering Directive This third AML Directive was adopted on 7 June 2005.

Directive applies to the financial and other key services sectors and it also covers all providers of goods, when payments are made in cash in excess of 15,000 Euro;

Those subject to the Directive need to:- identify and verify the identity of their customer;- report suspicions of ML and terrorist financing;- take various supporting measures.

Directive has to be implemented within 2 years – by the end of 2007.

Recent proposals• White paper on Financial Services

Policy (December 2005)• Directive on New Legal Framework for

payments market (December 2005)• Regulation on information on the payer

accompanying transfers of funds (July 2005)

• Directive extending MiFiD transposition (June 2005)

5. White Paper on EU Financial Services Policy

The White Paper was presented by the European Commission on 5 December 2005.

Less new legislation for the next 5 years;Focus on retail financial services;Initiating debate on hedge funds, asset

management, mortgages and rating agencies;Setting clear goals for supervisors.

6. New Legal Framework

The proposal for a Directive was presented by the European Commission on 1 December 2005.

New Directive once adopted should:make cross-border payments as easy, cheap and

secure as domestic payments;guarantee fair and open access to payments

markets;increase and standardise consumer protection.

7. Regulation to tighten controls of money transfers

The proposal was presented by the European Commission on 26 July 2005.

The proposal, once adopted, would: ensure better traceability of money transfers; require that money transfers be accompanied by

the identity of the sender; ensure that this information will be immediately

available to the appropriate law enforcement authorities.

8. Directive extending MiFiD transposition

The proposal was presented by the European Commission on 20 June 2005.

The proposal, once adopted, would: extend the MiFiD transposition deadline by 6

months; give firms and markets another 6 months to adapt

their structures and procedures.

In parallel consultations on different MiFiD implementing legislation are constantly going on.

Consultations

• Evaluation of the FSAP, part I (November 2005)

• Possible implementing measures to Transparency Directive (November 2005)

• Review of the Regulation on Cross-border payments in euros (October 2005)

…

Consultations

…• Certain Money-Laundering obligations

(September 2005)• Working document in relation to AML

Directive (September 2005)• Green paper on Mortgage Credit in EU

(July 2005)…

Consultations…

• Green paper on EU framework for Investment Funds (July 2005)

• Review of the Deposit Guarantee Schemes Directive (July 2005)

• Review of E-Money Directive (July 2005)• Green Paper on EU Financial services

policy for the next 5 years (May 2005)

9. Evaluation of the FSAP, part I The Commission has published part I of its FSAP

evaluation on 7 November 2005.

First step of an exhaustive analyses of the impact of FSAP;

Focus on the process of adoption of the measures put forward in the FSAP;

Views on the general perception of the FSAP process; on consultation and Lamfalussy process…

Deadline for comments is set to 31 January 2006.

10. Implementing measures to Transparency Directive

The Commission has published their working document on possible implementing measures in November 2005.

Part I: draft legal text containing possible implementing measures to the Directive;

Part II: draft recommendation on the use of standard forms for the purpose of notifying acquisition or disposal of major holdings.

Deadline for responses is set to 8 January 2006.

11. Regulation on Cross-border payments in euros

The Commission has launched a consultation on the review of the Regulation on 19 October 2005.

Outlines information gathered to date by the Commission services;

Offers stakeholders the opportunity to comment on the key issues;

Draft Evaluation report expected to be released in H1 2006.

Deadline for responses is set to 6 January 2006.

12. Certain AML obligations

The consultation was launched by the Commission on 25 September 2005.

Examines AML obligations in two areas:- non-face to face transactions;- electronic commerce.

Deadline for responses is set to 16 January 2006.

13. Working document in relation to AML Directive

The consultation was launched on 12 September 2005.

Relates to Chapter VI of Directive: adoption of implementing measures;

Proposes to prioritise the subjects. Priorities:- simplified customer due diligence;- politically Exposed Persons.

Deadline for responses was set to 21 October 2005.

14. Green Paper on mortgage Credit in the EU

The consultation on action in the EU mortgage market was launched on 19 July 2005.

Green Paper provides EC initial views on the recommendations of the Mortgage Credit Working Group;

It examines the case for Commission action in EU mortgage credit market (Whether and how?);

DG Markt hosted a public hearing yesterday (7 December 2005) on the conclusions of consultation.

Deadline for responses was set to 30 November 2005.

15. Green Paper on EU framework for Investment Funds

Consultation on the enhancement of the EU framework for investment funds was launched on 14 July 2005.

Green Paper reviews the functioning of the legislative framework provided for by the UCITS Directive;

Invites consideration and comment on wide range of proposals aimed at boosting efficiency of the single market for investment funds.

Deadline for responses was set to 15 November 2005.

16. The Deposit Guarantee Schemes Directive

Consultation on review of this Directive was launched also on 14 July 2005 and it lasted until 14 October 2005.

Follow-up communication is expected by mid 2006.

Consultation on report on minimum guarantee level of Deposit Guarantee Schemes of 20,000 euros was opened later.

Deadline for responses for this consultation is set to 15 February 2006.

17. The E-Money Directive Consultation on review of this Directive was launched

also on 14 July 2005.

Need to reassess whether the legal framework is still in tune with modern market developments;

Independent study carried out by consultants is going to be commissioned by the EC;

EC is intended to come forward with a follow-up report containing recommendations by spring 2006.

Deadline for responses was set to 14 October 2005.

18. Green paper on EU Financial services policy for the next 5 years

Green Paper was published by the EC on 3 May 2005.

Launched ideas to further integrate EU financial markets; Focused primarily on implementing existing rules agreed

under the FSAP; Explored ways of improving cross-border access to retail

financial services and asset management.

Deadline for responses was set to 1 August 2005.

The financial services policy programme (White Paper) was published on 5th December 2005.

Thank you for your attention!