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Definition: short selling is thesale of a security the sellerdoes not own with theintention of buying it back at alater time in order to deliver it.

This practice carries specificrisks of settlement failure.

Regulation of credit ratingagencies

Regulation 462/2013/EUrevising the regulation oncredit rating agencies;Directive 2013/14/EU revising

the directives on the use ofratings by UCITS and onhedge fund managers(directive).

To address conflicts of interest between rating agencies and ratedentities.

To reduce excessive dependence onratings.

To regulate the rating of sovereigndebt by rating agencies.

To boost competition in the sector ofrating agencies.

PROCESS COMPLETED

Adopted formally on 21May 2013. Entered intoforce in June 2013.The directive has to betransposed by member

states no later than 21December 2014.

Financial market reform

Revision of Directive2004/39/EC on markets infinancial instruments;regulation on markets in

financial instrumentsamending the EMIRregulation on over-the-counterderivatives, centralcounterparties and traderepositiories.

To further regulate the structure offinancial markets and theirtransparency.

To apply a more stringent frameworkto commodity derivatives markets andalgorithmic and high-frequency

trading (technologies that haveincreased transaction speed). To strengthen protection of investors.

PROCESS COMPLETED

First reading

The EP and Council sealeda political compromise in

January 2014. The EPendorsed it on 15 April andthe Council adopted it on13 May.

This reform has to beimplemented by the end of2016.

Reform of rules on marketabuse

Regulation repealing Directive2003/125/EC on insiderdealing and marketmanipulation; directive oncriminal sanctions for insiderdealing and marketmanipulation.

To expand rules to combat marketabuse to commodity markets and over-

the-counter derivatives trading. To strengthen regulatory authorities powers of investigation.

To reinforce administrative sanctionsfor non-compliance with thelegislation.

To introduce criminal sanctions formarket abuse.

PROCESS COMPLETED

First readingThe Council approved on14 April the politicalcompromises worked outwith the EuropeanParliament. The EP hadalready done so in


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September 2013 andFebruary 2014.

The two texts will be published in the Official

Journal in June. Memberstates will have 24 monthsto transpose the directiveinto their nationallegislation.

Regulation of centralsecurities depositories

Regulation on improving theregulation on securitiessettlement in the EU and on

central securities depositories(CSDs) and amendingDirective 98/26/EC.

Definition: Central securitiesdepositories handle theregistration and safekeeping ofsecurities (or financialcontracts) and administersecurities settlement systems.

To harmonise the securitiestransaction settlement period.

To require issuers and investors toregister with a depository thesecurities they trade on regulatedmarkets (exchanges).

To strengthen business and prudentialrequirements for depositories.

FORMAL ADOPTIONPENDING

First reading

The EP and Councilreached a politicalcompromise in December2013. The EP validated iton 15 April, and theCouncil still has to adoptit.


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Transparency rules forcompanies

Directive 2013/50/EUamending Directive

2004/109/EC on theharmonisation of transparencyrequirements in relation toinformation about issuerswhose securities are admittedto trading on a regulatedmarket; recast of accountingDirectives 78/660/EEC and83/349/EEC (directive).

To require oil, gas, mining andforestry companies to disclose the

payments they make to governmentsof countries where they operate.

To cut red tape and improve the

comparability of the incomestatements of all European companies(listed or not).

To draw up special rules for small andmedium-sized companies (SMEs).

PROCESS COMPLETED

Adopted formally on 22October 2013.The states have 24 months

to comply with thedirective.

Regulation of financial

benchmarks such as Libor(the London interbank rate).

Regulation on indices used as benchmarks in financialinstruments and financialcontracts

To set up a framework for the

creation, configuration, use andsupervision of benchmarks.

IN PROGRESS

First reading

The EP has to adopt its position and the Council itsgeneral approach. The twoinstitutions will then haveto negotiate a politicalcompromise.

Money market funds

Regulation on money marketfunds (MMF).

Money market funds arealternatives to bank depositsconsidered more attractive byinvestors who wish to investfor the short term.

They form part of shadow

banking, in other words thesystem of credit intermediationthat involves entities andactivities outside the regular

banking system.

To enhance the stability of moneymarket funds (MMF).

IN PROGRESS

First reading

The EP has to adopt its position and the Council itsgeneral approach, afterwhich the two institutionswill have to reach a

political compromise.


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Transparency of certainfinancial transactions

Regulation on reporting andtransparency of securities

financing transactions

The aim is to enhance thetransparency of certain financialtransactions, which take place outsidethe regulated banking sector.

The targeted operations are 'securities

financing transactions' (STFs);securities loans and pensionsoperations (repo), which consist ofselling securities with the commitmentto buy them back later, in the shortterm. The text aims to "improve thevisibility" of these operations forregulators and investors. For example,these transactions must all be notifiedto a central database.

IN PROGRESS

First reading

The EP has to adopt its

position and the Council itsgeneral approach, afterwhich the two institutionswill have to reach a

political compromise.

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