As the European single market turns 20, a number of key financial
initiatives are due to be finalised this year, including interoperability guidelines
and a new-look UCITS.
Adopted in April 2011, the Single Market Act is Europe’s attempt
to “re-launch” the single market for 2012, improving growth, competitiveness
and social progress.
Ranging from worker mobility to SME finance and consumer
protection, the European Commission’s Single Markets Act, aims to make life easier
for businesses, citizens, consumers and workers in the region.
Regulation of central securities depositories (CSDs) is
expected to be published within the next month, providing uniform requirements
for the performance of services by CSDs as well as for their access and
Under the proposals CSDs would fall under the supervision of the European Securities and Markets Authority, the pan-European regulatory body, which would be charged with maintaining a list of CSDs and keeping track of the activities they are licensed to carry out.
The new regulation will work in unison with MiFID II and the
European market infrastructure regulation (EMIR), which support full
interoperability between exchanges and clearing houses for equities and listed
and OTC derivatives.
Speaking in Brussels today, European Commission single
market commissioner Michel Barnier said he had made considerable progress on
rules which would better govern financial markets in Europe.
The latest re-engineering of the UCITS regime is due out in
Q2, providing rules on UCITS depositary functions, manager remuneration policy,
and administrative sanctions. The aim of UCITS V is to create a regulatory
regime which provides for robust investor protection and further strengthens
the internal market efficiency in the investment fund sector while ensuring
UCITS does not impair financial stability.
Also due in Q2 are the packaged retail investment products
(prip) guidelines, aimed at levelling the playing field for originators and
distributors of retail investment products in Europe and increasing efficiency
in the cross-border funds business.
According to Barnier, the Securities Law Directive, due in
Q3, will reduce the divergence between national substantive laws on book-entry
securities, simplifying financial markets operations.
Yet a legislative initiative on a framework for bank
recovery and resolution has not been given a firm date for adoption by the
European Commission. According to the Commission, the main objective of the proposal
will be to provide a more effective, efficient and harmonised crisis management
structure for member states to resolve failing banks without the need to engage
The Commission is also yet to provide details on the
adoption of a legislative initiative on close-out netting, the risk mitigation
tool used to reduce counterparty credit risk by giving priority over unsecured
creditors to the non-defaulting counterparty in the case of insolvency.
The objective of the initiative is to increase legal
certainty and safety of bilateral and multilateral netting agreements, but also to
empower national authorities to impose a temporary stay on the rights to