-The London Investment Banking Association (LIBA) responded to the Commission Consultation on the revision of the Investment Services Directive.
LIBA comes to the following conclusions:
In most respects the existing ISD has worked well. Where the existing ISD has not worked well, the review should focus on targeted amendments and effective enforcement. We welcome the proposals to address shortcomings in the internal market, especially:
mutual recognition of country of origin requirements for all types of business, limiting the ability of Member States to impose their own conduct of business and marketing rules on incoming cross-border business (paragraph 47): but this should not be contingent on prior harmonisation, especially in relation to wholesale business;
appropriate definition of and limited rules regime for professional investors (paragraphs 38, 39, and 45): but the definition needs to be broader and more flexible,
removal of barriers to cross-border business, especially the abolition of the connection requirement for foreign exchange business, and of the ability of Member States to impose ‘concentration requirements’ (paragraphs 19, 34, 51): but the proposals on reporting of OTC trades could be even more harmful than existing concentration rules.
But a number of the proposals would impose too interventionist and inflexible a framework on European markets, especially on inter-professional transactions. Such contentious and fundamental changes would risk delay in achieving more urgent, realistic and beneficial improvements. The concerns which give rise to them should be dealt with in a much more targeted and proportionate way (paragraphs 15 –27). Particular concerns are:
the proposed restructuring of regulatory classifications of EU markets and
exchanges is too interventionist and would damage European markets;
the proposed mandatory reporting and immediate publication of OTC trades in securities traded on ‘regulated markets’ would cut across the existing balance between transparency and liquidity, and would seriously harm European OTC markets.
The Lamfalussy approach should be applied as follows:
Level 1 framework directive: to define the scope and key concepts, and to establish principles to govern the flexible use, but also to limit the misuse, of implementing measures
Level 2 implementing measures to enable the adaptation of Level 1 definitions in the light of changing circumstances, and to enable the flexible application of Level 1 principles to the different characteristics and dynamics of different markets
Level 3 cooperation to develop more detailed regulatory standards, where necessary and appropriate, with improved coordination between the Commission’s and CESR’s policy development
Level 4: effective and consistent enforcement of the directive
full and responsive consultation with interested parties at all levels as the review develops, so that the revised ISD framework is fully adapted to EU markets and their users, and so commands the support of all (paragraph 14).
http://www.liba.org.uk/',WIDTH, 300, SHADOW, true, FADEIN, 300, FADEOUT, 300, STICKY, 1,DURATION,3500)" onmouseout="UnTip()");">LIBA - Commission consultation.doc' target='_blank'>See full LIBA response
© LIBA - London Investment Banking Association
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