MEPs will on Monday (10 May) hold crucial votes on two major planks of the European Commission’s agenda for reforming financial services.
The European Parliament’s economic and monetary affairs committee will vote on both an overhaul of financial supervision in the EU, and on a directive to regulate the shadow banking system – including hedge funds, private equity and structured investment vehicles. These subjects are among the top priorities for Michel Barnier, the European commissioner for the internal market. They also relate to the reform agenda set by the G20 group of developed and emerging economies.
Spain, which holds the rotating presidency of the Council of Ministers, intends to negotiate with MEPs immediately after the votes, in search of compromise deals before it hands the presidency over to Belgium on 1 July. But the Parliament committee is expected to adopt positions that differ markedly from the thinking in the Council of Ministers.
On alternative investment funds, the committee is expected to insist – by a large majority – that fund managers based outside the EU must be subject to the same regulatory regime as those in Europe if they want to operate in the single market.
By contrast, the latest text circulated to governments by the Spanish presidency would merely require managers outside the EU to comply with minimum transparency and reporting obligations to regulators and investors (such as annual reports and disclosure requirements when they take over companies). The UK, with support from the Czech Republic, is opposed to even these minimum rules, on the grounds that they would be protectionist.
The Spanish presidency wants governments to agree their position on the funds legislation at a finance ministers meeting on 17-18 May. Jean-Paul Gauzès, the Parliament’s lead MEP on the subject, warned that the law may not come into place “until 2015” unless a first-reading agreement between the institutions is reached.
On the supervisory package, the Parliament is expected to approve the creation of a European early-intervention fund to support failing banks, and to agree that an EU authority should have direct supervisory powers over financial institutions that represent a systemic risk to the economy. Both positions are opposed by member states.
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