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Thursday, 18th April 2024
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European finance ministers fast track securities legislation Back  
Proposals to speed up the integration of the European financial markets recommended in the Lamfalussy report were adopted in Stockholm recently.
European financial services regulation took a leap forward in Stockholm on 22 March when the proposals in the Lamfalussy report to fast track on market integration were adopted.

At that meeting the Council of Economics and Finance Ministers agreed on a draft Resolution on the functioning of a new legislative process for EU securities markets legislation. Two new committees were created the European Securities Committee and the European Securities Regulators Committee. This proposal will effectively increase the speed of introducing new financial services legislation.

Frits Bolkestein, European Commissioner for the Internal Market said the adoption of the measures was a landmark decision. ‘The Commission is extremely pleased that it has proved possible to agree on how to apply faster and more flexible decision-making procedures for securities market legislation while respecting the current balance between the Council of Ministers, the European Parliament and the Commission.’

‘Community legislation must respond rapidly and flexibly to developments in financial markets in order to achieve greater market integration and improved competitiveness,’ he added. ‘The new procedures are therefore good news not only to facilitate the optimum development of the EU’s securities industry but also to ensure that European industry and commerce as a whole have easier access to cheaper investment capital for innovation and job creation.’

The procedures laid out in the draft Resolution put into effect the Lamfalussy Report issued in mid February, which maintained that change was needed if an integrated financial market was to be built in the EU by the deadline of 2005.

The report argued that the basic legislation is not yet in place to achieve this and that there needs to be convergence of European regulatory structures over time. It also said that the current EU regulatory system is too slow, too rigid and too ill-adapted to meet the needs of the modern financial markets. The Report stated that these weaknesses were combined with various other obstacles to mean that the EU loses out on substantial potential for economic gains from integration.

The Report recommends a number of regulatory reforms to deal with this based on a four level regulatory approach. Level 1 deals with the framework EU legislation and setting out of general principles, adopted by the Council and European Parliament.

Level 2 deals with the adoption by the Commission of implementation measures, assisted by the two newly created committees.

Level 3 will look at the greater co-ordination between national regulators and level 4 at better enforcement.

Discussion at the 22 March Council meting focussed on the details of the procedures to be followed for adoption by the Commission of implementation measures.

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