The European Commission has adopted a technical Regulation implementing the Prospectus Directive (see IP/03/1018) and a technical Directive including a second set of measures implementing the Market Abuse Directive (see IP/02/1789). Both of these measures are in line with the new procedure for deciding and applying securities legislation agreed by the European Council in March 2001 and endorsed by the European Parliament in February 2002 (see IP/02/195) for deciding and applying securities legislation. Both measures were proposed by the Commission taking into consideration advice from the Committee of European Securities Regulators (CESR). The European Securities Committee, consisting of high-level representatives of the Member States subsequently adopted a positive opinion on both measures. The European Parliament, exercising its right of oversight, also agreed by letter.
Internal Market Commissioner Frits Bolkestein said “Adoption of these two important technical measures is a further strong signal that the new EU regulatory system for securities is beginning to work well. Today the European Union has one set of documents for raising capital in EU capital markets a major step forward, and something we have never had before.
This final set of technical rules on market abuse closes the chapter on this important Directive. It is essential that both these measures are now vigorously and rigorously applied by all Member States.”
Technical Regulation implementing the Prospectus Directive The Prospectuses Regulation is a cornerstone in the creation of the single market for financial services and the completion of the Financial Services Action Plan. In combination with the framework Prospectuses Directive adopted by the Council and the Parliament (2003/71/EC of 4 November 2003) which it implements, it will make it easier to raise capital in Europe and increase transparency and market integrity. By harmonising the necessary disclosure requirements, the new legal framework as a whole creates an effective “single passport” for both EU and non-EU issuers in other words it means that once a prospectus is authorised in one Member State, it can be used in all the others, cutting red tape and costs for issuers.
There is no “one-size fits all” model for prospectuses. The Regulation therefore sets out different minimum disclosure requirements for different products, depending on the types of information needed by investors in each case. For example, prospectuses may relate to equity securities or they may cover issues of non-equity securities (such as bonds), which may be admitted to trading in different ways, based on prospectuses using various formats. The sizes and legal forms of issuers also differ and the Regulation takes account of this.
The Regulation also specifies the content of prospectuses which can be drawn up either as a single document or composed of three separate documents. It lays down rules on the publication of the additional information which the Prospectuses Directive requires to be published outside the prospectus itself. In addition, the Regulation sets out the conditions issuers must meet when making information available by referring in the prospectus to other documents published previously or simultaneously. Finally, in order to ensure that interested parties have adequate access to prospectuses, the implementing measure includes requirements on how these must be published and advertised.
The Regulation will apply from 1 July 2005 which is also the deadline for Member States to implement the framework Directive. Technical Directive implementing the Market Abuse Directive This Commission has also adopted a technical implementing Directive comprising a second set of measures, proposed by the Commission on the basis of the CESR’s advice, to implement the Market Abuse Directive. The implementing Directive covers accepted market practices in the context of market manipulation, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders by issuers and persons acting on their behalf or for their account and the notification to the relevant authorities of suspicious transactions and of transactions undertaken by issuers’ managers.
It will complement the first set of implementing measures, consisting of a Commission Regulation and two Commission Directives, already in force since December 2003 (see IP/04/16). The two sets of implementing measures as a whole will provide the detailed technical context ensuring that the Market Abuse Directive will achieve its aims of reinforcing market integrity, contributing to the harmonisation throughout Europe of the rules against market abuse and establishing transparency and equal treatment of market participants.
The implementing Directive will have to be written into national law by Member States by 12 October 2004, which is also the deadline for implementing the Market Abuse Directive itself.
Background In line with the new approach for regulating securities markets, the European Commission addressed on 18 March 2002 and 5 February 2003 two provisional mandates to the Committee of European Securities Regulators (CESR) for technical advice on possible implementing measures for the Prospectuses Directive. These provisional mandates by the Commission were formalised on 1 October 2003 after the adoption of the Directive (2003/71/EC).
Concerning the Market Abuse Directive, the European Commission addressed on 5 February 2003 a formal mandate to CESR for technical advice on a second set of possible implementing measures.
In order to guarantee the necessary transparency and maximise the effectiveness of the measures concerned, the CESR consulted market participants and the wider public before finalizing its advice. In line with the new procedure for deciding and applying securities legislation, agreed by the European Council in March 2001 and endorsed by the European Parliament in February 2002, the Commission made proposals taking into account that advice.
Now that the ESC has approved the proposals and the European Parliament has decided to agree to them, the Commission is, under the agreed procedure, in a position to formally adopt them.
The new approach for securities markets regulation comprises four-levels: namely broad framework principles included in legislation adopted by the European Parliament and Council (Level 1), measures implementing those Directives and adopted by the Commission after advice from the Committee of European Securities Regulators (CESR) and the agreement of the European Securities Committee, consisting of high-level representatives of the Member States (Level 2), co-operation among regulators (Level 3) and enforcement (Level 4).