On 12 January 2011, the Council of the European Union (“the Council”) published the work programme prepared by the Hungarian Presidency for the EU Economic and Financial Affairs Council (“ECOFIN”).
The work programme sets out ECOFIN’s financial services-related priorities, which include:
- reaching agreement on Omnibus II (the proposed directive amending several financial services directives to specify the competencies of the European Supervisory Authorities);
- reaching agreement in the Council on the legislative proposal on over-the-counter (OTC) derivatives, central counterparties (CCPs) and trade repositories (also known as “EMIR”). On 13 January 2011, the European Central Bank (the “ECB”) also issued its opinion on the EMIR proposal, supporting the overall aim of the regulation but identifying a number of concerns. A key aspect relates to the aim of the proposal to promote financial stability in the OTC derivatives market from a prudential supervisory point of view. Given the statutory role and responsibilities of central banks to safeguard financial stability, and for the safety and efficiency of financial infrastructures, it underlines the importance of an adequate involvement of the ECB and national central banks in a number of aspects of the proposed regulation. It stresses the need for CCPs to be strictly regulated and suggests that CCPs should be classified as “credit institutions” with a limited purpose banking licence. In relation to the issue of access by CCs to central bank liquidity, the ECB also considered that commercial bank money does not truly eliminate risks, whilst central bank money does. It therefore indicated that the proposed regulation should not present central bank liquidity and commercial bank money as two equally safe and preferable options. (A draft European Parliament report on EMIR is due shortly and the deadline for amendments to EMIR will be 15 February 2011, consideration in Committee will take place on 15 March 2011, with the vote in Committee scheduled for 23 March 2011 and the plenary vote will take place before the summer recess);
- reaching a general approach in the Council on its proposal for a regulation on short selling and certain aspects of credit default swaps; and
- holding trilogues with the European Parliament to reach an agreement on revisions to the Financial Conglomerates Directive (2002/87/EC).
In addition, other key elements in the Presidency’s document included:
- taxation, including the Presidency’s desire to carry on work with a view to limiting the current differences between Member States in modalities of financial sector taxation and efforts will be made to bring impetus into the negotiations on the extension of the scope of the Savings Tax Directive; and
- prioritisation of reinforcing fiscal discipline by giving a more prominent role to public debt in the Stability and Growth Pact is mentioned and strengthening the national fiscal frameworks of the Member States is proposed.