THE EU SECURITIES ACQUIS José Manuel PORTERO CNMV portero@cnmv.es Sofia, 16 September 2005

1. THE EU SECURITIES ACQUISJosé Manuel PORTEROCNMVportero@cnmv.esSofia, 16 September 2005

2. THAT WAS THEN... • Early 90s –Liberalisation of transactions in securities • 1993 –Two very important Directives enacted on • Investment Services • Capital Adequacy which make possible the right to establish and freedom to provide services • However significant obstacles and barriers still in place...

3. THAT WAS THEN...PART II • 1999- The European Commission set-up the Financial Services Action Plan –FSAP- 42 measures to be adopted • Main goal-to speed-up the creation of a single European market in the financial services field- • Main tools • Generalization of home country approach • Harmonisation of standards • Mutual recognition • Coordination between national supervisory bodies

4. ... THIS IS NOW • 2005 • 39 out of 42 original measures of the FSAP have been adopted • Only one major measure relating to securities is still under negotiation –the review of the capital requirements of Investment Firms- • And future work –maybe regulation- on clearing and settlement is expected by next year • And, last but not least...

5. ...THIS IS NOW...WORKING • The Four-Level regulatory approach under the Lamfalussy process • Level 1 –Adoption of framework principles- • Level 2 –Implementing measures- • Level 3 –Common guidelines issued by regulators- • Level 4 –Enforcement of MS compliance with EU rules European Securities Committee –ESC- Committee of European Securities Regulators –CESR- .......................................................fully operational!!!

6. BUT THIS IS ONLY THE END OF THE BEGINNING • From 2005 onwards • What next? • Better regulation • Transposition • Enforcement • Continuous evaluation • Way forward? • Green Paper on Financial Services Policy explains it all!!!

7. RELEVANT EU LEGISLATION IN THE SECURITIES FIELDAuthor’s Choice

8. MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE –2004/39/EC- • To set-up harmonized requirements for authorisation of Investment Firms, Regulated Markets and MTFs • To enhance pre and post trade transparency on securities transactions • To make mandatory co-operation between jurisdictiosn

9. MARKET ABUSE DIRECTIVE -2003/6/EC-COMMISSION IMPLEMENTING RULES • To mitigate, to detect and to define market manipulation and insider dealing • Definition and public disclosure of inside information • Investment recommendations and disclosure of conflicts of interest

10. PROSPECTUS DIRECTIVE –2003/71/EC-COMMISSION REGULATION • European Passport for Prospectuses • Harmonized requirements for Prospectuses • Information contained in Prospectuses and dissemination of advertisements

11. TRANSPARENCY DIRECTIVE -2004/109/EC- • To establish a common financial disclosure regime within the EU for issuers of listed securities • To improve the European dissemination on information on issuers

12. UCITS DIRECTIVES2001/107/EC—2001/107/EC • To establish the conditions of access and authorisation • Relations with third countries • Obligations of the Depositories • Policy of investment on financial instruments

13. ENDORSEMENT OF IAS/IFRSCOMMISSION REGUL. -1606/2002/EC • To endorse the International Accounting Standards/International Financial Reporting Standards to be applied since January 2005 to consolidated groups of listed companies

14. CAPITAL REQUIREMENT DIRECTIVE • To adapt the new Basel Accord –Basel II- to European legislation by the re-casting of the two existing Directives on • Capital Adequacy –1993/6/EC- • Banking –2000/12/EC-

15. DON QUIXOTE SAID400 YEARS AGO “...TO BE PREPARED IS HALF THE VICTORY”Definitely Still Valid After All These Years!!!