VideoLinklaters' Burn blames CESR's teething problems more than anything else. "What you had was a group of regulators from different countries getting together pretty much for the first time, all of them bringing different experience of cross-border markets to the table," he says. In that context, it was unsurprising that "you found all sorts of odd things creeping in, because a member from Ruritania thought it was important."
Transparency Directive
Seeks to enhance comparability and market liquidity by standardising the information that issuers must disclose on an ongoing basis. The Council has agreed a draft of the directive, and the European Parliament voted on it in February 2004.
Unlike the Prospectus Directive, this directive is not focused on harmonisation—it will allow member state governments some flexibility to impose additional requirements above the minimum levels required. For example, on the controversial issue of quarterly reporting, the latest proposal from Ecofin is that there will be only very basic disclosure obligations on issuers between the annual report and the half-year report. "This isn't a topic that requires a particularly religious conviction," says Alexander Schaub, director general of DG Internal Market, and chairman of the ESC. "For me, it's one where we can live with diversity and see how the conviction within the integrated market will develop."
Markets in Financial Instruments Directive
Formerly known as ISD2, this will replace the existing Investment Services Directive which was implemented in 1995. Its main purpose is to provide a framework for stock exchanges and investment banks to operate on a pan-European basis. An overhaul was needed because the existing regime has been complicated by member states imposing local requirements on incoming cross-border operators.
Seen as the centrepiece of the FSAP, the directive has been much delayed by debate as some member states have opposed various pre-trade transparency requirements. It's now subject to a second reading in the European Parliament by 1st May, before a final text is agreed.
Use of International Financial Reporting Standards
This is the work of CESR-Fin, a sub-committee chaired since November last year by John Tiner, CEO of the UK's Financial Services Authority. The group co-ordinates the work of CESR members in the endorsement and enforcement of financial reporting standards in Europe.
The group has produced two standards so far. Standard No 1, released last April, set out 21 basic principles establishing common definitions of enforcement, and the kind of actions that might be adopted in case of infringement. "It's a great step forward," nods Ian Wright, global head of reporting at PricewaterhouseCoopers. "It brings clarity for member states as to what minimum principles should be applied."
Standard No 2, published in October, called for a harmonised approach to enforcement decisions to include relevant non-securities regulators, and the establishment of an EU-wide database which would collate decisions taken by national enforcers. It also issued recommendations on conversion to IFRS that go beyond the official requirements of IFRS1. For example, the standard encourages companies to provide narrative information in their 2003 national GAAP statements on the expected differences in accounting policies, so as to ready investors for the first IFRS-compliant statements a year later.
Reader Comments» Post a comment