BETA


2006/2670(RSP) Resolution on the implications of signing the Hague Securities Convention

Progress: Procedure completed

Legal Basis:
RoP 136-p5

Events

2007/02/21
   EC - Commission response to text adopted in plenary
Documents
2007/01/24
   EC - Commission response to text adopted in plenary
Documents
2006/12/14
   EP - Motion for a resolution
Documents
2006/12/14
   EP - Results of vote in Parliament
2006/12/14
   EP - Debate in Parliament
2006/12/14
   EP - Decision by Parliament
Details

The European Parliament adopted a resolution on the implications of signing the Hague Securities Convention. The latter is intended to establish a rule to determine the law applicable to certain issues in respect of the holding, transfer and collateralisation of securities credited to a securities account held with an intermediary in an international context. The heart of the Convention’s regime is laid down in Article 4(1), according to which the law applicable to the issues covered by the Convention is the law in force in the State that the relevant intermediary and the account holder have expressly agreed as governing their account agreement. There is currently a proposal for a Council decision concerning the signature of the Hague Securities Convention, and the Commission has made a legal assessment of certain aspects of the Hague Securities Convention.

Parliament pointed out in this resolution that the Hague Securities Convention is incompatible with Directives 2002/47/EC, 98/26/EC and 2001/24/EC. Under current EC law, the law which determines rights in securities is that of the Member State (or, in some cases, third country) in which the securities account that records the existence of those rights is located The Commission is therefore proposing to revise these three Directives, which were adopted by Parliament by means of the co-decision procedure. These Directives laid down a principle known as "PRIMA" ("Place of the Relevant Intermediary Approach") seeking to guarantee the legal certainty of payments and effective supervision of financial intermediaries. Parliament's assent is required for the ratification of the Hague Securities Convention.

The European Parliament reiterated the need for democratic checks on the negotiations carried on in the context of the Hague Conference on Private International Law, and stressed the need for upstream consultation of Parliament prior to ratification, particularly on draft mandates for negotiation and the need for disconnection clauses. It was committed to the PRIMA principle, to defining a common framework for clearing and settlement activities, to effectively combating money laundering and to respect for shareholders' voting intentions.

Parliament felt that it was crucial to guarantee ex-ante legal certainty as regards the law applicable to certain matters relating to the holding, perfection and disposition of securities credited to an account and held with intermediaries and the collateralisation of such securities, in an international context, and to reduce the systemic risks which might result from uncertainties in this respect. It expressed its extreme concern at the reservations repeatedly expressed by the European Central Bank regarding systemic risk and the risk of an exponential growth in litigation on the enforcement of securities, in which courts will have to apply a foreign law with a view, in particular, to determining the priority of the security.

The property aspects of all securities credited to the accounts of participants in the clearing and settlements system should be governed by a single legal system , and, similarly, a single legal system should govern the contractual aspects of the relationship between the clearing and settlement system and each of its participants, in order to protect the finality of transactions and the security and transparency of the clearing and settlement system. Parliament considered that ensuring the security of intra-European transactions must take precedence over the facilitation of transactions between the EU and the rest of the world.

It regretted the highly inadequate nature of the reality test (Article 4(1) of the Hague Securities Convention) and the exemptions with regard to public policy rules (Article 11(3) of the Hague Securities Convention), which risk encouraging the choice of the least restrictive law and creating distortions in the internal market in financial services.

The Commission is asked to submit to Parliament a comprehensive impact study on the implications of accession to the Hague Securities Convention for the law and economy of the European Union. This study should specify in particular the fiscal consequences of acceding to the Convention, the implications of the transfer of risks between entities (central depositaries, banks, depositors) resulting from the abandonment of the PRIMA principle, the implications for the exercise of voting rights attached to securities, the effects on the remuneration of the ultimate owner of securities, on combating market abuses, on combating money-laundering and on the funding of terrorism, the effectiveness of clearing and settlement systems and the identification of risks of the insolvency of credit institutions. This impact study should be adopted by the College of Commissioners before the Hague Securities Convention is signed on behalf of the Community.

Documents
2006/12/14
   EP - End of procedure in Parliament
2006/12/11
   EP - Oral question/interpellation by Parliament
Documents

Documents

Activities

History

(these mark the time of scraping, not the official date of the change)

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2006-12-14T00:00:00
type
Decision by Parliament
body
EP
docs
url: https://www.europarl.europa.eu/doceo/document/TA-6-2006-0608_EN.html title: T6-0608/2006
summary
events/2
date
2006-12-14T00:00:00
type
Decision by Parliament, 1st reading/single reading
body
EP
docs
url: http://www.europarl.europa.eu/doceo/document/TA-6-2006-0608_EN.html title: T6-0608/2006
summary
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Rules of Procedure EP 136-p5
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Rules of Procedure EP 128-p5
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activities
  • date: 2006-12-14T00:00:00 docs: url: http://www.europarl.europa.eu/oeil/popups/sda.do?id=13156&l=en type: Results of vote in Parliament title: Results of vote in Parliament url: http://www.europarl.europa.eu/sides/getDoc.do?secondRef=TOC&language=EN&reference=20061214&type=CRE type: Debate in Parliament title: Debate in Parliament url: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P6-TA-2006-608 type: Decision by Parliament, 1st reading/single reading title: T6-0608/2006 body: EP type: Results of vote in Parliament
commission
  • body: EC dg: Financial Stability, Financial Services and Capital Markets Union commissioner: MCCREEVY Charlie
committees
    docs
    • date: 2006-12-11T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=MOTION&reference=B6-2006-447&language=EN title: B6-0447/2006 type: Oral question/interpellation by Parliament body: EP
    • date: 2006-12-14T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=MOTION&reference=B6-2006-632&language=EN title: B6-0632/2006 type: Motion for a resolution body: EP
    • date: 2007-01-24T00:00:00 docs: url: /oeil/spdoc.do?i=13156&j=1&l=en title: SP(2007)0303 type: Commission response to text adopted in plenary
    • date: 2007-02-21T00:00:00 docs: url: /oeil/spdoc.do?i=13156&j=0&l=en title: SP(2007)0609 type: Commission response to text adopted in plenary
    events
    • date: 2006-12-14T00:00:00 type: Results of vote in Parliament body: EP docs: url: https://oeil.secure.europarl.europa.eu/oeil/popups/sda.do?id=13156&l=en title: Results of vote in Parliament
    • date: 2006-12-14T00:00:00 type: Debate in Parliament body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?secondRef=TOC&language=EN&reference=20061214&type=CRE title: Debate in Parliament
    • date: 2006-12-14T00:00:00 type: Decision by Parliament, 1st reading/single reading body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P6-TA-2006-608 title: T6-0608/2006 summary: The European Parliament adopted a resolution on the implications of signing the Hague Securities Convention. The latter is intended to establish a rule to determine the law applicable to certain issues in respect of the holding, transfer and collateralisation of securities credited to a securities account held with an intermediary in an international context. The heart of the Convention’s regime is laid down in Article 4(1), according to which the law applicable to the issues covered by the Convention is the law in force in the State that the relevant intermediary and the account holder have expressly agreed as governing their account agreement. There is currently a proposal for a Council decision concerning the signature of the Hague Securities Convention, and the Commission has made a legal assessment of certain aspects of the Hague Securities Convention. Parliament pointed out in this resolution that the Hague Securities Convention is incompatible with Directives 2002/47/EC, 98/26/EC and 2001/24/EC. Under current EC law, the law which determines rights in securities is that of the Member State (or, in some cases, third country) in which the securities account that records the existence of those rights is located The Commission is therefore proposing to revise these three Directives, which were adopted by Parliament by means of the co-decision procedure. These Directives laid down a principle known as "PRIMA" ("Place of the Relevant Intermediary Approach") seeking to guarantee the legal certainty of payments and effective supervision of financial intermediaries. Parliament's assent is required for the ratification of the Hague Securities Convention. The European Parliament reiterated the need for democratic checks on the negotiations carried on in the context of the Hague Conference on Private International Law, and stressed the need for upstream consultation of Parliament prior to ratification, particularly on draft mandates for negotiation and the need for disconnection clauses. It was committed to the PRIMA principle, to defining a common framework for clearing and settlement activities, to effectively combating money laundering and to respect for shareholders' voting intentions. Parliament felt that it was crucial to guarantee ex-ante legal certainty as regards the law applicable to certain matters relating to the holding, perfection and disposition of securities credited to an account and held with intermediaries and the collateralisation of such securities, in an international context, and to reduce the systemic risks which might result from uncertainties in this respect. It expressed its extreme concern at the reservations repeatedly expressed by the European Central Bank regarding systemic risk and the risk of an exponential growth in litigation on the enforcement of securities, in which courts will have to apply a foreign law with a view, in particular, to determining the priority of the security. The property aspects of all securities credited to the accounts of participants in the clearing and settlements system should be governed by a single legal system , and, similarly, a single legal system should govern the contractual aspects of the relationship between the clearing and settlement system and each of its participants, in order to protect the finality of transactions and the security and transparency of the clearing and settlement system. Parliament considered that ensuring the security of intra-European transactions must take precedence over the facilitation of transactions between the EU and the rest of the world. It regretted the highly inadequate nature of the reality test (Article 4(1) of the Hague Securities Convention) and the exemptions with regard to public policy rules (Article 11(3) of the Hague Securities Convention), which risk encouraging the choice of the least restrictive law and creating distortions in the internal market in financial services. The Commission is asked to submit to Parliament a comprehensive impact study on the implications of accession to the Hague Securities Convention for the law and economy of the European Union. This study should specify in particular the fiscal consequences of acceding to the Convention, the implications of the transfer of risks between entities (central depositaries, banks, depositors) resulting from the abandonment of the PRIMA principle, the implications for the exercise of voting rights attached to securities, the effects on the remuneration of the ultimate owner of securities, on combating market abuses, on combating money-laundering and on the funding of terrorism, the effectiveness of clearing and settlement systems and the identification of risks of the insolvency of credit institutions. This impact study should be adopted by the College of Commissioners before the Hague Securities Convention is signed on behalf of the Community.
    • date: 2006-12-14T00:00:00 type: End of procedure in Parliament body: EP
    links
    other
    • body: EC dg: url: http://ec.europa.eu/dgs/internal_market/ title: Internal Market and Services commissioner: MCCREEVY Charlie
    procedure/legal_basis/0
    Rules of Procedure EP 128-p5
    procedure/legal_basis/0
    Rules of Procedure of the European Parliament EP 128-p5
    procedure/subject
    Old
    • 2.50.04.02 Electronic money and payments, cross-border credit transfers
    New
    2.50.04.02
    Electronic money and payments, cross-border credit transfers
    procedure/subtype
    Old
    Debate or resolution on oral questions
    New
    Debate or resolution on oral question/interpellation
    activities
    • date: 2006-12-14T00:00:00 docs: url: http://www.europarl.europa.eu/oeil/popups/sda.do?id=13156&l=en type: Results of vote in Parliament title: Results of vote in Parliament url: http://www.europarl.europa.eu/sides/getDoc.do?secondRef=TOC&language=EN&reference=20061214&type=CRE type: Debate in Parliament title: Debate in Parliament url: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P6-TA-2006-608 type: Decision by Parliament, 1st reading/single reading title: T6-0608/2006 body: EP type: Results of vote in Parliament
    committees
      links
      other
      • body: EC dg: url: http://ec.europa.eu/dgs/internal_market/ title: Internal Market and Services commissioner: MCCREEVY Charlie
      procedure
      reference
      2006/2670(RSP)
      title
      Resolution on the implications of signing the Hague Securities Convention
      legal_basis
      Rules of Procedure of the European Parliament EP 128-p5
      stage_reached
      Procedure completed
      subtype
      Debate or resolution on oral questions
      type
      RSP - Resolutions on topical subjects
      subject
      2.50.04.02 Electronic money and payments, cross-border credit transfers