| 263 |
2007/2238(INI)
2008/05/08
EMPL
52 amendments...
1. Stresses that, from the macroeconomic point of view, hedge funds and private equity (HFs & PE) represent welcome additional investors at a time when economic structures are experiencing ever more substfinancial speculation and financial innovation must be curbed in order to prevent systemic finantcial change at an ever- increasing pace, but that thisrisk; points out that hedge funds and private equity are a type of alternative investment which is unregulated; stresses, in addition, that lack of scrutiny and excessive profit- seeking are solely at the expense of employees and/or other third parties;
A. whereas long-term investments of hedge funds and private equity can play an important positive role in the European economy by increasing Europe's competitiveness and contributing to job creation,
2. Calls on the Commission to present a proposal as to how the legal status of HFs & PE as employers can be determinedexamine whether hedge funds and private equity funds are assuming the role of employers and whether the legal provisions governing their operation are in accordance with Community legislation;
1. Notes that there is a body of Community legislation concerning financial markets that directly or indirectly, and only to some extent, applies to hedge funds and private equity; emphasises that most of that legislation is relatively recent and that its full impact cannot therefore be assessed yet; consequently, calls on the Member States and the Commission to ensure its consistent implementation and application;
2. Calls on the Commission to present a proposal as todiscuss how the legal status of HFs & PE as employers can be determined;
1. Notes that there is a body of Community legislation concerning financial markets that directly or indirectly applies to hedge funds and private equity; emphasises that most of that legislation is relatively recent and that its full impact cannot therefore be assessed yet; consequently, calls on the Member States and the Commission to ensure its consistent implementation and application; emphasises that an imbalance should not be created between commercial disclosures required from private equity portfolio companies and those required from other companies; asserts that all further adjustments to existing legislation must be the subject of a proper cost/benefit analysis and must be non- discriminatory;
3. Calls on the Commission to present a proposal as to how Council Directive 2001/23/EC of 12 March 2001 on the safeguarding of employees' rights in the event of the transfer of undertakings should be supplemented so as to safeguard the rights of the employees concerned in the case of HF & PE takeovers and prevent jobs being jeopardised by loss of liquidity in firms taken over;
2. Notes that, in addition to existing legislation, the hedge fund and private equity industries have produced their own voluntary standards of best practice; supports these initiatives and takes the view that such a soft-law approach is appropriate for the regulation of the two sectors because industry-initiated standards can keep up with market developments better than heavy regulation and are more likely than Community legislation to impose a certain degree of global control, particularly over market players domiciled off-shore; believes that any excessive regulation will have a detrimental effect resulting in more hedge fund managers and private equity moving off-shore, which in turn will result in less transparency and oversight;
3. Calls on the Commission to present a proposal as to how Council Directive 2001/23/EC of 12 March 2001 on the safeguarding of employees' rights in the event of the transfer of undertakings should be supplemented so as to safeguard the rights of the employees concerned inprovide also for the case of HF & PE takeovers; thereof;·
2. Notes that, in addition to existing legislation, the hedge fund and private equity industries have produced their own voluntary standards of best practice; supports these initiatives and takes the viewbut stresses that such a soft-law approach is appropriateinsufficient for the regulation of the two sectors because industry-initiated standards can keep up with market developments better than heavy regulation and are more likelythey are non-binding and do not prevent less responsible players in the industry from taking excessive risks in order to get higher returns from investments; urges thane Community legislation to impose a certain degree of global control, particularly over market players domiciled off-shoreission to initiate proposals that are principle-based along the lines of the Lamfalussy process, so they can keep up with market developments;
4. Calls on the two sides of industry and the Commission to undertake a reshaping of European rules to reflect the situation created by HFs & PE, and primarily of Council Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council and Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community;
Draft opinion
Paragraph 2 a (new) 2a. Calls on the Commission to investigate the possibilities of regulating off-shore market players globally;
5. Calls on the Member States to use best practice to ensure that employePoints out that, since the mid-1990s, there has been an increasing number of pension funds and insurance companies with holdings in HFs and PE; calls on the Commission, in reviewing Directive 2003/41/EC, to ensure that employees or staff representatives are informed about the way in which their pensions are invested and the associated risks, and that they can have a say therein;
Draft opinion
Paragraph 2 a (new) 2a. Acknowledges the positive role played by private equity in supporting new venture companies and adding financial and managerial value and experience to failing companies; notes that any "asset- stripping" is the exception and not the norm; notes that Member States have or can put in place measures to counter instances of asset-stripping, and that portfolio company directors also have fiduciary obligations to their company as well as obligations to consult with employees, as in the case of other companies;
5. Calls on the Member States to use best practice to ensure that employees are informed about the way in which their pensions are invested and the associated risks, and that they can have a say thereincompany pensions acquired by employees are shielded from bankruptcies;
3. Calls on the Commission to consider extending the definition of the “prudent person” principle in such a way as to require investors to verify that the alternative investment funds in which they invest also abide by the industry's best practice standards;
5. Calls on the Member States to use best practice to ensure that employees are informed about the way in which their pensions are invested and the associated risks, and that they can have a say thereinall the implications for them of investments in the undertakings in which they are employed;
3. Calls on the Commission to consider extenincluding in the definition of the “prudent person” principle in such a way as to require, where the principle is incorporated in the existing Community legislation, the requirement for investors to verify that the alternative investment funds in which they invest abide by appropriate legislation and the industry's best practice standards;
Draft opinion
Paragraph 5 a (new) 5a. Points out that pension funds, and especially occupational pension funds, must not be allowed to invest in hedge funds and private equity, because these unregulated forms of alternative investment implicate a high degree of financial risk and failure of such funds would negatively affect the pension entitlements of the pension schemes' members; considers that Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision must be reviewed accordingly;
4. Calls on the Commission to study the possibility of requiring hedge fund and private equity industries' bodies to notify the Committee of European Securities Regulators of best practice standards as well as any substantive changes made thereto; considers that a public and harmonised database thus established could serve as a point of reference for investors;
6. Expects the fund industry to move further towards binding measures on corporate governance which will also be made public; considers that funds which act as entrepreneurs cannot distance themselves from cultivating human resources, ensuring worker participation and the pursuit of environmental and social objectives; calls for improvement of controlling mechanisms over the legal framework with a stronger role of national authorities, such as Central Banks;
4. Calls on the Commission to study the possibility of requiring hedge fund and private equity industries' bodies to notify the Committee of European Securities Regulators of best practice standards as well as any substantive changes made thereto; considers that a database thus established could serve as a point of reference for investors; acknowledges the work being conducted on voluntary codes and principles at a global level, such as the International Organization of Securities Commissions' Principles for the Valuation of Hedge Fund Portfolios, and believes that, ultimately, any response should as far as possible be sought at a global level;
1. Stresses that, from the macroeconomic point of view, hedge funds and private equity (HFs & PE) represent welcome additional investors at a time when economic structures are experiencing ever more substantial change at an ever- increasing pace, but that this type of alternative investment is unregulated; stresses, in addition, that lack of scrutiny and excessive profit-seeking are solely at the expense of employees and/or other third parties; stresses, however, the potential risks also inherent to both forms of investment;
Draft opinion
Recital A a (new) Aa. whereas hedge funds and private equity investment strategies are often based on significant financial risk-taking and high leverage, which give rise to financial stability concerns,
6. Expects the fund industry to move further towards voluntary but binding measures on corporate governance which will also be made public; considers that funds which act as entrepreneurs cannot distance themselves from cultivating human resources, ensuring worker participationsuch a code of conduct should include cultivating human resources and the pursuit of environmental and social objectives;
5. Takes the view that, in order to satisfy the need to monitor market activity for supervisory purposes, all necessary information on hedge fund holdings and lending should be made available to competent supervisory authorities via prime brokers; stresses that the information requirements should not be such as to place an excessive burden on prime brokers and that the national supervisory authorities should aim, where necessary and/national supervisory authorities should aim to harmonise their requirements in order to avoid gold-plating and regulatory appropriate, to harmonise their requirementsrbitrage and to promote a truly integrated financial market;
6. Expects the fund industry to move further towards binding measures and regulations on corporate governance which willmust also be made public; considers that funds which act as entrepreneurs cannot distance themselves from cultivatingthe obligation to develop human resources, ensuring worker participation and the pursuit of environmental and social objectives;
5. Takes the view that, in order to satisfy the need to monitor market activity for supervisory purposes, information on hedge fund holdingexposures and lending should be made available to competent supervisory authorities via prime brokers; stresses that the information requirements should not be such as to place an excessive burden on prime brokers and that the national supervisory authorities should aim, where necessary and/or appropriate, to harmonise their requirements;
6. Expects the fund industry to move further towards binding measurjointly excepted rules on corporate governance which will also be made public; considers that funds which act as entrepreneurs cannot distance themselves frommust cultivatinge human resources, ensuring worker participation and the pursuit of environmental and social objectives;
6. Recognises that excessive leverage may pose risks to the financial stability of companies and the financial markets; takes the view, however, that risk is part of those markets and that it must be left to participants in the markets concerned to assess the appropriate level of risk to take; does not support, therefore, the idea of setting a legal maximum level of leverage;
6. Expects the fund industry to move further towards binding measures on corporate governance with a view to achieving greater transparency which will also be made public; considers that funds which act as entrepreneurs cannot distance themselves from cultivating human resources, ensuring worker participation and the pursuit of environmental and social objectives;
6. Recognises that excessive leverage may pose risks to the stability of financial markets; takes the view, however, that risk is part of those markets and that it must be left to participants in the markets concerned to assess the appropriate level of risk to take; does not support, therefore, the idea of setting a legal maximum level of leveragecalls on the Commission to put forward proposals to limit the level of possible leverage in order to prevent the spreading of systemic risks; urges the Commission to establish a set of legal instruments that would enable supervisors to intervene and make the financial markets function for the benefit of the real economy;
7. Calls on the Commission to monitor and analyse the effects of the operations of HF & PE companies, and to propose a directive on minimum transparency rules on the way in which investments are financed, the objectiverisks are managed, methods of invassestsment projects, the disclosure of ownership structures and the registration of hedge funds, the qualifications of managers and possible conflicts of interest;
7. Urges the Commission to introduce a uniform definition of private placement in the EUestablish a European private placement regime in order to eliminate obstacles to cross- border distribution for alternative investments.
7. Calls on the Commission to monitor and analyse the effects of the operations of HF & PE companies, and to propose a directiveframework provisions on minimum transparency rules on the way in which investments are financed, the objective, the funding of investment projects, the disclosure of ownership structures and the registration of hedge funds;
Draft opinion
Paragraph 7 a (new) 7a. Notes that the current structure of corporate governance is imbalanced; calls on the Commission and industry to establish codes of conduct that would enhance the competences of important gatekeepers such as supervisory boards, works councils and accountants, and to improve the working methodology of analysts and rating agencies.
7. Calls on the Commission to monitor and analyse the effects of the operations of HF & PE companies, and to propose a directive on minimumencourage harmonisation of transparency rules on the way in which investments are financed, the objective of investment projects, the disclosure of ownership structures and the registration of hedge funds;
7. Calls on the Commission to monitor and analyse the effects of the operations of HF & PE companies, and to propose a directive on minimum transparency rules on the way in which investments are financed, the objective of investment projects, the disclosure of ownership structures and the registration of hedge fundsanalyse the way in which investments are financed;
1. Stresses that, from the macroeconomic point of view, hedge funds and private equity (HFs & PE) represent welcome additional investors at a time when economic structures are experiencing ever more substantial change at an ever- increasing pace, but that t. This type of alternative investment is unregulated; stresses, in addition, that lack of scrutiny and excessive profit-seeking are solely at the expense of employees and/or other third partiesshould be regulated by jointly agreed procedures and subject to scrutiny so as to prevent any form of abuse;
Draft opinion
Recital B a (new) Ba. whereas specific Community legislation concerning hedge funds or private equity does not exist,
1. Stresses that, from the macroeconomic point of view, hedge funds and private equity (HFs & PE) represent welcome additional investors at a time when economic structures are experiencing ever more substantial change at an ever- increasing pace, but that this type of alternative investment is unregulated; stresses, in addition, that lack of scrutiny and excessive profit-seeking are solely at the expense of employees and/or other third partiesinsufficiently regulated;
C. whereas self-regulation of hedge funds and private equity is insufficient; whereas principle-based regulation is an appropriate approach to regulating financial markets as it is better able to keep up with market developments than product-specific regulation,
1. Stresses that, from the macroeconomic point of view, hedge funds and private equity (HFs & PE) represent welcome additional investors at a time when economic structures are experiencing ever more substantial change at an ever- increasing pace, but that this type of alternative investment is unregulated; stresses, in addition, that lack of scrutiny and excessive profit-seeking are solely at the expense of employees and/or other third partiesinsufficiently regulated;
Draft opinion
Recital C a (new) Ca. whereas hedge funds and private equity should neither be treated differently from other private investments nor be subject to specific legislation unfairly affecting their competitiveness,
1. Stresses that, from the macroeconomic point of view, hedge funds and private equity (HFs & PE) represent welcome additional investors at a time when economic structures are experiencing ever more substantial change at an ever- increasing pace, but that this type of alternative investment is unregulated; stresses, in addition, that lack of scrutiny and excessive profit-seeking are solely at the expense of employees and/or other third parties;
D. whereas, the current financial crisis has highlighted a lack of transparency and whereas it is recognised that there is a need to enhance transparancy at different levels; whereas while transparency is vital for a functioning market, it must be purposive in relation to the target group; whereas transparency that is not purposive will have adverse effects on market stability through herding and predatory trading, and risks destroying the entire alternative investment business model based on innovative trading strategies,
Draft opinion
Paragraph 1 a (new) 1a. Points out that private equity funds already destroyed thousands of jobs in recent years by taking over and dissecting economically viable companies just for the goal of a higher return on investment for the funds' shareholders; considers that the resulting destabilisation of employment demonstrates that such activities of private equity funds in no way constitute an effective and efficient way of investment;
Draft opinion
Recital E a (new) Ea. whereas the aggregated effects of the behaviour of hedge funds and private equity can lead to systemic risks; whereas financial market supervisors lack a complete overview of the activities of hedge funds and private equity; whereas no appropriate legal instruments enabling market authorities to stop hedge funds and private equity from harming the stability of financial markets currently exist,
Draft opinion
Paragraph 1 b (new) 1b. Points out that private equity funds in recent years took over social housing or cooperative housing on a grand scale and converted rented flats into condominiums; stresses that these activities considerably reduced the availability of affordable or social housing and contributed to increasing social exclusion;
Draft opinion
Recital E b (new) Eb. whereas the remuneration systems for hedge funds and private equity managers may give rise to perverse incentives leading to irresponsible risk-taking,
2. CPoints out that, under many legal systems, private equity funds which own and control companies are not regarded as employers and are therefore exempt from employers’ legal obligations; calls on the Commission to present a proposal as to how the legal status of HFs & PE as employers can be determined;
Draft opinion
Recital E c (new) Ec. whereas the current structure of corporate governance includes imbalances in terms of ownership, control, transparency, supervision, accountability and information; whereas hedge funds and private equity potentially affect the level of transparency of the operational management in a negative way,
2008/05/19
ECON
211 amendments...
Motion for a resolution
Title Draft Report with recommendations to the CommissionOwn Initiative Report on Hedge Funds and private equity (2007/2238(INI)) Committee on Economic and Monetary Affairs Rapporteur: Poul Nyrup Rasmussen (Own Initiative - Rule 3947 of the Rules of Procedure)
Motion for a resolution
Recital A A. whereas there is at present insufficientno specific EU regulation of hedge funds and private equity, many EU and national regulations cover aspects of their activities,
Motion for a resolution
Recital Q a (new) Qa. Whereas hedge funds can lead to conflicts of interest in the assessment of complex financial instruments; whereas hedge funds as minority shareholders can influence business strategies and whereas difficulties in hedge funds can have a direct bearing on credit institutions; whereas private equity undertakings have the problem of leveraged buy-out, which can place a disproportionate burden on acquired undertakings,
Motion for a resolution
Recital Q b (new) Qb. whereas with regard to hedge funds and private equity, account should always be taken of the global context, as institutional investors’ financial transactions are not limited to a particular economic area (in this case the EU), so that the creation of new EU supervisory authorities is not justified,
Motion for a resolution
Paragraph 1 1. Requests the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, a legislative proposal or proposals on hedge funds, private equity and other relevant actors, following the detailed recommendations below;deleted
Motion for a resolution
Paragraph 1 1. Requests the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, a legislative proposal or proposals on hedge funds, private equity and other relevant actors, following the detailed recommendations below;deleted
Motion for a resolution
Paragraph 1 1. Requests the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, a legislative proposal or proposalsa study on hedge funds, private equity and other relevant actors, following the detailed recommendations below;
Motion for a resolution
Paragraph 1 1. RequestAsks the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, a legislative proposal or proposals onexamine whether any further EU legislation specific to hedge funds, and /or private equity and other relevant actors, followis required and to report to the Parliament ing the detailed recommendations below;is regard not later than 30th November 2008.
Motion for a resolution
Paragraph 1 1. Requests the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, options for a legislative proposal or proposals oninclusive of hedge funds, private equity and other relevant actors, following the detailedtaking account of the recommendations below;
Motion for a resolution
Paragraph 1 1. Requests the Commission to submit to Parliament by 30 November 2008,undertake without undue delay, an examination of all existing Community legislation relevant to financial markets in order to identify any lacunae as regards the regulation of hedge funds and private equity and, based on the results of such examination, and on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, to submit to Parliament a legislative proposal or proposals on amending the existing Directives where necessary to better regulate hedge funds, private equity and other relevant actors, following the detailed recommendations below;
Motion for a resolution
Paragraph 1 1. Requests the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, a legislative proposal or proposals oncovering all significant financial market participants and relevant actors including hedge funds, and private equity and other relevant actors,with regard to regulatory completeness, equity requirement across the entire financial system, continued participation of the originators of securitised loans, non-cyclical accounting rules, increase transparency of rating agencies including disclosure of the conflicts of interests, derivative trading on open exchange and the alignment of compensation of actors of the financial system in times of profit as in times of loss following the detailed recommendations below;
Motion for a resolution
Paragraph 3 3. Considers that the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations for (i) the establishment of any EU supervisory authority, (ii) the EU public credit rating agency, and (iii) the EU public certification body for structured products;deleted
Motion for a resolution
Recital A A. whereas there is at present insufficientno specific EU regulation ofn hedge funds and private equity,.
Motion for a resolution
Paragraph 3 3. Considers that the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations for (i) the establishment of any EU supervisory authority, (ii) the EU public credit rating agency, and (iii) the EU public certification body for structured products;deleted
Motion for a resolution
Paragraph 3 3. Considers that the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations for (i) the establishment of any EU supervisory authority, (ii) the EU public credit rating agency, and (iii) the EU public certification body for structured products;deleted
Motion for a resolution
Paragraph 3 3. Considers that the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations for (i) the establishment of any EU supervisory authority, (ii) the EU public credit rating agency, and (iii) the EU public certification body for structured productrequested proposal(s) has/have no financial implications;
Motion for a resolution
Paragraph 3 3. Considers that thpossible financial implications of the requested proposal or proposals should be covered by EU budgetary allocations for (i) the establishment of any EU supervisory authority, (ii) the EU public credit rating agency, and (iii) the EU public certification body for structured products;
Motion for a resolution
Annex ANNEX TO THE MOTION FOR A RESOLUTION: DETAILED RECOMMENDATIONS ON THE CONTENT OF THE PROPOSAL 1. Recommendation 1 on Financial Stability and Better Functioning Financial Markets Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration. (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required. (c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/EC. (d) Valuation The Commission should propose precise rules on the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets. (e) Prime brokers The capital requirement of any institution providing prime brokerage services should be increased in line with the complexity and opacity of the structure or nature of the exposures, to which their dealings with hedge funds and private equity expose them. In particular, the provisions of Directives 2006/48/EC and 2006/49/EC should be amended to achieve that result. (f) Venture capital The Commission should implement, without delay, the policy proposals set out in its communication on Removing obstacles to cross-border investments by venture capital funds, including proposing legislation to provide a harmonised EU- wide framework for venture capital and so to ensure cross-border access to such capital for the SME sector in line with the Lisbon Agenda. (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation. 2. Recommendation 2 on Transparency Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilities, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below). (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below). (c) Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the information on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be public. (d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but also relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS). (e) Private equity and protection of employees The Commission should propose amendments to Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction. 3. Recommendation 3 on Excessive Debt Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Limits on leverage for private equity The Commission should amend Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member States. (b) Capital depletion The Commission should amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members), to certify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long- term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that result. (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system. (d) EU Registration for structured products The Commission should establish a public register of structured products in the EU. 4. Recommendation 4 on Conflicts of Interest Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Investment banks (prime brokers) - hedge funds and private equity The Commission should assess whether the strengthening of capital requirements for prime brokers (Recommendation 1) deals appropriately with the inherent conflicts of interest between: - the prime brokers and hedge funds, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via trading services), and - investment banks and private equity, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via deal related services). (b) The Commission should also introduce rules to ensure effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc). - Private equity The Commission should formulate rules by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company. - Credit Rating Agencies (CRAs) The Commission should formulate rules by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets. - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAs.deleted REQUESTED
Motion for a resolution
Annex – Heading ANNEX TO THE MOTION FOR A RESOLUTION: DETAILED RECOMMENDATIONS ON THE CONTENT OF THE PROPOSAL REQUESTED
Motion for a resolution
Annex – recommendation 1 1. Recommendation 1 on Financial Stability and Better Functioning Financial Markets Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration. (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required. (c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/EC. (d) Valuation The Commission should propose precise rules on the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets. (e) Prime brokers The capital requirement of any institution providing prime brokerage services should be increased in line with the complexity and opacity of the structure or nature of the exposures, to which their dealings with hedge funds and private equity expose them. In particular, the provisions of Directives 2006/48/EC and 2006/49/EC should be amended to achieve that result. (f) Venture capital The Commission should implement, without delay, the policy proposals set out in its communication on Removing obstacles to cross-border investments by venture capital funds, including proposing legislation to provide a harmonised EU- wide framework for venture capital and so to ensure cross-border access to such capital for the SME sector in line with the Lisbon Agenda. (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation.deleted
Motion for a resolution
Annex – recommendation 1 1. Recommendation 1 on Financial Stability and Better Functioning Financial Markets Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration. (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required. (c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/EC. (d) Valuation The Commission should propose precise rules on the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets. (e) Prime brokers The capital requirement of any institution providing prime brokerage services should be increased in line with the complexity and opacity of the structure or nature of the exposures, to which their dealings with hedge funds and private equity expose them. In particular, the provisions of Directives 2006/48/EC and 2006/49/EC should be amended to achieve that result. (f) Venture capital The Commission should implement, without delay, the policy proposals set out in its communication on Removing obstacles to cross-border investments by venture capital funds, including proposing legislation to provide a harmonised EU- wide framework for venture capital and so to ensure cross-border access to such capital for the SME sector in line with the Lisbon Agenda. (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation.deleted
Motion for a resolution
Annex – recommendation 1 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulatestudy should cover the following points:
The European Parliament considers that the legislative act to be adopted should aim to regulatealls on the Commission to consider the following regulatory and legislative options:
Motion for a resolution
Recital B B. whereas the condition in Rule 39(2), that no proposal should be in preparation, is not duly fulfilled,
Motion for a resolution
Annex – recommendation 1 – point a (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration.deleted
Motion for a resolution
Annex – recommendation 1 – point a (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, tThe Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registrations continue to be risk based, not entity based. Consideration as to the adherence of codes of conduct may be taken into account by supervisors.
Motion for a resolution
Annex – recommendation 1 – point a (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should consider ensureing that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration. These capital requirements should nevertheless not be additional requirements to already existing rules and in no case be regarded as a guarantee in case of any fund failure.
Motion for a resolution
Annex – recommendation 1 – point a (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, tThe Commission shcould ensure thatxamine the need for an appropriate capital requirement isto be introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration and the implications thereof.
Motion for a resolution
Annex – recommendation 1 – point a (a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should ensure thatThe Commission could examine the need for an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration.
Motion for a resolution
Annex – recommendation 1 – point a a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, the Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controlsis responsible for the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registration.
Motion for a resolution
Annex – recommendation 1 – point b (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required.deleted
Motion for a resolution
Annex – recommendation 1 – point b (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required.deleted
Motion for a resolution
Annex – recommendation 1 – point b (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required.deleted
Motion for a resolution
Annex – recommendation 1 – point b (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required.deleted
Motion for a resolution
Recital C C. whereas the Commission has not responded positively to Parliament's earlier requests, including those made in itsall aspects of above-mentioned resolutions of 15 January 2004, 27 April 2006, 11 July 2007, 13 December 2007),
Motion for a resolution
Annex – recommendation 1 – point b (b) EU public credit rating agency The Commission should establish an EU Public Credit Rating Agency in order to foster competition and improve transparency in that sector. The Commission should also, in its revisHedge funds and private equity The Commission should undertake an examination of all existing Community legislation relevant to financial markets in order to identify any lacunae as regards the regulation of the Directive 2006/48/EC, introduce a provision that, where a creddge funds and private equity assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required.nd, based on the results of such examination, to submit to Parliament a legislative proposal or proposals on amending the existing Directives where necessary to better regulate hedge funds, private equity and other relevant actors;
Motion for a resolution
Annex – recommendation 1 – point b (b) EU public cCredit rating agencyies The Commission should establish an EU Public Credit Rating Agencytake necessary measures in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required and continue its work with the competent international bodies.
Motion for a resolution
Annex – recommendation 1 – point c (c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/EC.deleted
Motion for a resolution
Annex – recommendation 1 – point c (c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/EC.deleted
Motion for a resolution
Annex – recommendation 1 – point c (c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/ECcontinue its work with the competent international bodies with a view to setting internationally applicable principles for the management of liquidity.
Motion for a resolution
Annex – recommendation 1 – point c (c) Liquidity The Commission should introduceconsider risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/EC.
Motion for a resolution
Annex – recommendation 1 – point d (d) Valuation The Commission should propose precise rules on the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets.deleted
Motion for a resolution
Annex – recommendation 1 – point d (d) Valuation The Commission should propose precise rules on theexamine how to best promote better valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets, taking into account the various initiatives on valuation currently underway in the EU and globally.
Motion for a resolution
Annex – recommendation 1 – point d (d) Valuation The Commission should propose precise rulcontinue its work with the competent international bodies with regard to resolving the difficulties oin the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets.
Motion for a resolution
Annex – recommendation 1 – point d (d) Valuation The Commission should propose precise, in cooperation with the international standards bodies, should discuss sector- specific general rules on the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets.
Motion for a resolution
Recital D D. whereas hedge funds and private equity are increasingly important alternative investment vehicles that have not only a significant and increasing share in global assets under management, but also a significant and increasingly important presence and activity in world financial marketsimprove the efficiency of financial markets by creating new investment opportunities,
Motion for a resolution
Annex – recommendation 1 – point d (d) Valuation The Commission should proposeconsider ways for the introduction of precise rules on the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets.
Motion for a resolution
Annex – recommendation 1 – point e (e) Prime brokers The capital requirement of any institution providing prime brokerage services should be increased in line with the complexity and opacity of the structure or nature of the exposures, to which their dealings with hedge funds and private equity expose them. In particular, the provisions of Directives 2006/48/EC and 2006/49/EC should be amended to achieve that result.deleted
Motion for a resolution
Annex – recommendation 1 – point e (e) Prime brokers The capital requirement of any institution providing prime brokerage services should be increased in line with the complexity and opacity of the structure or nature of the exposures, to which their dealings with hedge funds and private equity expose them. In particular, the provisions of Directives 2006/48/EC and 2006/49/EC should be amended to achieve that result.deleted
Motion for a resolution
Annex – recommendation 1 – point e (e) Prime brokers The capital requirement of any institution providing prime brokerage services should be increased in line with the complexity and opacity of the structure or nature of the exposures, to which their dealings with hedge funds and private equity expose them. In particular, the provisions of Directives 2006/48/EC and 2006/49/EC should be amended to achieve that result.deleted
Motion for a resolution
Annex – recommendation 1 – point f (f) Venture capital The Commission should implement, without delay, the policy proposals set out in its communication on Removing obstacles to cross-border investments by venture capital funds, including proposing legislation to provide a harmonised EU-wide framework for venture capital and so to ensure cross- border access to such capital for the SME sector in line with the Lisbon Agenda. The proposed harmonised EU-framework should be in line with principles of good regulation and avoid additional legal, fiscal and administrative complexities at EU level.
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation.deleted
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation.deleted
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation).deleted
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation.deleted
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential regulation and another for conduct of business regulation.deleted
Motion for a resolution
Recital D a (new) Da. whereas most hedge funds operate from offshore banking centres without any supervision and regulation;
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authorityies The Commission should establish a Europeanreview the adequacy and capacity of European Supervisory structures in the ongoing debate on the future of supervisorion covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: onea radical overhaul of the current supervisory architecture or simple adjustments to the existing Lamfalussy structure and to what extent approaches must differ for prudential regulation and another for conduct of business regulation.
Motion for a resolution
Annex – recommendation 1 – point g (g) EU supervisory authority The Commission should establish a European supervisor covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: one for prudential The common database referred to in point c of Annex 2 should lie under the management of the ECB which should calculate at the end of every quarter the EU aggregate index of financial systemic risk caused by activity of hedge funds and private equity funds. If this financial systemic indicator exceeds a certain level of value set by the ECB and supervisors in concert, the EU supervisors would be entitled to take the necessary measures on the basis of the recommendations of the ECB under close surveillance of European Parliament. In this case the measures put in place should be disclosed to the public and carried out in transparent and prudent way for the investors. Caregful assessment of crisis situations and another for cppropriate actions on duct of bue time are requisintess regulation. to avoid real economic slump.
Motion for a resolution
Annex – recommendation 2 2. Recommendation 2 on Transparency Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilities, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below). (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below). (c) Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the information on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be public. (d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but also relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS). (e) Private equity and protection of employees The Commission should propose amendments to Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction.deleted
Motion for a resolution
Annex – recommendation 2 2. Recommendation 2 on Transparency Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilities, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below). (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below). (c) Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the information on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be public. (d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but also relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS). (e) Private equity and protection of employees The Commission should propose amendments to Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction.deleted
Motion for a resolution
Annex – recommendation 2 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulatestudy should cover the following points:
Motion for a resolution
Annex – recommendation 2 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulate:alls on the Commission to consider the following regulatory and legislative options
Motion for a resolution
Annex – recommendation 2 – point a (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below).deleted
Motion for a resolution
Annex – recommendation 2 – point a (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilities, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below).deleted
Motion for a resolution
Annex – recommendation 2 – point a (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilities, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below).deleted
Motion for a resolution
Annex – recommendation 2 – point a (a) Registration and authorisation of management companies and funds' managers The Commission should establish an EU framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms)for non-retail investors, which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilities, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below).
Motion for a resolution
Recital E E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced their concerns in relation to hedge funds and private equity about financial stability, inadequate risk management, excessive debt (leverage) and the valuation of illiquid and complex financial instruments,deleted
Motion for a resolution
Annex – recommendation 2 – point a (a) Registration and authorisation of management companies and funds' managers The Commission should seek to establish an EU global framework for the registration and authorisation of entities that control the investment of hedge funds or private equity (i.e. management firms), which should function on a single entry point basis: once authorised, the entities concerned should have access to undertake business throughout the EU. In order to promote a well-functioning single European financial market, t. The Commission should ensure that management firms disclose the following: - the name and domicile of funds they control, - the identity and qualifications of managers, - corporate earnings and bonuses, - remuneration of directors, senior executives and other staff with investment responsibilitiesnature and scope of risk management, and - relationships with prime brokers. That information should be set out in a uniform format (also to facilitate the proposal for a database below).
Motion for a resolution
Annex – recommendation 2 – point b (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below).deleted
Motion for a resolution
Annex – recommendation 2 – point b (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below).deleted
Motion for a resolution
Annex – recommendation 2 – point b b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of thPrivate equity fund regime: The Commission should submit a legislative proposal to regulate the private equity fund regime at European level, allowing cross-border distribution of hedge funds to qualified investors. In addition, within the EU-USA dialogue it should encourage adoption of some common rules on hedge funds, and - share of the fund contributed by the management company and its staff.. That information should be set out in a uniform format (also to facilitate the database proposal below)to even out the existing imbalances.
Motion for a resolution
Annex – recommendation 2 – point b (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below)Private Placement Regime The Commission should submit a legislative proposal for the establishment of a European Private Placement Regime allowing for cross-border distribution of alternative investment products to eligible groups of sophisticated investors.
Motion for a resolution
Annex – recommendation 2 – point b (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds Private placement The Commission should submit a legislative proposal for the establishment of a Europeand private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees),), - source and amount of funds raised,, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff.. That information should be set out in a uniform format (also to facilitate the database proposal below)placement regime allowing for cross- border distribution of alternative investment vehicles to eligible groups of sophisticated investors.
Motion for a resolution
Annex – recommendation 2 – point b (b) Notification (i.e. approval) of wholesale investment vehicles In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of theestablishing an EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, or institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raisedrisk incurred by the investment vehicle, - past performance if available, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below).
Motion for a resolution
Annex – recommendation 2 – point b (b) Notification (i.e. approval) of wholesale investment vehicles. In order to encourage funds to be located onshore in the EU, the Commission should propose a separate directive along the lines of the EU-wide private placement regime, currently under discussion, to apply to the marketing and distribution in the EU of hedge funds and private equity funds managed by European management companies. Such a regime should function on a single entry point basis: once authorised, it should be possible to offer those wholesale investment vehicles to professional, institutional investors throughout the EU. In order to promote a well-functioning single European financial market, the Commission should ensure the investment vehicle discloses the following: - general investment strategy and immediate information on any changes thereto, - leverage/debt exposure, - overall fees as well as breakdown of fees (including any stock options awarded to employees), - source and amount of funds raised, - past performance, - risk-management system and portfolio valuation methods, - information on the administrator of the fund, and - share of the fund contributed by the management company and its staff. That information should be set out in a uniform format (also to facilitate the database proposal below).
Motion for a resolution
Annex – recommendation 2 – point c (c) Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the information on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be public.deleted
Motion for a resolution
Annex – recommendation 2 – point c (c)Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the informSuggests that a one-stop-shop website for codes of conduct be established, including a register of those who comply, their disclosure and explanations on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be publicf non-compliance; observes that reasons for non-compliance can also be a learning tool; this should be done for the EU and promoted internationally.
Motion for a resolution
Recital E E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced their concerns in relation to hedge funds and private equity about financial stability, inadequate risk management, excessive debt (leverage) and the valuation of illiquid and complex financial instruments,deleted
Motion for a resolution
Annex – recommendation 2 – point c (c) Database The Commission should, with the help of Level 3 Committees, consider establishing an EU-wide registration/authorisation database recording the information on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be public.
Motion for a resolution
Annex – recommendation 2 – point c c) Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the information on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be public.
Motion for a resolution
Annex – recommendation 2 – point d (d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but also relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS).deleted
Motion for a resolution
Annex – recommendation 2 – point d d) Investors The Commission and supervisory authorities shouldshould examine whether there is a need to ensure that investors in those vehicles receive not only sufficient but alsoand relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS)information on the main features of their investment.
Motion for a resolution
Annex – recommendation 2 – point d (d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but alsoand relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS)information.
Motion for a resolution
Annex – recommendation 2 – point d (d) Investors The Commission and supervisory authorities should consider ways to ensure that investors in those vehicles receive not only sufficient but also relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS).
Motion for a resolution
Annex – recommendation 2 – point d (d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but also relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS).
Motion for a resolution
Annex – recommendation 2 – point e (e) Private equity and protection of employees The Commission should propose amendments to Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction.deleted
Motion for a resolution
Annex – recommendation 2 – point e (e) Private equity and protection of employees The Commission should propose amendments toevaluate and if necessary amend Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction.
Motion for a resolution
Annex – recommendation 2 – point e (e) Private equity and protection of employees The Commission should proposeconsider amendments to Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction.
Motion for a resolution
Recital E E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced their concerns in relation to hedge funds and private equity about financial stability, inadequate risk management, excessive debt (leverage) and the valuation of illiquid and complex financial instruments,deleted
Motion for a resolution
Annex – recommendation 2 – point e (e) Private equity and protection of employees The Commission should propose amendments to Directive 2001/23/EC so that the same protections afforded employees by that Directiveensure that Directive 2001/23/EC, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction by any investors, including private equity and hedge funds.
Motion for a resolution
Annex – recommendation 3 3. Recommendation 3 on Excessive Debt Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Limits on leverage for private equity The Commission should amend Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member States. (b) Capital depletion The Commission should amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members), to certify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long- term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that result. (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system. (d) EU Registration for structured products The Commission should establish a public register of structured products in the EU.deleted
Motion for a resolution
Annex – recommendation 3 3. Recommendation 3 on Excessive Debt Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Limits on leverage for private equity The Commission should amend Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member States. (b) Capital depletion The Commission should amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members), to certify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long- term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that result. (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system. (d) EU Registration for structured products The Commission should establish a public register of structured products in the EU.deleted
Motion for a resolution
Annex – recommendation 3 3. Recommendation 3 on Excessive Debt Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Limits on leverage for private equity The Commission should amend Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member States. (b) Capital depletion The Commission should amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members), to certify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long- term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that result. (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system. (d) EU Registration for structured products The Commission should establish a public register of structured products in the EU.deleted
Motion for a resolution
Annex – recommendation 3 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulatestudy should cover the following points:
Motion for a resolution
Annex – recommendation 3 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulate:alls on the Commission to consider the following regulatory and legislative options
Motion for a resolution
Annex – recommendation 3 – point a (a) Limits on leverage for private equity The Commission should amend Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member States.deleted
Motion for a resolution
Annex – recommendation 3 – point a (a) Limits on leverage for private equity The Commission should amend, while reviewing Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member St, ensure any amendments adhere to the fundamental principles based approach, so that capital is held according to risk, and does not unfairly discriminate against specific private investors or between different investment funds or vehicles that use similar stratesgy.
Motion for a resolution
Annex – recommendation 3 – point a (a) Limits on leverage for private equity The Commission should consider ways to amend Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member States.
Motion for a resolution
Annex – recommendation 3 – point b (b) Capital depletion The European Commission should amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members),review use of existing national legislative options to avoid asset stripping in target companies in order to ascertify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long- term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that resultain whether there is a need for a harmonised measure.
Motion for a resolution
Recital E E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced their concerns in relation to hedge funds and private equity about financial stability, inadequate risk management, excessive debt (leverage) taken steps and made recommendations in relation to:- on the one hand financial institutions' exposure to hedge funds and the framing of these exposures in institutions' overall risk management, and on the other hand the valuation of illiquid and complex financial instruments, by all financial managers,
Motion for a resolution
Annex – recommendation 3 – point b (b) Capital depletion The Commission should consider ways to amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose consider rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members), to certify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long-term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that result.
Motion for a resolution
Annex – recommendation 3 – point c c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system..deleted
Motion for a resolution
Annex – recommendation 3 – point c (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system.deleted
Motion for a resolution
Annex – recommendation 3 – point c (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system.deleted
Motion for a resolution
Annex – recommendation 3 – point c (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system.deleted
Motion for a resolution
Annex – recommendation 3 – point c (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preserving the stability of the EU financial system.deleted
Motion for a resolution
Annex – recommendation 3 – point c (c) Limits on leverage for hedge funds The Commission should devise the upper limit in the debt of hedge funds in relation to preservingRisk disclosure: In order to contribute to the preservation of the stability of the EU financial system, hedge funds should disclose and manage the risks they incur.
Motion for a resolution
Annex – recommendation 3 – point d (d) EU Registration for structured products The Commission should establish a public register of structured products in the EU.deleted
Motion for a resolution
Annex – recommendation 3 – point d (d) EU Registration for structured products The Commission should establishassess the usefulness of a public register of structured products in the EU.
Motion for a resolution
Annex – recommendation 4 4. Recommendation 4 on Conflicts of Interest Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Investment banks (prime brokers) - hedge funds and private equity The Commission should assess whether the strengthening of capital requirements for prime brokers (Recommendation 1) deals appropriately with the inherent conflicts of interest between: - the prime brokers and hedge funds, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via trading services), and - investment banks and private equity, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via deal related services). (b) The Commission should also introduce rules to ensure effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc). - Private equity The Commission should formulate rules by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company. - Credit Rating Agencies (CRAs) The Commission should formulate rules by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets. - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAs.deleted
Motion for a resolution
Citation 31 a (new) – having regard to the IOSCO "Objectives and Principles of Securities Regulation" 2003, which cover principles for, amongst others, the marketing of collective investment schemes including hedge funds,
Motion for a resolution
Recital E E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced theiranalysed potential concerns in relation to hedge funds and private equity abouts regards financial stability, inadequate risk management standards, excessive debt (leverage) and the valuation of illiquid and complex financial instruments; whereas the analysis carried out by the Financial Stability Forum in 2007 concluded that financial stability concerns were best addressed through prime brokers and supervisors; whereas any concerns specifically relevant to hedge funds or private equity have largely not materialised in the light of the current financial crisis,
Motion for a resolution
Annex – recommendation 4 4. Recommendation 4 on Conflicts of Interest Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Investment banks (prime brokers) - hedge funds and private equity The Commission should assess whether the strengthening of capital requirements for prime brokers (Recommendation 1) deals appropriately with the inherent conflicts of interest between: - the prime brokers and hedge funds, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via trading services), and - investment banks and private equity, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via deal related services). (b) The Commission should also introduce rules to ensure effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc). - Private equity The Commission should formulate rules by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company. - Credit Rating Agencies (CRAs) The Commission should formulate rules by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets. - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAs.deleted
Motion for a resolution
Annex – recommendation 4 4. Recommendation 4 on Conflicts of Interest Measures The European Parliament considers that the legislative act to be adopted should aim to regulate: (a) Investment banks (prime brokers) - hedge funds and private equity The Commission should assess whether the strengthening of capital requirements for prime brokers (Recommendation 1) deals appropriately with the inherent conflicts of interest between: - the prime brokers and hedge funds, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via trading services), and - investment banks and private equity, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via deal related services). (b) The Commission should also introduce rules to ensure effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc). - Private equity The Commission should formulate rules by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company. - Credit Rating Agencies (CRAs) The Commission should formulate rules by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets. - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAs.deleted
Motion for a resolution
Annex – recommendation 4 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulatestudy should cover the following points:
Motion for a resolution
Annex – recommendation 4 – paragraph 1 The European Parliament considers that the legislative act to be adopted should aim to regulate:alls on the Commission to consider the following regulatory and legislative options
Motion for a resolution
Annex – recommendation 4 – point a (a) Investment banks (prime brokers) - hedge funds and private equity The Commission should assess whether the strengthening of capital requirements for prime brokers (Recommendation 1) deals appropriately with the inherent conflicts of interest between: - the prime brokers and hedge funds, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via trading services), and - investment banks and private equity, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via deal related services).deleted
Motion for a resolution
Annex – recommendation 4 – point a (a) Investment banks (prime brokers) - hedge funds and private equity The Commission should assess whether the strengthening of capital requirements for prime brokers (Recommendation 1) deals appropriately with the inherent conflicts of interest concerns between: - the prime brokers and hedge funds, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via trading services), and - investment banks and private equity, where the former's credit (lending) decisions are often contaminated by the prospect of earning fees from latter (via deal related services)and - investment banks and private equity.
Motion for a resolution
Annex – recommendation 4 – point b (b) The Commission should also introduce rulevestigate means to ensurhance effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc). - Private equity The Commission should formulate rules by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company. - Credit Rating Agencies (CRAs) The Commission should formulate rules by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets. - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAsThe European Parliament wishes to reiterate that any adjustments should be applicable to all financial institutions and thus non-discriminatory.
Motion for a resolution
Annex – recommendation 4 – point b – paragraph 1 (b) The Commission should also introduceconsider rules to ensure effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc).
Motion for a resolution
Annex – recommendation 4 – point b – indent 1 - Private equity The Commission should formulate ruleconsider ways by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company.
Motion for a resolution
Annex – recommendation 4 – point b – indent 2 - Credit Rating Agencies (CRAs) The Commission should formulate ruleconsider ways by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets.
Motion for a resolution
Recital E E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced their conceranalysed concerns and made recommendations in relation to hedge funds and private equity about financial stability, inadequate risk management, excessive debt (leverage) and the valuation of illiquid and complex financial instruments,
Motion for a resolution
Annex – recommendation 4 – point b – indent 3 - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAs.deleted
Motion for a resolution
Annex – recommendation 4 a (new) The European Parliament considers that the legislative act to be adopted should aim to regulate: a) Regulatory completeness: Regulatory coverage must be complete. All leveraged financial institutions above a certain size must be inside a harmonised EU-net; the Member States and the Commission should ensure the consistent implementation and application of the body of Community legislation concerning financial markets, that directly or indirectly applies to hedge funds and private equity; b) Capital Requirements: Capital requirements must be the same across the entire financial system, against any given class of risks. But there must also be greater attention to liquidity. c) Continued participation: Originators should be required to hold portions of securitised loans on their balance sheets. d) Non-cyclical accounting: It is necessary to differentiate between target levels of capital and a lower minimum level; institutions that have minimum capital in bad times would only be required to aim for the higher target level over an extended period. e) Transparency: Rating agencies should be required to eliminate/ mitigate the lack of information, asymmetric information and uncertainty and disclose the conflicts of interest under which they operate without destroying the transaction oriented financial system. f) Derivate Trading: The European Commission should evaluate the possibility to insist that all derivatives be traded on open exchange. g) Incentives and compensation: The European Parliament asks the Commission to require the relevant corporate governance boards to ensure that rewards for trading and transaction origination are commensurate in times of profit the same way as in times of loss.
Motion for a resolution
Recital F F. whereas there is empirical evidence that hedge funds engage in herding in times of market turmoil, thus giving rise to financial stability concerns,deleted
Motion for a resolution
Recital F F. whereas there is empirical evidence that hedge funds engage in herding in times of market turmoil, thus giving rise to financial stability concerns,deleted
Motion for a resolution
Recital F F. whereas there is empirical evidence that hedge funds engage in are less prone to herding than otherd ingvestors in times of market turmoil, thus giving rise tomitigating financial stability concerns,
Motion for a resolution
Recital F F. whereas there is empirical evidence thatsome hedge funds may engage in herding in times of market turmoil, thus giving rise toin the EU this is largely due to counterparty pressure for deleveraging and it is also evident that the varying hedge fund strategies mean they can help mitigate financial instability concerns,
Motion for a resolution
Recital F F. whereas there is empiricalno clear evidence that hedge funds engage in herding in times of market turmoil, thus giving rise to financial stability concerns,
Motion for a resolution
Recital F F. whereas there is empirical evidencea risk that hedge funds may engage in herding in times of market turmoil, thuswhich could givinge rise to financial stability concerns,
Motion for a resolution
Recital F a (new) Fa. whereas similar to the polluter pays principle in environmental policies, the costs for crisis management should be borne by those who have benefited from the enormous profits by now,
Motion for a resolution
Recital H H. whereas such long-term investment requires well-functioning, stable financial markets in the EU and globally, contributing to the real economy,
Motion for a resolution
Citation 31 b (new) – having regard to the study published by the European Parliament Policy Department for Economic and Scientific Policy on Hedge Funds: Transparency and Conflict of Interest, published in December 2007 (IP/A/ECON/IC/2007- 24),
Motion for a resolution
Recital H H. whereas such long-term investment requires well-functioning financial markets in the EU and globally, contributing to the real economy, which can only be achieved by ensuring the presence in the European Union of a competitive and innovative financial industry,
Motion for a resolution
Recital H H. whereas such long-term investment requires well-functioning financial markets in the EU and globally, contributing to the real economy, which can be only achieved by ensuring the presence in the European Union of a competitive and innovative financial industry,
Motion for a resolution
Recital H a (new) Ha. whereas the strategies of hedge funds and private equity funds are usually aimed at maximizing profits in the short run without considering companies` needs for stable long-term financing,
Motion for a resolution
Recital I I. whereas the massive and uncontrolled diffusion of complex “innovative products” lies at the heart of the current financial crisis; whereas hedge funds and private equity in many cases provide liquidity and demand for such innovative products,
Motion for a resolution
Recital I I. whereas hedge funds and private equity in many cases provide liquidity and demand for innovative productshelp to meet pension liabilities through their returns, provide aid price discovery, provide market diversification, market efficiency, cushion volatile markets, provide absolute returns and demand for innovative products and thereby contributes positively to meeting the objectives of the Lisbon Agenda,
Motion for a resolution
Recital I I. whereas hedge funds and private equity in many cases provide liquidity and demand for innovative productss well as increased market efficiency by creating demand for innovative products, aiding price discovery and providing for market diversification,
Motion for a resolution
Recital I I. whereas hedge funds and private equity in many cases provide liquidity and demand for, help correct market inefficiencies, and foster diversification and the creation of new, innovative products,
Motion for a resolution
Recital J J. whereas financial stability also requires better supervisory cooperation, including globally, which logically requires, in due course, a comprehensive revision of current EU supervisory arrangements,
Motion for a resolution
Recital J J. whereas global financial stability also requires better supervisory cooperation, including globally, which logically requires, in due course, a comprehensive revision of current EU supervisory arrangementwith regular exchanges of information, transparency of institutional investors and, instead of unnecessary additional regulation, a code of conduct that would be voluntarily entered into but nevertheless contain binding provisions,
Motion for a resolution
Recital J J. whereas financial stability also requires better supervisory cooperation, including at global levely, which logically requires, in due course, a comprehensive revisionncurrent gradual improvement of current EU supervisory arrangements,
Motion for a resolution
Citation 31 c (new) – having regard to the best practice standards published by the Hedge Fund Working Group on Tuesday, 22 January 2008, and the subsequent setting up of a Hedge Fund Standards Board to act as custodian of those standards,
Motion for a resolution
Recital J J. whereas financial stability also requires better supervisory cooperation, including globally, which logically requires, in due course, a comprehensive revision of currentcontinuing improvements in EU supervisory arrangements,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well- functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, potentially including, in future, any new EU supervisory bodycommon EU arrangements, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Motion for a resolution
Recital K a (new) Ka. whereas the liberalisation and deregulation of financial markets has led to a new model of wealth creation which is damaging for the productive sector and labour, increases social polarization and contributes to the erosion of democracy; whereas measures to improve transparency and supervision are not enough to ensure that financial markets contribute to economic stability, social equity and sustainable development; whereas the current financial crisis has systemic roots, and hence the structure and the mechanisms of the system in general are at stake,
Motion for a resolution
Recital L L. whereas excessive debt required by much of the activities of hedge funds and private equity threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimes,deleted
Motion for a resolution
Recital A A. whereas there is at present insufficient EU regulation of hedge funds and private equity,deleted
Motion for a resolution
Recital L L. whereas excessive debt required by much of the activities of hedge funds and private equity threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimes,deleted
Motion for a resolution
Recital L L. whereas excessive debt required by much of the activities of hedge funds and private equity threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimes,deleted
Motion for a resolution
Recital L L. whereas excessive debt required by much of the activitiespoor management of hedge funds and private equity threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in nationdebt may, despite its risk diversification capacity, threaten financial stax regimesbility,
Motion for a resolution
Recital L L. whereas excessive debtit is unclear in what way high debt levels required by much of the activities of hedge funds and private equity threatens financial stability, prejudicesmight impact on the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimes,
Motion for a resolution
Recital L L. whereas excessive debt required by much of the activities ofthe lack of proper management of debt by hedge funds and private equity might threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national ; whereas the systemic impacts of debt held by hedge funds and private equity is best addressed in regulation by ensuring that prime brokers continue to provide for an adequate level of capitaxl regimequirements,
Motion for a resolution
Recital L L. whereas excessive debt required by much of the activities of hedge funds and private equity threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimethe effects of high leverage may, in adverse market conditions, be dangerous; hence hedge funds and private equity fund managers should carefully assess their risks,
Motion for a resolution
Recital L L. whereas excessive debt required by muchsome of the activities of hedge funds and private equity may threatens financial stability, and prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimes,
Motion for a resolution
Recital M M. whereas the recent increase in private equity transactions has significantly increased the number of employees, whose jobs are ultimately controlled by equity funds, and Community employment law (in particular, Directive 2001/23/EC) was formulated when this was not so,deleted
Motion for a resolution
Recital M M. whereas the recent increase in private equity transactions in many cases has significantly increased the number of employees, whose jobs are ultimately controlled by equity funds, and Community employment law (in particular, Directive 2001/23/EC) was formulated when this was not so in the undertakings,
Motion for a resolution
Recital M M. whereas the recent increase in private equity transactions has significantly increased the number of employees, whose jobs are ultimately controlled by equity funds, and Community employment law (in particular, Directive 2001/23/EC) was formulated when this was not so,
Motion for a resolution
Recital A A. whereas there is at present insufficient EU regulation of hedge funds and private equity is only justified if the market fails,
Motion for a resolution
Recital M M. whereas the recent increase in private equity transactions has significantly increased the number of employees, whose jobs are ultimately controlled by equity funds, and are covered by Community employment law (in particular, Directive 2001/23/EC) was formulated when this was not sohich applies on a non discriminatory basis,
Motion for a resolution
Recital M M. wWhereas the recent increase in private equity transactions has significantly increased the number of employees, whose jobs are ultimately controlled by equity funds, due regard should be given to existing national employment laws, and Community employment law (in particular, Directive 2001/23/EC) was formulated when this was not so, on the basis of fair and appropriate treatment of all economic actors with similar responsibilities towards employees,
Motion for a resolution
Recital N N. whereas in the event of extreme debt loads, private equity leveraged buy-outs can affect the viability of the target companies,
Motion for a resolution
Recital N N. whereas in the event of extreme debt loads, private equity leveraged buy-outs affect the viability of the target companiescompanies present a higher risk profile,
Motion for a resolution
Recital N N. whereas in the event of extreme debt loads, private equity leveraged buy-outs affect the viability of the target companiescompanies present a higher risk profile,
Motion for a resolution
Recital N N. whereas in the eventminority instances of extreme debt loads, private equity leveraged buy-outs affect the viability of the target companies,
Motion for a resolution
Recital N N. whereas in the event of extreme debt loads, private equity leveraged buy-outs may come to affect the viability of the target companies,
Motion for a resolution
Recital N N. whereas in the event of extreme debt loads, private equity leveraged buy-outs may affect the viability of the target companies,
Motion for a resolution
Recital N a (new) Na. whereas laws and regulations for private equity are needed which prevent damaging practices such as the asset- stripping of viable companies,
Motion for a resolution
Recital O O. whereas there are many conflicts of interest either arising from the business model of private equity or hedge funds or from the relationships between those vehicles and other actors in financial markets,deleted
Motion for a resolution
Recital A A. whereas there is at present insufficientnational and EU regulation concerning financial markets that directly or indirectly apply tof hedge funds and private equity,
Motion for a resolution
Recital O O. whereas there are many conflicts of interest either arising from the business model of private equity or hedge funds or from the relationships between those vehicles and other actors in financial markets,deleted
Motion for a resolution
Recital O O. whereas there are manypotential conflicts of interest either arising from the business model of private equity or hedge funds or from the relationships between those vehicles and other actors in financial marketof hedge funds and private equity are covered by the Market abuse Directive (2003/6/EC); whereas guidelines on the management of conflicts of interest covering hedge funds and private equity also exist, including at global level, such as the IOSCO principles for the management of conflicts of interest by Collective Investment Schemes and market intermediaries,
Motion for a resolution
Recital O O. whereas, as with other entities, there are mcany be conflicts of interest either arising from the business model ofrelationships between private equity orand hedge funds or from the relationships between those vehicles and other actors in financial markets,and other actors in financial markets, however, reiterates that while welcoming realistic efforts to enhance existing EU legislation, such efforts must not be restricted solely to hedge funds and private equity;
Motion for a resolution
Recital O O. whereas there are many conflicts of interest either arising from the business model of private equity or hedge funds or from the relationships between those vehiclebetween private equity or hedge funds and other actors in financial markets can arise,
Motion for a resolution
Recital O O. whereas there are many conflicts of interest either arisingmay arise either from the business model of private equity or hedge funds or from the relationships between those vehicles and other actors in financial markets,
Motion for a resolution
Recital O O. whereas there are manymight be conflicts of interest either arising from the business model of private equity or hedge funds or from the relationships between those vehicles and other actors in financial markets,
Motion for a resolution
Recital O a (new) Oa. whereas there are widely held suspicions that hedge funds are disproportionately involved in insider trading, because they are perceived as secretive, because they are heavy users of derivative markets (especially over-the- counter derivatives where monitoring of trading by authorities is more difficult) and because their incentive arrangements encourage such behaviour,
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved in the business of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhanced the crisis,deleted
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved in the business of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhanced the crisis,
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved in the business of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhanced the crisis,
Motion for a resolution
Recital A A. whereas there is at present insufficientnational and EU regulation of hedge funds and private equity,
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles did not caused the current financial crisis, they have been involved in the business oftrade in non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhanced the crisis,
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved indge funds were amongst the businvess of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhancetors in the complex structured products that were subject to the credit crisis, and thus incurred losses as did othe crisir investors,
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved in the business of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhanced the crisis,
Motion for a resolution
Recital P P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved in the business of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhanced the crisis,
Motion for a resolution
Recital Q Q. whereas in order to minimise the risk of future financial crises and given the strong interactions across markets and between market participants and given the objective of a level playing field across borders and between regulated and unregulated market participants, the EU needs better, more coherent and harmonised regulation across the boardshould continue to review the accuracy and coherence of its regulatory standards, taking into account developments at international level,
Motion for a resolution
Recital Q Q. whereas in order to minimise the risk of future financial crises and given the strong interactions across markets and between market participants and given the objective of a level playing field across borders and between regulated and unregulated market participants, the EU needs better,several initiatives are under way, in the EU and at global level, to secure more coherent and harmonised regulation across the board,
Motion for a resolution
Recital Q Q. whereas in order to minimise the risk of future financial crises and given the strong interactions across markets and between market participants and given the objective of a level playing field across borders and between regulated and unregulated market participants, the EU needs better, more coherent and harmonised regulation across the boardanagement instruments in the event of failure of the market,
Motion for a resolution
Recital Q Q. whereas in order to minimise the risk of future financial crises and given the strong interactions across markets and between market participants and given the objective of a level playing field across borders and between regulated and unregulated market participants, the EU needs better, more coherent and harmonised regulation across the board. to establish a common database where business type data (volumes, exposures and leverages) of hedge funds and private equity funds must be stored provided that the concerning hedge funds or private equity funds have transacted business with a counterparty domiciled in EU. This common database should lie under the management of the ECB which should calculate at the end of every quarter the EU aggregate index of financial systemic risk caused by activity of hedge funds and private equity funds. If this financial systemic indicator exceeds a certain level of value set by the ECB and supervisors in concert, the EU supervisors would be entitled to take the necessary measures on the basis of the recommendations of the ECB. In this case the measures put in place should be disclosed to the public and carried out in transparent and prudent way for the investors. Careful assessment of crisis situations and appropriate actions on due time are requisites to avoid real economic slump.
Motion for a resolution
Recital Q Q. whereas in order to minimise the risk of future financial crises and given the strong interactions across markets and between market participants and given the objective of a level playing field across borders and between regulated and unregulated market participants, the EU needs better, and more coherent and harmonised regulation across the board,
Motion for a resolution
Recital Q a (new) Qa. whereas the European Parliament welcomes the current work by the European Commission to establish a European Private Placement Regime in order to eliminate obstacles to cross- border distribution for alternative investments,
Motion for a resolution
Recital A A. whereas although there is at present insufficientno specific EU regulation of hedge funds and private equity, there is a body of both EU and national legislation that directly or indirectly applies to these entities,
Motion for a resolution
Recital Q a (new) Qa. whereas there has been a movement from a commercial bank centred, highly regulated financial system, to an enormously more complicated and highly engineered system,
Motion for a resolution
Recital Q b (new) Qb. whereas financial crisis typically emerge after a self-reinforcing process of market exuberance marked by too much lending and too much borrowing, which in turn develop in response to underlying economic imbalances,
Motion for a resolution
Recital Q c (new) Qc. whereas any return to heavily regulated, bank dominated, nationally insulated markets is not possible in this world of an international system with sophisticated financial techniques,
Motion for a resolution
Recital Q d (new) Qd. whereas due to international markets, business and individuals regulation and supervision must take into account practices elsewhere,
Motion for a resolution
Recital Q e (new) Qe. whereas the liquidity of active open markets also encouraged thin capital positions and high leverage,
Motion for a resolution
Recital Q f (new) Qf. whereas the rating agencies have a strong reputation to protect; however, it appears that their approach towards rating complex packages of mortgages and loans has suffered not only from the appearance of conflicts of interests, but also from the common difficulty of much financial engineering,
Motion for a resolution
Recital Q g (new) Qg. whereas the ECB has the basic responsibility to protect its value and resist chronic pressures towards inflation; granted a high degree of independence in pursuing that responsibility, the ECB should be removed from, and be seen to be removed from, decisions that seem biased to favour particular institutions or politically sensitive constituencies,
Motion for a resolution
Recital Q h (new) Qh. whereas the ECB, by reason of its mandate, its prestige, its perceived competence, and most importantly because it is called upon to lend to troubled banks, is advantageously placed to exercise strong and effective oversight of the financial system,
Motion for a resolution
Recital Q i (new) Qi. whereas a lack of information, asymmetric information and uncertainty are inherent in financial activities,
Motion for a resolution
Recital Q a (new) Qa. whereas there are already market led responses to the recent turmoil, for example among credit rating agencies, that can provide solutions more efficiently than regulation,
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