Procedure completed
| Role | Committee | Rapporteur | Shadows |
|---|---|---|---|
| Lead | ECON | DOMENICI Leonardo (S&D) | GAUZÈS Jean-Paul (PPE), KLINZ Wolf (ALDE), GIEGOLD Sven (Verts/ALE), FOX Ashley (ECR) |
| Opinion | JURI | BODU Sebastian Valentin (PPE) |
Legal Basis TFEU 053-p1
Activites
- 2013/05/31 Final act published in Official Journal
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2013/05/21
Final act signed
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2013/05/21
End of procedure in Parliament
- #3237
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2013/05/13
Council Meeting
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2013/05/13
Act adopted by Council after Parliament's 1st reading
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2013/01/16
Results of vote in Parliament
- Results of vote in Parliament
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T7-0013/2013
summary
The European Parliament adopted by 599 votes to 27, with 68 abstentions, a legislative resolution on the proposal for a Directive of the European Parliament and of the Council amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings of collective investment in transferable securities (UCITS) and Directive 2011/61/EU on Alternative Investment Funds Managers in respect of the excessive reliance on credit ratings. Parliament adopted its position at first reading under the ordinary legislative procedure. The amendments adopted in plenary are the result of a compromise reached between the European parliament and the Council. They amend the proposal as follows: Introduction of a reference to Directive 2003/41/EC of the European Parliament and of the Council: the new Directive also seeks to amend Directive 2003/41/EC which provides for regulation at Union level of institutions for occupational retirement provision (IORPs). Excessive reliance on credit ratings: the amended text underlines the need to require IORPs, managers of UCITS and managers of Alternative Investment Funds (AIFs) to avoid relying exclusively and automatically on external credit ratings or using them as the only parameter when assessing the risk involved in the investments made by IORPs, by managers of UCITS and by managers of AIFs. More specifically, Directives 2003/41/EC, 2009/65/EC and 2011/61/EU are amended in order to make provision for the competent authorities, taking into account the nature, scale and complexity of the investments of UCITS to monitor the adequacy of their credit assessment processes of the management companies, assess the use of references to credit ratings in their investment policies and, where appropriate, encourage mitigation of the impact of such references, with a view to reducing sole and mechanistic reliance on ratings. Delegated acts: the Commission shall publish the results of consultations it carries out in the course of its preparatory work with a view to the adoption of delegated acts.
- 2013/01/15 Debate in Parliament
- #3205
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2012/12/04
Council Meeting
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2012/06/28
Committee report tabled for plenary, 1st reading/single reading
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A7-0220/2012
summary
The Committee on Economic and Monetary Affairs adopted the report by Leonardo DOMENICI (S&D, IT) on the proposal for a Directive of the European Parliament and of the Council amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings of collective investment in transferable securities (UCITS) and Directive 2011/61/EU on Alternative Investment Funds Managers in respect of the excessive reliance on credit ratings. The Committee recommended that the European Parliament’s position at first reading under the ordinary legislative procedure should be to amend the Commission’s proposal as follows: Placement rules: institutions shall not adopt investment rules that would result in the automatic sale of assets in the event of a downgrade of their creditworthiness by an external credit rating agency. Definitions: Members propose incorporating in Directive 2004/109/EC definitions of “financial instrument”, “securitisation”, “structured finance instrument”, “originator” and “sponsor”. Additional information requirements for issuers whose structured finance instruments are admitted to trading on a regulated market: an amendment stipulates that the issuer shall ensure that either the originator or the sponsor of a structured finance instrument established in the Union shall disclose to the public: information on the credit quality and performance of the individual underlying assets of that structured finance instrument, the structure of the securitisation transaction, the cash flows and any collateral supporting a securitisation exposure as well as any information that is necessary to conduct comprehensive and well-informed stress tests on the cash flows and collateral values supporting the underlying exposures. This obligation to disclose information shall not extend to the provision of such information that would breach statutory provisions governing the protection of confidentiality of information sources or the processing of personal data. Moreover, the European Securities and Markets Authority (ESMA) shall develop draft regulatory technical standards to specify: (i) the information that the persons are to disclose; (ii) the frequency with which such information is to be updated; and (iii) a template by which to disclose the information. Members call for ESMA to submit those draft regulatory technical standards to the Commission by 1 January 2013 and to set up a webpage for the publication of the information on structured finance instruments. Method of risk management (Directive 2009/65/EC): a UCITS shall not include in its fund rules any rule that would result in the automatic sale of its assets in the event of a downgrade of its creditworthiness by an external credit rating agency. Use of external ratings (Directive 2011/61/EU): Members consider that investment firms, management companies and insurance undertakings shall not suggest that their customers insert, in their standard investment agreements, fund rules or insurance contracts, references to reliance on ratings. Members feel that in the medium term, further initiatives should be evaluated with a view to taking ratings out of financial regulation.
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A7-0220/2012
summary
- #3178
- 2012/06/22 Council Meeting
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2012/06/19
Vote in committee, 1st reading/single reading
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2011/11/30
Committee referral announced in Parliament, 1st reading/single reading
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2011/11/15
Legislative proposal published
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COM(2011)0746
summary
PURPOSE: to reduce the risk of over-reliance on credit ratings by financial market participants, including undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIFs). PROPOSED ACT: Directive of the European Parliament and of the Council. BACKGROUND: Regulation (EC) No 1060/2009 on credit rating agencies (CRA Regulation) entered into full application on 7 December 2010. It requires credit rating agencies (CRAs) to comply with rigorous rules of conduct in order to mitigate possible conflicts of interest, ensure high quality and sufficient transparency of ratings and the rating process. The Regulation was amended by Regulation (EU) No 513/2011 which entrusted the European Securities and Markets Authority (ESMA) with exclusive supervisory powers over CRAs registered in the EU in order to centralise and simplify their registration and supervision at European level. However, a number of issues related to credit rating activities and the use of ratings have not been sufficiently addressed in the existing CRA Regulation. One of these issues is the risk of overreliance on credit ratings by financial market participants, including UCITS and AIFS who do not necessarily conducting their own assessments of the creditworthiness of issuers of such debt instruments. The European Commission pointed to these open issues in its Communication of 2 June 2010 on Regulating financial services for sustainable growth, and announced the need for a targeted review of the CRA Regulation. On 8 June 2011, the European Parliament adopted a non-legislative resolution on CRAs, which supports the need to enhance the regulatory framework for credit rating agencies and to take measures to reduce the risk of over-reliance of ratings. The European Council of 23 October 2011 concluded that progress is needed on reducing overreliance on credit ratings. On the international level, the Financial Stability Board (FSB) issued in October 2010 principles to reduce authorities’ and financial institutions’ reliance on external ratings. IMPACT ASSESSMENT: an impact assessment has been produced for this proposal. It can be found at http://ec.europa.eu/internal_market/securities/agencies/index_en.htm. LEGAL BASIS: Article 53 (1) TFEU. CONTENT: in order to reduce the risk of over-reliance of managers of UCITS and AIFs on credit ratings, the Commission proposes to introduce amendments to Directive 2009/65/EC on the coordination of law, regulations and administrative provisions relating to the undertakings for collective investment in transferable securities (UCITS) and Directive 2011/61/EU on Alternative Investment Fund Managers. The Commission is presenting in parallel a proposal of Regulation for the amendment of the CRA Regulation. Amendment of Directive 2009/65/EC on UCITS: the proposal amends Article 51 of Directive 2009/65/EC as regards the risk management process: § it introduces a requirement for the management or investment company not to solely or mechanistically rely on external credit ratings for assessing the creditworthiness of the UCITS assets. External credit ratings may be used as one factor among others in this process but shall not prevail; § it proposes corresponding amendments to the existing powers of the Commission to adopt delegated acts with a view to specifying the provisions of Article 51(1) of 2009/65/EC. Amendment of Directive 2011/61/EC on managers of AIFs: the proposal amends Article 15 of Directive 2011/61/EU as regards the risk management systems: § it introduces a requirement for the AIF Manager not to solely or mechanistically rely on external credit ratings for assessing the creditworthiness of the AIF assets. External credit ratings may be used as one factor among others in this process but shall not prevail; § it proposes corresponding amendments to the existing powers of the Commission to adopt delegated acts with a view to specifying the provisions of Article 15(1) of Directive 2011/61/EU. The proposal provides for a transposition period of 12 months. BUDGETARY IMPLICATIONS: the proposal has no implications for the EU budget. DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the EU.
- DG {'url': 'http://ec.europa.eu/dgs/internal_market/', 'title': 'Internal Market and Services'}, BARNIER Michel
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COM(2011)0746
summary
Documents
- Legislative proposal published: COM(2011)0746
- Debate in Council: 3178
- Committee report tabled for plenary, 1st reading/single reading: A7-0220/2012
- Debate in Parliament: Debate in Parliament
- Results of vote in Parliament: Results of vote in Parliament
- Decision by Parliament, 1st reading/single reading: T7-0013/2013
- : Directive 2013/14
- : OJ L 145 31.05.2013, p. 0001
| Amendments | Dossier |
| 10 |
2011/0360(COD)
2012/03/29
ECON
10 amendments...
Amendment 1 #
Proposal for a directive Recital 2 (2) An effect of the financial crisis has been that investors, including UCITS and AIFs, rely excessively on credit ratings to carry out their investments on debt instruments, without necessarily conducting their own assessments of the creditworthiness of issuers of such debt instruments. In order to improve the quality of the investments made by UCITS and AIFs and, therefore, to protect investors in those funds, it is appropriate to require the persons managing UCITS and AIFs to avoid relying exclusively and automatically on external credit ratings when assessing the risk involved in the investments made by the UCITS and AIFs they manage. The
Amendment 10 #
Proposal for a regulation Article - 1 a (new) – point 1 Directive 2004/109/EC Article 2 – paragrapg 1 – point pa to pd (new) and Article 18a Amendment 11 #
Proposal for a directive Article 1 – paragraph 1 – point 1 a (new) 2009/65/EC Article 51 – paragraph 3 a (new) (1a) the following paragraph is inserted: "3a. A UCITS shall not include in its fund rules any rule that that would result in the automatic sale of its assets in the event of a downgrade of its creditworthiness by an external credit rating agency."
Amendment 12 #
Proposal for a directive Article 2 – paragraph – point 1 a (new) 2011/61/EU Article 15 – paragraph 3 a (new) (1a) the following paragraph is inserted: "3a. The AIFM shall ensure that the AIF is not required automatically to sell any of its assets in the event of a downgrade of its creditworthiness by an external credit rating agency."
Amendment 13 #
Proposal for a directive Article 3 – paragraph 1 – subparagraph 1 Member States shall bring into force the
Amendment 5 #
Proposal for a directive Recital 2 (2) An effect of the financial crisis has been that investors, including UCITS and AIFs, rely excessively on credit ratings to carry out their investments on debt instruments, without necessarily conducting their own assessments of the creditworthiness of issuers of such debt instruments. In order to improve the quality of the investments made by UCITS and AIFs and, therefore, to protect investors in those funds, it is appropriate to require the persons managing UCITS and AIFs to avoid relying exclusively and automatically on external credit ratings when assessing the risk involved in the investments made by the UCITS and AIFs they manage. The general principle on the avoidance of excessive reliance on external credit ratings should therefore be integrated into the risk management processes and systems of the managers of UCITS and AIFs, and adapted to their specificities. However, internal models for risk assessment have not proven to be a more reliable option and a mere shift from external ratings to internal evaluations is unlikely to be beneficial. In the medium term, further initiatives should be evaluated in order to take ratings out of financial regulation and eliminate risk- weighting of assets through external rating or internal models".
Amendment 6 #
Proposal for a directive Recital 2 (2) An effect of the financial crisis has been that investors, including UCITS and AIFs, rely excessively on credit ratings to carry out their investments on debt instruments, without necessarily conducting their own assessments of the creditworthiness of issuers of such debt instruments. In order to improve the quality of the investments made by UCITS and AIFs and, therefore, to protect investors in those funds, it is appropriate to require the persons managing UCITS and AIFs to avoid relying exclusively and automatically on external credit ratings or making excessive use thereof when assessing the risk involved in the investments made by the UCITS and AIFs they manage. The general principle on the avoidance of excessive reliance on external credit ratings should therefore be integrated into the risk management processes and systems of the managers of UCITS and AIFs, and adapted to their specificities.
Amendment 7 #
Proposal for a directive Recital 3 (3) In order to specify further the general principle on overreliance that should be introduced into Directives 2009/65/EC and 2011/61/EU, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union
Amendment 8 #
Proposal for a directive Recital 5 (5) Since the objective of this Directive, namely to contribute to the reduction of the excessive reliance of UCITS and AIFs on external credit ratings when making their investments, cannot be sufficiently achieved at the Member State level acting in a coordinated manner and can therefore, by reason of the pan-Union structure and impact of the activities of UCITS, AIFs and credit rating agencies, be better achieved at the Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on the European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those
Amendment 9 #
Proposal for a directive Article -1 (new) 2003/41/EC Article 18 Article -1 Amendments to Directive 2003/41/EC Directive 2003/41/EC is amended as follows: In Article 18, the following paragraph is inserted: "1a. Institutions shall not include investment rules that would result in the automatic sale of assets in the event of a downgrade of their creditworthiness by an external credit rating agency."
source: PE-486.063
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