It was with great sadness that we learnt that Philippe BISSARA left us on 4 January 2009.
In his capacity of Director General of ANSA, the French association of issuing companies, Philippe BISSARA was one of the founders of our association EuropeanIssuers. Together with his Dutch homologue of VEUO, the Dutch association of listed companies, Mr. BISSARA took the initiative to create EALIC – The European Association of Listed Companies – soon to be joined by national associations of listed companies of several other countries. A committed worker and thinker, he was especially interested in the identification of shareholders and voting in general meetings, topics that are still today a priority for EuropeanIssuers. EuropeanIssuers is grateful and honoured to pursue Mr.BISSARA’s work. Our thoughts are with his family.
Works in progress
Financial Crisis
IOSCO
On 16 January the Secretary General attended a meeting with the Technical Committee of IOSCO (International Organisation of Securities Commissions) in Madrid. The purpose was an exchange of views with market participants on recent market events and IOSCO's current crisis-related work. The meeting is part of an on-going initiative to deepen the dialogue with financial market stakeholders.
De Larosière Group Hearing - 21/01/09 Brussels
The European Commission organised a breakfast meeting at which the de Larosière group heard industry representatives to get their views on the financial crisis and on cross-border supervision. Secretary General Dorien Fransens was invited to give a testimonial on behalf of EuropeanIssuers.
General Meetings Market Standards
The public consultation on the market standards on general meetings closed on 15 February. The market standards aim at providing an efficient communication model for information that is crucial for the general meeting for both the shareholder and the issuer. The Working Group is now processing the numerous comments it received from the banking, issuer, CSD and investor communities. In its next meetings it will examine to what extent the standards need to be revised accordingly. More information will follow in our next newsletter.
For the Consultation Document and Responses from the market, click here.
Corporate Actions Market Standards
The consultation on the draft Market Standards on Corporate Actions Processing closed on 19 December. EuropeanIssuers sent a comment letter (see Latest Positions). EuropeanIssuers has several delegates in the Joint Working Group that is currently analysing the market responses. The standards should be finalised in the months to come. The proposed standards cover Distributions and Reorganisations as well as related Transaction Management (Market Claims, Transformations and Buyer Protection).
For the Consultation Document, click here.
Target2Securities
On 4 February our Secretary General attended the Target2Securities (T2S) info session. Topics discussed included among others the commitment of CSDs, the legal framework of T2S, pricing, etc. EuropeanIssuers is especially interested in the works of the corporate actions subgroup. The ECB has taken the initiative to organise a conference specifically for issuers and has invited Ms Fransens to act as speaker (see Calendar).
For more information about T2S and the presentations of the conference, click here.
Credit Rating Agencies
EuropeanIssuers commented on the Commission’s Proposal for a Regulation of the European Parliament and of the Council on Credit Rating Agencies of 12 November 2008. The position paper was sent to the European Parliament, the Commission, the Council and the EU Presidency. The draft report made by the Economic and Monetary Affairs committee (ECON) of the European Parliament was published in January and will be voted on 23 March. It will take into account the report by the de Larosière group expected by end February. EuropeanIssuers is following up on the procedure and will act if and when appropriate.
For the draft report of ECON, click here. For EuropeanIssuers’ position paper, click here.
EC Consultation - Control Structures in Audit Firms
Following an independent study on the ownership rules of audit firms, the European Commission launched a consultation on control structures in audit firms on 18 November 2008. The purpose is to examine possibilities to stimulate the emergence of new players in the market. One possible option is the deregulation of the capitalisation of audit firms (unbundling) while preserving robust independence rules. Other barriers to market entry open for discussion are: reputation, quality and expertise of staff, low audit firm switching rates, differences in the international outreach among firms and differences in independence rules. EuropeanIssuers prepares its comments. Deadline for comments to the Commission is 28 February.
For the Consultation Document, click here. For related info, click here.
Prospectus Directive Review
The European Commission (EC) launched a consultation on 9 January 2009 on the review of the application of the Prospectus Directive (PD), including some proposals to improve and simplify it. The consultation comes following a study published last August.
The consultation starts with a general assessment of the overall functioning of the PD. The EC concludes that the application of the PD is to be considered as broadly positive since most market participants appear satisfied. Nonetheless, the following elements are the object of proposed measures: definition of qualified investors; revision of exempt offers; revision of annual disclosure obligation; time limit for exercise of right of withdrawal; certain thresholds of the Directive. Other issues that are not included for proposals but of interest to the EC are: effectiveness of the prospectus summary; disclosure requirements for offers with Government guarantee schemes; disclosure requirements for small quoted companies and for rights issues; compliance costs; impact on competition; other impact, costs and benefits. The deadline for comments to the Commission is 10/03/09. EuropeanIssuers prepares its position.
For the Consultation and press release, click here.
MiFID - CESR Consultation Non-Equity Markets Transparency
EuropeanIssuers prepares its response to the consultation of CESR dated 19 December 2008 on the role of trade transparency in markets for corporate bonds, structured finance products and credit derivatives. On corporate bonds CESR is to review whether the conclusions on trade transparency published in 2007 remain appropriate. CESR wants to explore whether additional post-trade transparency could play a role in supporting a return to more normal market conditions in the corporate bond markets and be of value thereafter. The deadline for comments to CESR is 19 February.
For the Consultation and press release, click here.
Company Law - EC Proposal - Mergers and Divisions Simplification
EuropeanIssuers is finalising its comments on the European Commission’s Proposal for a Directive dated 25 September 2008 that will further reduce the administrative burden on European public limited-liability companies in the area of mergers and divisions. The current proposal aims notably at reducing reporting requirements upon shareholders decision and for "simplified" mergers and divisions between parent companies and their subsidiaries, avoiding double reporting, introducing the use of Internet and e-mail to publish draft terms of mergers or divisions and other documentation. The proposal complements the two packages of “fast track” measures that were put forward by the Commission in March 2007 and April 2008.
For the proposal for a Directive, click here.
CESAME II
Cesame II had its second meeting in Brussels. Secretary General Dorien Fransens, who is a member of this group, attended the meeting. Cesame is the Clearing and Settlement Advisory and Monitoring Expert Group set up with the objective to dismantle the Giovannini Barriers to efficient post trading services. EuropeanIssuers is also actively involved in its working groups on corporate actions and on general meetings (see above).
For the meeting’s presentations, click here.
The year 2009 has merely taken off and already EuropeanIssuers issued 6 position papers. Judging by the many works in progress you can read about in this newsletter, there will be a lot more to come!
Numerous regulatory initiatives are currently contemplated by the European Institutions. The report of “de Larosière Group” is expected shortly. Its recommendations on the future supervision in Europe should model an overall EU review of the regulatory and supervisory framework for financial markets. EuropeanIssuers had the opportunity to voice the main concerns of listed companies at a hearing by the Group.
The consultation on general meetings market standards has recently ended. The great number of responses received from market participants shows that this topic doesn’t leave any of them unaffected. The cross sector working group will process all feedback and adapt the proposed standards where appropriate. On a related topic, the Commission is to prepare a proposal for a, not yet determined, legislative instrument on the holding and transfer of securities in the European Union. This project will be high on our agenda for the following 20 months or so. We will remain in close contact with the Commission to ensure that the new legislation will fill the holes left by the Shareholder Rights Directive as regards the exercise of voting rights and the identification of the shareholder.
These are just a few items among the many important developments happening in these challenging times. I will not reveal anything more in this introduction and invite you to discover more hereinafter!
Enjoy reading our newsletter!
Best regards,
Dorien Fransens
Secretary General
Latest News Latest Positions In memoriam Works in progress Calendar Presentations & Speeches
Latest News
09/02/09 EC launches call for evidence on review of Investor Compensation Schemes Directive
The European Commission has launched a call for evidence on the review of the application of the Investor Compensation Schemes Directive in order to gather information about the application of the Directive. The closing date reply is 8 April 2009.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=106
top27/01/09 McCreevy speaks at 7th European Financial Services Conference
Commissioner McCreevy delivered a speech at the 7th European Financial Services Conference, co-organised by our member Assonime (Italian Association of Listed Companies).
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=101
26/01/09 EC strengthens supervisory committees and standard setters for accounting and auditing
The European Commission (EC) adopted a set of decisions to strengthen the supervisory framework of the three Committees that supervise, respectively, securities, banking and insurance. In addition, it proposed for the EU to provide with financial support to key bodies for accounting and auditing.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=97
26/01/09 EC to clarify the responsibility of UCITS depositaries.
The failure to recover Madoff fund assets worth 1.6bn€ revealed intolerable differences in investor protection depending on the domicile of fund deposotaries.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=98
19/01/09 EC launches European database for Financial Education
The European Commission has published a European Database for Financial Education (EDFE). The EDFE includes standardised information about education schemes and research projects and it is open to all providers and potential users.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=99
19/01/09 European Financial Integration Report 2008
The European Commission (EC) has released its European Financial Integration Report (EFIR) for 2008.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=100
17/12/08 The Single Market review: one year on
The European Commission has published a staff working document outlining a series of measures that have already been taken or are in the pipeline, in order to re-launch the European economy.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=91
11/12/08 EC to review Transparency Directive in 2009/2010
Commissioner McCreevy, DG MARKT, delivered a speech to the British Venture Capital Association, on private equity, disclosure and transparency. He stated that regulation to private equity industry is not necessary nor productive, considering self-regulation a better option.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=89
Latest Positions
EC Consultation on Hedge Funds
EuropeanIssuers welcomes the possibility of a regulatory initiative. Hedge funds differ from traditional investors in that they are not interested in the company itself as an economic undertaking. They do not invest in a company but exploit market price movements. The risks for the real economy and the investee companies caused by imprudent behaviour by hedge funds should be investigated. Hedge funds must act in a responsible manner with respect to their investment target. The issuer should be able to know his shareholders including hedge funds. A system of EU-wide shareholder identification needs to be put in place.
A European approach to hedge funds will be effective but international co-ordination or convergence should be striven for. Omnibus accounts should not be allowed where such can increase risks to the market. Transparency should give market participants relevant information for their investments thus leading to an efficient and truthful pricing.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=172
CESR - call for evidence on short selling
EuropeanIssuers:
• welcomes permanent measures aiming at preventing abusive short-selling practices
• believes that these measures should also include securities issued by listed companies in general
• reasons that naked short sales should be prohibited internationally
• pleads again for measures to regulate stock lending
• suggests measures to strengthen transparency, enhance market integrity and improve coordination
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=173
EC proposal for a Regulation on CRAs
EuropeanIssuers observes inter alia:
1) Execution of orders & reliance on credit ratings – Art. 4 par 2 should be deleted. The proposed provision (and the very Proposal) leads to even more reliance.
2) The distinction between structured instruments and other financial (traditional) instruments or entities should be enhanced
3) CRAs should not be encouraged to control information beyond the controls performed by the issuer or the statutory audit
4) The “issuer-pays model” relies on independence rules, controls performed by the CRAs and the competent authorities, and disclosure of historical performance data.
5) Art. 6, 4: we caution against a mandatory rotation of the internal committee members approving credit ratings
6) Surveillance of credit rating activity: securities commissions should coordinate within IOSCO.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=171
Market Standards on Corporate Actions
EuropeanIssuers comments as follows:
i) The communication flow should be continued until the end investor by default.
ii) The interim security must never be treated as a real security.
iii) How will the expected cost savings be materialised and who will benefit from them?
iv) STP should become the norm and there should be no early intermediary cut off deadlines.
v) Standardization should not prejudice the flexibility required by listed companies with a dual listing.
vi) The time proposed to elapse between the Ex Date and the actual payment date should take into account the needs of investors and issuers who want to continue trading the security with the benefit included.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=168
CESR Consultation Market Abuse L3 - second step
EuropeanIssuers:
- Agree that stabilisation outside the exemption in art. 8 should not be regarded as abusive solely because it occurs outside of the safe harbour;
- Ask for recognition of more advanced practices of price stabilisation as accepted market practices;
- Suggest that employees’ share option programmes should not be subject to the restrictions of article 6 of the MAD implementing Regulation;
- Consider that a wider set of purposes for buy-back programmes should be considered;
- Agree that issuers are under no obligation to respond to rumours which are without substance and believe also that issuers should have to comment on rumours with substance, only if they relate to inside information within the issuer and when there are price movements or abnormal quantity movements.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=169
Impact MiFID on secondary markets functioning
EuropeanIssuers’ reply includes:
- The lack of level playing field for transaction and regulatory compliance costs between regulated markets and alternative venues is a downside.
- Pre and post trade transparency will mitigate the risk of liquidity fragmentation but might increase costs.
- Data aggregation and consolidation will guarantee equal access to price discovery and allow best execution verification.
- The determination of a shareholder depends on a maze of complex financial transactions. MiFID allows custodians to use clients’ assets for their own or their clients’ account. It also allows intermediaries to (re)use assets as collateral for their own account. CESR should analyse the possible (systemic) risks.
- Reconciliation of accounts should be daily to determine who can attend a general meeting.
- Intermediaries should pass on general meeting and other corporate actions related information and disclose the identity of the shareholder on request of the issuer.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=170
Calendar
26/02/2009
Conference Private Equity & Hedge Funds - Brussels
The European Commission is organising a High-Level Conference on Private Equity and Hedge Funds, to be held in Brussels on 26th and 27th February 2009. EuropeanIssuers will have as representative in the panel "Management of Micro-Prudential Risks & Transparency Towards Investors" Prof. Erik Vermeulen, member of our Legal Committee. This panel will be at 11h30 to 13h00 on 27/02. The event will take place at the National Bank of Belgium.
The conclusions from the discussions, coupled with the results of an ongoing public consultation on hedge funds, will feed in to the European Commission's review of the adequacy of supervisory and regulatory arrangements for all financial market actors in the context of the financial crisis.
For the conference details click here.
02/03/2009
JWGGM Meeting – Brussels
Meeting of the Joint Working Group on General Meetings, working on the standardisation of General Meeting communications and voting instructions (Giovannini Barrier 3).
06/03/2009
CAJWG Meeting - London
Meeting of the Corporate Actions Joint Working Group, working on the Giovannini private sector barrier 3.
11/03/2009
T2S conference on issuers - Brussels
The Eurosystem organises a conference to explain the impact of T2S for issuers and their agents and explore the opportunities in such areas as shareholder visibility, the accompanying legal harmonisation and efficient execution of corporate actions by issuers and their agents.
There will be contributions from the ECB, international issuers, their agents, and the European Commission. Secretary General Dorien Fransens will be part of the panel on “shareholders’ visibility”.
The conference will take place on 11/03 at the National Bank of Belgium in Brussels from 11h00 to 17h00.
For the agenda and registration form click here.
19/03 & 20/03
CAJWG Meeting - Brussels
Meeting of the Corporate Actions Joint Working Group, working on the Giovannini private sector barrier 3.
26/03/2009
JWGGM Meeting - London
Meeting of the Joint Working Group on General Meetings, working on the standardisation of General Meeting communications and voting instructions (Giovannini Barrier 3).
02/04/2009
Annual General Meeting 2009
Our Annual General Meeting will be held in Vienna on Thursday 2 April from 10 am to 11 am, kindly hosted by our Austrian member AKTIENFORUM.
Presentations & Speeches
Issuers announcements - CorpActions 2009 - 21/01/09 - London
Secretary General Dorien Fransens sat on a panel on "Issuers Announcements" in the context of a full day conference on "Corporate Actions" organised by SOF (Securities Operations Forum) in association with SWIFT (Society for Worldwide Interbank Financial Telecommunication).
For the presentation click here.
