The European private company statute (debate)
President
The first item is the report by Klaus-Heiner Lehne, on behalf of the Committee on Legal Affairs, with recommendations to the Commission on the European private company statute.
Klaus-Heiner Lehne
rapporteur. - (DE) Madam President, Commissioner, ladies and gentlemen, I feel particularly honoured to be able to see this topic discussed today, when you, Madam President, are chairing a sitting of this House for the first time.
The action plan on company law already envisaged examination of which additional forms of company might be considered as subjects for legislation within the European Union. As a result of the studies carried out at that time, these questions were, in essence, left open. Now, the Commission, a number of years ago, invited discussion of the company law action plan and subjected it to a wholesale revision. This House made a full contribution to this debate, and, following on from it, decided to produce and discuss an own-initiative report on the European private company.
Such is the background to this item on today's agenda. We have considered this question carefully and organised in this House a hearing on the subject, which drove home the fact that there is a real need for that sort of European private company and for the Commission to initiate legislation to create it. Smaller industrial companies in particular - export-driven businesses that are at present obliged to set up subsidiaries and companies in other Member States and in accordance with those states' laws on companies - would welcome with great enthusiasm the creation of a European legal form whereby they could organise their subsidiaries throughout the European Union. At present, they are in serious need of advice, which may well be good for the lawyers, but it does cost a lot of money, since there has to be, again and again, examination of individual cases to ascertain what rights and duties their directors and members of their supervisory boards actually have and what they have to do in order not to end up at odds with the law.
I think they will be able to avoid that if they can be offered a single European legal form that regulates a number of core matters, in particular directors' powers and questions of liability, in one way at the European level and thus offers something to businesses. There is, then, absolutely no question of additional bureaucracy, for companies can decide for themselves whether they want this legal form or not; it is simply something of which they can avail themselves, something that plugs a real hole in the law left over after we created the European Limited Company for bigger firms.
Let me also say, by way of an aside, that the insufficient progress made in the past in the development of European company law is one explanation for the European Court of Justice's rulings in such cases as Inspire Art, and this is where we can help to provide and create an exemplary structure in the European Union.
I believe that the Committee on Legal Affairs - which adopted this report by a large majority, or, indeed unanimously - has succeeded in finding a suitable compromise between the different approaches to the structure of such companies found in continental Europe on the one hand and in British legal thinking on the other, especially on the issue of equity, where we achieved a good compromise on the basis that equity ought, as a matter of principle, to exist, but without the obligation to make cash payments, which, as a means whereby registration may be made easier, is, in my view, a step in the right direction and also shows how it is possible for the Commission to submit a proposal with the Council then being able to find a rational compromise between the various legal traditions.
What we in the Committee on Legal Affairs - and I think, after today's vote, this House too - expect of the Commission is that it should, in accordance with the provisions of the Treaty, with our Rules of Procedure, and with the interinstitutional agreement, stir itself into action and, within the foreseeable future, take definite steps to put a definite proposal for legislation before this House and the Council.
As I draw to a close, I would like to mention another consideration that has had some input into the amendments, that being the debate on workers' participation in decision-making. Let me make perfectly plain something that was not a bone of contention in our deliberations, namely that nobody is seeking to restrict workers' rights in any way whatever. In so far as they are guaranteed at the national level, they are also to be guaranteed and maintained when this legislative project is put into effect. This is something on which there have been a number of amendments, which I do not regard as crucial, for they all have the same end in mind, that of protecting workers' rights.
One final comment - and yes, I do mean final, for I will then have used up my five minutes: I note with pleasure that the German Presidency of the Council has declared the European Private Company to be one of its priorities, and so I assume that the Council, too, will be as supportive of this as - I hope - an overwhelming majority in this House is about to be.
Charlie McCreevy
Member of the Commission. Madam President, firstly I would like to thank the Committee on Legal Affairs, and in particular the rapporteur, Mr Lehne, for the excellent work done in the preparation of the report on the European private company statute on which you will vote today. My departments are already studying in detail the suggestions and recommendations proposed in this report.
We need to make it easier and cheaper for small and medium-sized companies to conduct cross-border business. It is important to take action that will help small and medium firms to reap fully the benefits of the single market.
The growth of small businesses is crucial for the competitiveness of the European economy. One means of facilitating the expansion of small businesses is to simplify the current legal framework and reduce unnecessary administrative burdens. These burdens are particularly onerous for SMEs that do not have big legal departments at their disposal. That is why I have decided to present a communication on the simplification of EU company law in the spring of this year. This fits in with the broader programme of the Commission on simplification of the acquis communautaire which provides for a 25% reduction in administrative burdens by 2012.
I am all for initiatives that will give European firms, and in particular small and medium companies, a flexible regulatory framework. The European private company statute could be a useful option for them in this respect. The idea was supported by industry in the recent public consultation on future priorities for the action plan on company law and corporate governance. Many respondents stressed that such an option would create more choice for companies and reduce compliance costs for firms which wish to operate in several Member States. However, a number of our respondents also questioned the usefulness of such a measure and, as you know, in accordance with better regulation principles the Commission must carry out an impact assessment before any initiative is proposed. Accordingly, my departments are now examining the costs and benefits of such a statute, as well as alternative measures to address the problems at stake. I would only propose a European private company statute if the impact assessment clearly shows that this is the most appropriate instrument to tackle the problems SMEs face today and that the European private company form would be useful to them in expanding their activities and developing their businesses across borders.
Experience with the European company statute has shown that creating a new European corporate form can be a very long and complex process. The end result may be legal instruments that are not always easy to use. If a European private company statute is to be worthwhile, then agreement would need to be found swiftly. The end result would have to be simple for SMEs to use, thereby bringing real added value.
I note that your report and associated resolution are based on Article 192 of the Treaty calling on the Commission to submit a legislative proposal. Under the framework agreement, the Commission undertook to take account of any such request made pursuant to Article 192 of the Treaty. I intend to live up to these commitments. We will assess the practical suggestions set out in the report in detail. I want my departments to take the time necessary to consider carefully all possible options in order to provide the best balanced solution for SMEs. Upon conclusion of the impact assessment, I will report back to you on its results and the policy conclusions we draw from it.
Andreas Schwab
on behalf of the PPE-DE Group. - (DE) Madam President, I, too, as a former fellow-member of the Committee on the Internal Market and Consumer Protection, wish you every success in the exercise of your functions. If every President were to keep the Chamber as quiet as you have done this morning, our deliberations would indeed be much more constructive, and so I can only ask you to carry on the way you have begun.
I can tell the Commissioner that small and medium-sized enterprises are the driving force behind the European internal market. That may well be reiterated time and time again, but the progress towards the achievement of this goal is often too slow. I, too, therefore, am among those who believe that the creation of a European legal framework with the interests of the self-employed and smaller businesses particularly in mind is an extremely important matter, not least for the Committee on the Internal Market.
Mr Lehne's own-initiative report is much to be welcomed, not least on the grounds that it sends an important signal to the Commission - and, let me add, to the Presidency of the Council too - and I would like to thank him for the splendid work he has done in this regard.
It is cause for thanksgiving that many small and medium-sized businesses already work across borders, and you, Commissioner, were able to see that for yourself when you visited Offenburg, my own electoral district. In many instances, though, their dedication and growth are hampered by bureaucratic restrictions and the lack of experience of the local legal situation, and small and medium-sized enterprises from the new Member States have hitherto been put at a considerable competitive disadvantage by this.
Offering in future a European legal form in parallel with the legal forms of the nation states therefore not only serves to further the completion of the European internal market, but also makes it easier for small and medium-sized enterprises to set up subsidiaries in European countries other than their own, and hence to develop their activities beyond their own country's borders.
What is of the essence in this is that the consultancy and administrative costs involved in setting up and running a company can be reduced to a considerable degree and that cross-border business activity no longer involves the laws of more than one Member State being applicable.
A survey conducted by the German International Chamber of Commerce - I can refer only to German businesses - showed that enterprises were very keen that there should be a European legal form that met the needs of small and medium-sized businesses, and the businesses that responded said that they saw this as being a 'little sister' to the European Limited Company and believed that it needed to be slimline, practicable and - above all else - European.
I can therefore tell the Commissioner that what this House is saying by means of this report is that it wants to see the Commission presenting a legislative proposal on the basis of Article 308 before this year is out. We are of course pleased to hear you advocating the impact assessment, but we have also seen, from the example of other directives relating to the internal market and consumer protection, that, where the political will is present, an impact assessment can either be carried out briskly or limited to specific individual questions, and so I would ask you to move the impact assessment forward with some speed in order to arrive at a legislative proposal as soon as possible. I would also ask the German Presidency of the Council to process this dossier as soon as possible and with vigour.
Manuel Medina Ortega
on behalf of the PSE Group. - (ES) Madam President, I believe that this is the first time that I have had the opportunity to speak while you are presiding over the sitting and I would like to congratulate you on your appointment. I am sure that you will do your duties in your characteristically independent manner.
Secondly, I would like to thank Mr Lehne for his report. I believe that he has done a good job, but I would like to point out a couple of problems that we have.
Firstly, I do not believe the Committee on Legal Affairs' current approach of presenting reports on an issue of legislative initiative with an annex which has not been sufficiently discussed to be the appropriate legislative technique.
We are talking about an initial phase of legislative proposals. What we are doing is asking the Commission to look into the possibility of presenting a report, and I believe that at this stage we should restrict ourselves to the first part of the resolution.
I do not believe that the annex to the motion for a resolution has been sufficiently debated. We cannot therefore take the view that these conclusions of the annex genuinely reflect the will of the Committee on Legal Affairs.
Secondly, I believe that Mr McCreevy was absolutely right to point out that we should not be legislating for the sake of legislating - our failure in relation to the European Company should give us cause for concern in this regard - and the impact study is therefore clearly necessary.
Furthermore, it is clear that we in this House believe that it is necessary to draw up a statute to enable small businesses to operate and that we should work towards achieving that.
In doing so, we are faced with certain difficulties: for example, the problem of worker participation. We have held discussions on the text of recital H. In my political group, there have been certain reservations about the way Mr Lehne had worded it.
I believe that the final formula proposed by Mr Lehne is satisfactory and I hope that we in my group can approve it.
In short, I believe that Mr Lehne's proposal is a good one. We are not demanding that the Commission accept it, but we are asking it to look into this possibility.
I hope that Mr McCreevy will do everything he can to ensure that this Parliament's will in this regard is implemented.
Sharon Bowles
on behalf of the ALDE Group. - Madam President, first let me also extend my congratulations to you on your appointment and the conduct of your first debate.
I must also start with an apology to the rapporteur because, although I attended the hearing on this subject, I was unable to participate in the debate in committee and I know it is a bit irritating when somebody then pops up in Plenary.
I broadly welcome the underlying idea in the proposal, but I have some concerns that I hope the Commission will investigate further during future work on this matter. Mr Lehne, you have said in your explanatory note to the report - and indeed the Commissioner has also said just now, and I agree - that the statute will need to focus on the needs of SMEs. But that of course covers just about all companies except multinationals. To me it is clear that if we follow all of the recommendations in the annex, those that are likely to benefit or choose this option are towards the medium rather than the small end of the spectrum of companies. They certainly would not be start-up companies. The suggested capital requirements ensure that is the case. I do not want people to say 'here you are standing there as a Brit not wanting any capital requirement'. I recognise that the capital does not necessarily have to be paid in and I welcome attempts to find a compromise on that, but it will still have an impact, especially on small businesses.
Smaller businesses, whether at the start-up or whether trying to expand, have enough cost and difficulty trying to give belt-and-braces guarantees to banks without there being an added tier of financial expectation. And, make no mistake, the fact that shareholders could potentially lose EUR 10 000, even if not paid in at the start, does add an extra tier of financial expectation.
Now, that may not matter at all since it is optional, and if you do not like the statute, you do not have to use it, but I would prefer that if you propose something, it would be liked and used and accessible to all companies.
While I have said that there may be little incentive in some quarters to choose this, that does not mean it is because small companies do not conduct cross-border business or do not aspire to do so. Many quite small companies do engage in significant cross-border business and European Court of Justice decisions make it clear that they can do so. But, as it is optional, maybe that is no matter. Or is that really the case? I would not like to see the situation where the new statute introduced a factor of discrimination where consumers were concerned that if you were not big enough to consider it worth being a European private company, you are not big enough to do business in Europe. That would run completely counter to the notion of a single market and the mutual importance of fostering and nurturing small businesses within that market. In a single market, size must not matter.
Marek Aleksander Czarnecki
on behalf of the UEN Group. - (PL) Madam President, I fully support the view that the European Private Company Statute should be based on Community legislation and dispense with references to national law. The aim is to create a new legal form for small and medium-sized enterprises, which are the driving force behind all European economies. A new legal form will help to foster cross-border activity too.
We must also keep in mind joint activities when it comes to promoting the development of the internal market, and consequently economic growth. If a single European legal form is created, consultancy costs will be cut. In the many countries involved, the law will no longer apply to cross-border activities. Instead, we shall have a single, uniform statute. For this type of company to be competitive on the market, it must be flexible and able to adjust to market requirements. This could be achieved by endowing such a company with a wide range of possibilities for transforming itself.
In this context, the issue of legal harmonisation arises, for instance, with regard to the cross-border transfer of registered offices. For an undertaking of this nature to be able to operate with maximum efficiency on the market, however, it must focus primarily on the security of business transactions and on protecting the company's creditors. We still need to give further consideration to these issues.
Godfrey Bloom
on behalf of the IND/DEM Group. - Madam President, I find this absolutely fascinating! Every time I come here I have to smile. What this place knows about running small businesses is absolutely unbelievable. When I look up the CVs of Members of this Parliament, I find that nobody has ever had any serious responsibility for a small company in their lives. It is amazing what we all know about these things!
In 1992 I started a small business. I thought about it and I bought some old-fashioned, second-hand furniture. I sucked my pencil and thought, 'My goodness me, what have I done? I have left a big corporation, where do I go from here?'. That business now has branches in Hong Kong, Jersey, the Channel Islands and South Africa, as well as London and York, which is my constituency.
I really do not think I could do that again. There are so many regulations, it is unbelievable. If you really want to fire up small business in the European Union, and particularly the United Kingdom, I would suggest that these people here and the Commission get their blasted noses out of everybody else's business and stop trying to tell us how we should run our businesses! Just let us get on with it, because if you do not, more and more businesses are going to go to Dubai, Bermuda and the Channel Islands - I am moving half my business to the Channel Islands as it is.
I would counsel you and the Commission to please keep your ill-informed noses out of small businesses!
Ashley Mote
on behalf of the ITS Group. - Madam President, this report is a contradiction in terms. Governments cannot micro-manage enterprise. Since when has the European Union initiated anything that improves trade, minimises costs, cuts red tape, generates new wealth, creates new jobs, frees up enterprise? When ever? Most governments can hope to contribute to economic growth only by clearing the decks of obstacles and creating an enterprise-free environment. Government ought to be about enabling people and their initiative to thrive. After that it should stand well back.
The UK has a huge, permanent and growing deficit with the EU. Does anyone here seriously imagine that by seizing control over company law relating to SMEs, the European Union will change or improve that situation? Do you really imagine that possible, especially as these proposals are based on German and French ideas of a social market?
I endorse what Mr Bloom has just said. How many of you here have ever started a new business at your own risk? Created jobs? Funded it for yourselves and successfully run it for, let us say, 20 years? How many of you have done that? How many people on that committee have done that? How many of you know what it takes to start a new business in the UK? Well, I will tell you. Less than a hundred pounds, ten minutes on the phone and you can do business anywhere. Compare that with these proposals. We have centuries of company law in the UK, thank you very much. And it works just fine. We also have SMEs trading all over the world and they do just fine. Most of their nightmares come from past misguided attempts by the EU to 'help' with trade on the Continent. Most of that 'help' merely interferes with their activities, and the idea of yet more 'help' will be greeted with horror.
Over the years we have seen masterpieces of unintended consequences from this place. There is the Working Time Directive, which finally proved to a business friend of mine that the EU was clinically insane. There is the drive for a level playing field, the very antithesis of wealth and job creation, which totally depends on finding differences. And now we have got the licensing of authorised economic operators, which hugely benefits those who qualify and undermines everyone else with extra costs and bureaucracy. Even the Socialist British Government has figured out that this proposal is expensive and dangerous nonsense and it belongs in the bin.
Małgorzata Handzlik
(PL) Madam President, I should like to thank the rapporteur for a very sound and detailed report. In my view, it sends out an important message to small and medium-sized enterprises, indicating that their development and activity on the common European market will soon become much more straightforward. It also sends out a further message to SMEs, namely that European legislators recognise the role of SMEs on the Union's market and are making an effort to improve their situation.
The main aim of our activities relating to the common market should be to create an optimum situation whereby European enterprises are not hindered by unnecessary red tape or commercial and technical obstacles when they move from one country to another, or set up branches in various Union countries. It should be just as easy as if they were moving from one part of their own country to another. All companies should be able to operate on the same principles across the length and breadth of the Union. Only then will it really be possible to speak of a common European market with benefits for all.
Mr Lehne's report is a further step in developing legislation designed to enhance the efficiency of the SME sector's activities on the common market. Its implications will certainly significantly contribute to increasing the economic activity of European companies, and consequently to improving all our lives and meeting one of the aims of the Lisbon Agenda. I was actually a businesswoman myself in the past. I ran my own business for 15 years, and employed some 100 people. I am well aware of the problems entrepreneurs face and am convinced that the proposal to develop a European Private Company Statute represents an excellent and much-needed solution for undertakings conducting cross-border business.
It is important, however, to proceed with caution and learn from the mistakes made when developing the European Company Statute. Companies of that type do not fully fulfil their role as European Companies because of the large number of references to national law. That is why the European Private Company Statute must be based mainly on Community law, with minimum reference to national law. Such an approach will result in a more uniform text and legal provisions. In addition, it will provide legal certainty, which is crucial to entrepreneurs. We must make every effort to ensure that the Statute is as uniform as possible, and that it makes minimal reference to individual legal systems whilst referring to Community law as much as possible.
Andrzej Jan Szejna
(PL) Madam President, I should like to begin by thanking Mr Lehne, the rapporteur, for all the work he has undertaken on a matter which is of such vital importance to the future of European integration and the development of economic cooperation within the framework of the internal market. The current situation regarding the internal market is that we already have a European Company. It is intended for large capital-based companies. A legal form which will also make it easier for small and medium-sized enterprises to conduct cross-border business is therefore essential.
It is important to bear in mind that SMEs are the main driving force behind the European economy and the main source of employment for Union citizens. That is why further efforts should be made to enhance the economic activities undertaken by these companies. However, the new legal solutions we are proposing to our entrepreneurs do call for detailed consideration. We should learn from the experience gained when introducing the legal form for the European Company on to the common market. That statute took a long time to draw up and was the result of a compromise. In fact, the final compromise has not proved entirely satisfactory. We should therefore learn from our mistakes, as Mrs Handzlik suggested earlier.
As far as is possible, the European Private Company Statute should be a uniform European legal form. It must provide for the simplification of the principles of establishment and organisation. It will be important to retain a balance between protecting creditors, a flexible company structure, and ensuring the security of business transactions. In the interests of protecting the flexibility of such undertakings, provision must be made for ensuring ease of transformations such as mergers or changing the registered office. Therefore, there is every justification for the European Parliament's initiative containing recommendations to the Commission on the European Private Company Statute.
Zbigniew Krzysztof Kuźmiuk
(PL) Madam President, there are several reasons why the development of a European Private Company Statute is such a crucial project for accelerating the economic growth of the European Union.
Firstly, measured in terms of GDP growth, the rate of economic growth of the United States is more than twice that of the European Union. This has been the case for many years. In addition, the rate of economic growth of the countries of South-East Asia is several times higher than that of the Union. Secondly, many internal barriers still persist within the common market created by the free movement of capital, goods and services. Thirdly, the draft European Private Company Statute is aimed at small and medium-sized enterprises, which are the cornerstone of the economies of all the Member States of the European Union. Fourthly, a European Private Company would be a very useful instrument for the implementation of the Lisbon Strategy, which places great emphasis on eliminating obstacles to the development of European entrepreneurship.
These reasons alone justify supporting the development of a European Private Company Statute. It is important, however, not to repeat the mistakes made when drawing up the European Company Statute. The market has refused to accept the European Company as a company form, despite the long and difficult process involved in developing this statute. An effort must therefore be made to ensure that the European Private Company Statute contains the minimum number of references to the national legislation of individual Member States, so that it is relatively flexible in nature and provides security for both owners and contractors.
Achille Occhetto
(IT) Madam President, ladies and gentlemen, this legislative proposal on the European private company statute is very important. It is, in fact, crucial not only to remove barriers to trade but also to develop the factor of production at Community level. To that end, there is undoubtedly a need to create unitary legal entities in order to overcome the current legal uncertainty.
It should not be forgotten, however, that, as well as trying to make markets transparent and to protect savers, the company law reform will also directly affect the future of the European social model. Therefore, if allowing companies to move wherever they like in order to take advantage of the single market is a legitimate aim, it must be fulfilled by giving our workers the same transnational rights.
That was the thinking behind some of my amendments, certain of which were accepted, which were aimed at safeguarding the rights to codetermination, information and consultation that exist at the time of a company's turning into a European private company. We are talking here about an important adjustment that will mean more careful attention being paid to aspects relating to the strengthening of social Europe, one of the fundamental elements of which must be worker participation.
We therefore endorse this important proposal and we thank Mr Lehne for his work. We would point out to the Commission that, if allowing companies to move wherever they like in order to take advantage of the single market is a legitimate aim, it must be fulfilled without the demands of the market prejudicing those of social equality.
Charlie McCreevy
Madam President, I should like to thank the Members very much for their comments on this important topic. The growth of small and medium-sized enterprises is crucial for the competitiveness of the European economy. It is, therefore, necessary to facilitate the expansion of these small businesses. Looking at the legal form of companies that operate across borders can make an important contribution to this.
I will take Mr Lehne's report into account. As it is under Article 192 of the Treaty, we are bound to do it in a prompt manner. But even if it was not under that article, I will still deal with it in as prompt a manner as possible. I give you that commitment.
President
Commissioner, I should like to thank you for your participation in the debate.
The debate is closed.
The vote will take place at 11.30 today.
Written statements (Rule 142)
Dominique Vlasto
(FR) The creation of the European private company statute has the support of both the Member States and industry, and I congratulate the rapporteur on his excellent report and his pragmatic recommendations.
I am very much in favour of the creation of this statute for at least two reasons. Firstly, because the adoption of this statute will help remove one of the obstacles to SMEs' mobility. All too often, company founders are reluctant to do business because they do not understand the legal environment very well, particularly when they establish themselves in another Member State.
Next, this statute will enable us significantly to enhance legal transparency and thus to build confidence among the various economic players. The fact is that confidence is crucial in trade relations and forms the basis for a prosperous economy.
I am therefore in favour of Mr Lehne's report, with one exception: its recommendation 7. Including legally reprehensible behaviour in the private company statute would mean amending Title VI of the Treaty and unnecessarily complicating the link between the statute and our national laws.
I therefore feel that this provision runs counter to the objectives of the European private company statute: to produce better legislation and to make European entrepreneurs' lives easier.


Credit rating agencies (debate)
President
The next item is the report by Mr Gauzès, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1060/2009 on credit rating agencies - C7-0143/2010 -.
Jean-Paul Gauzès
Mr President, Mr Chastel, Commissioner, here we are in the third act of the financial legislation for 2010. Following supervision, following the directive on alternative investment fund managers, we are once again looking at credit rating agencies. I say 'once again' because Europe has not been slow in bringing in a regulation in this area which was conceived in 2009 and which is now taking effect.
Credit rating agencies, in general, issue opinions, literally in the form of ratings, on the creditworthiness of businesses and states and on complex financial products. The rating reflects an assessment of the risk of issuers of financial instruments not being able to honour their debts. These agencies have gradually become very important in the financial world, for a variety of reasons.
First, ratings are taken into account in banking regulations in order to determine the amounts of own funds that will be used to back investments. The second reason is that ratings have been a factor in the success of issues, since they have become a major indicator for investors.
Yet, although credit rating agencies were not the main cause of the recent financial crisis, they did have a harmful influence. Indeed, they underestimated the probability that issuers of certain complex financial instruments would default.
Faced with the need to restore confidence in the markets and to strengthen protection for investors, in 2009, the European Commission proposed a mechanism for monitoring and supervising credit rating agencies. Thus, in the same year, Regulation (EC) No 1060/2009 on credit rating agencies was adopted.
During the debates in the European Parliament preceding the adoption of this regulation, your rapporteur stressed the need for EU-wide joint oversight of credit rating agencies' products and integrated supervision of them. At the time, European supervision of this type was legally impossible. However, the Commission undertook to draft a legislative proposal along these lines, and you, Commissioner, kept this promise.
The agreement reached between the Council and the European Parliament on the architecture of European supervision, which will enter into force on 1 January 2011, now makes the effective implementation of rating agency supervision possible.
It is stressed in the Regulation establishing the European Securities and Markets Authority that this authority will exercise its own supervisory powers in relation, in particular, to credit rating agencies. That was the objective of the additional amending regulation on which we reached an agreement and on which we will vote tomorrow.
What I wanted - and my colleagues supported this request - was for the other issues relating to credit rating agencies, allocation of sovereign debt, remuneration schemes and competition, to be postponed and dealt with in a study taking the form of an own-initiative report, which will precede the legislative proposal that you are due to make in the first half of 2011 and for which you have launched a consultation.
I believe that, by establishing European supervision of credit agencies, we are taking a big step along the same lines as the supervision arrangements that have been implemented. I now want to thank the Belgian Presidency for its tireless efforts on the financial dossiers, you and your teams, Commissioner, and, obviously, my fellow Members in the European Parliament who participated in this study and who supported our positions.
Olivier Chastel
Mr President, Commissioner, ladies and gentlemen, after Mr Gauzès and a report of this kind, it is clearly a pleasure to be among you on behalf of the Belgian Finance Minister, Didier Reynders, on the day of the debate concerning the amendment of the regulation on credit rating agencies.
Once again, as you have just said, we are talking about a measure relating to financial services on which the three institutions have just reached an agreement in record time.
We are also very pleased that this agreement will be voted on in Parliament tomorrow, as agreed, between the three institutions.
The regulation will therefore be modified to allocate additional powers to the European Securities and Markets Authority. This will allow the authority to exercise stricter supervision of the activities of credit rating agencies throughout the Union. This is an important step which we also think will contribute to improving the stability of the financial markets, and which will support the development of a much more effective supervisory framework.
Once the regulation enters into force, therefore, the authority will have powers concerning the registration and direct supervision of credit rating agencies. It will also have the power to determine that a credit rating agency has infringed the regulation in force and the power to impose appropriate penalties.
Of course, a framework will also be provided for cooperation between the competent authorities in the Member States and the European Securities and Markets Authority. However, we are prepared to have a more in-depth debate on the issue of regulating the credit rating agency sector itself once the Commission has provided us with its proposal on the comprehensive review of this sector, which is set for next year. While I am obviously hoping for a positive result from your vote tomorrow, I would particularly like to thank the Chair of the Committee on Economic and Monetary Affairs, Mrs Bowles, Parliament's rapporteur, Mr Gauzès, and its shadow rapporteurs, of course, as well as Commissioner Barnier, who, alongside the Belgian Finance Minister, Mr Reynders, carried out important work for six months, securing swift agreements that have been transformed in this very Parliament into real decisions in the financial sector. Anyway, thank you for your fruitful and effective collaboration in this area. I am sure that you will continue this work during the Presidencies to come.
Michel Barnier
Mr President, good afternoon to you all. You spoke very well, Mr Gauzès, as did Mr Chastel just now, on behalf of Mr Reynders, about the supervision and regulation of the large hedge fund and private equity sector, today, and about this second stage of credit rating agency regulation, tomorrow, which is clearly being undertaken with and thanks to you, ladies and gentlemen, and thanks to the Council and to the initial work of the Commission. On the subject of regulation, Europe is making concrete and effective progress, and it is learning the lessons of the crisis, as all taxpayers, who are also European citizens, are demanding.
Ladies and gentlemen, the agreement on the supervision of credit rating agencies is an important step, and I, too, would like to thank you, Mr Gauzès, and, of course, those working alongside you, the Committee Chair, Mrs Bowles, as well as the shadow rapporteurs, Mr Klinz, Mr Giegold, Mr Pittella and Mr Fox. In a few days' time, this Presidency will come to an end, having had much success and having made a lot of progress, and I want to give my sincere thanks to Mr Reynders and to his whole team for the good relations we have maintained throughout the last six months.
This is a good agreement, even though I have to say that it would have been excellent if, in the final compromise, we had taken up the rules that the Commission initially proposed for reinforced transparency regarding structured financial instruments. However, as was indicated in the recitals of the regulation, we will come back to this subject, if you wish, during the next revision of the regulation in 2011.
As Mr Chastel said just now, from July 2011, this amendment to the 2009 regulation will give ESMA, the new Securities and Markets Authority, the direct power to supervise credit rating agencies at European level. Ladies and gentlemen, the importance of this decision that you are taking today really must be understood. This is the first time that ESMA, this new European authority, will have the power to directly supervise financial institutions operating across Europe.
This amendment completes the new European supervision framework. It strengthens ESMA's powers considerably, as you explained very well, Mr Gauzès, and as Mr Giegold, who is here, was also anxious to point out during the debate on supervision. This is therefore a very important subject for you, and it is also a very important subject for us.
ESMA will become the institution responsible for registering rating agencies and supervising them throughout the Union, and it will exercise strict control. The legislation will grant it all the supervisory powers deemed necessary to force rating agencies to comply with the terms of the regulation.
ESMA will be able to exercise supervision - I am thinking here of requests for information and the power to carry out spot checks - and if it notices that a credit rating agency is committing a violation, it will have to take the measures necessary to force the agency to put a stop to that violation. ESMA will also have the power, strictly regulated by clear rules, to impose fines and penalties on rating agencies which do not respect the regulation. Clearly, this regulation also guarantees the rights of defence of rating agencies, in particular, the right to a hearing, access to documents and other procedural guarantees. Finally, when exercising a supervisory power, ESMA will respect the rights enshrined in the Charter of Fundamental Rights and the other principles and provisions of European Union law, including the proportionality principle.
The new regulation on rating agencies will also ensure a single point of contact for all rating agencies, a regulatory framework which is harmonised across the European Union, with equal treatment, and a more consistent application of the rules for agencies throughout the European Union.
I therefore think that this represents a considerable gain in efficiency, transparency and security within the general architecture that we are constructing week by week in order to achieve intelligent supervision and effective regulation.
Mr President, I do not want to speak at great length as I did just now, but I would perhaps like to expand on what Mr Chastel said and mention the next stage, since I myself said that we must go further to ensure the proper regulation of rating agencies, while noting that the agencies are not creating the problem and the turbulence on the financial markets. The thermometer does not cause the fever, but it still needs to work properly, which was not the case in the past, and that is what we want to remedy, so to speak, with these successive regulations.
The Commission is already considering the next stage: a public consultation was launched on 5 November 2010 to broaden this debate and to collect the points of view of all the parties concerned, and, as you know, there is nothing artificial about the debates regarding all these regulations. Ladies and gentlemen, I truly set great store by listening to every contribution, criticism or idea made in the context of these consultations.
We shall now consider, first, the consequences of the issuer-pays model, which is widespread among rating agencies; second, the dependence of the banks and other institutional investors on credit ratings; third, the rating of sovereign debt - which is not a straightforward matter; fourth, increasing transparency in order to manage conflicts of interest better; and fifth, creating more competition and diversity in this rating agencies market, which is currently concentrated in too few hands.
This consultation is open until next January and, on the basis of all the responses that we receive, and of Mr Klinz's own-initiative report, we will take a decision at some point in 2011, but not too late, regarding the measures that we want to implement in order to complete, through a third stage, these two regulations on rating agencies, which are now almost implemented.
Sebastian Valentin Bodu
rapporteur for the opinion of the Committee on Legal Affairs. - Mr President, as a Vice-Chair of the Committee on Legal Affairs, I would like to present some important aspects that were the subject of the debates and amendments tabled in this committee.
Firstly, at the present time, payment for the structured instruments evaluated by the agencies is made by the issuing company. There can be conflicts of interest because the rated companies are interested in having a good rating. Alternatively, it might be the users of ratings who pay. The users' interests are more diverse and therefore, there is not a single interest that can lead to a conflict of interest. There are users who prefer a good rating, for instance, when they want to sell shares, and those who prefer a bad rating, for instance when they want to buy shares.
Secondly, the regime for the rating agencies could profit from the rules that have been established for the auditors. The rating agencies and auditors have a lot of responsibility for the good reputation of companies and the proper functioning of the market. Auditors, however, seem to be subject to far stricter rules than the rating agencies.
Thirdly, the European Securities and Markets Authority, ESMA, should have supervisory competence over the credit rating agencies in order to verify possible material discrepancies between the ratings given by different agencies for the same structured financial instrument. ESMA should also have greater power of enforcement.
Fourthly, the directive introduces a new principle, taken from the latest US legislation. When an agency other than the one contracted to make the valuation can do its valuation for the same instrument, it is subject to the contracted valuation. For this, the first agency must disclose certain information regarding the valuated instrument. In such a way, two beneficial effects are obtained - firstly, there is a second opinion and, secondly, the liability that falls on the contracted agency is reduced.
Finally, I want to underline the fact that the provisions of this directive, which represents a new regulatory frame, should only apply to the structured financial instruments, credit rating agencies themselves being an important part of structured finance. The remainder of the financial instruments, 150 year-old common shares or plain bonds which do not pose a systemic risk should not be part of this directive if you want to be tight but not to over-regulate, if you want to be competitive but not expensive in administrative costs, and if you want to hold capital in Europe and not drive it away to the emerging markets abroad.
Gianni Pittella
Mr President, ladies and gentlemen, thanks to our now tried-and-tested cooperation, we have worked productively with Mr Gauzès on this regulation to ensure some important advances in the rules governing one of the most controversial areas for the stability of the financial markets.
One such improvement is undoubtedly the plan for the newly formed European Securities and Markets Authority (ESMA) to be able to directly penalise credit rating agencies for misconduct. This was a point that I very much insisted on. Parliament is showing in this way that it is fighting for the creation of a strong European supervisory body that is equipped with real powers.
We are also aware that this regulation still does not tackle all the problems in a sector which, in recent years, has been seen to have exacerbated the crisis. The stumbling blocks to be overcome, which are the subject of a parliamentary report already being drafted by Mr Klinz, concern two issues in particular: the evaluation of Member States' sovereign debt and the general structure of a market characterised by an obvious oligopoly.
The European Union must have a clear objective in relation to these issues, namely, to make finance less dependent on ratings. The references currently contained in the laws and regulations on credit rating agencies must be superseded by alternative creditworthiness standards. The United States and the G20 have already gone in that direction.
At international level we need to have the courage and the ambition to change the rules underpinning Basel II, by which I mean the obligation to use ratings - a mechanism that has actually led the banking sector, in the past and still today, to completely give up on supervision, the consequences of which are plain to see.
I shall conclude with a brief reference to the issue of sovereign debt rating: this should no longer be the responsibility of credit rating agencies, because too often they have exasperated market sentiment with their ratings, fuelling speculation. We should give thought instead to the possibility of a European institution - perhaps an existing institution, such as the European Court of Auditors - playing a role in this area.
I really do hope that my suggestions will be endorsed by my fellow Members and will receive the full, authoritative support of Commissioner Barnier, for whom I wish to reiterate my high regard.
Wolf Klinz
Mr President, Commissioner, ladies and gentlemen, in a few weeks' time, we will have a new supervisory structure in Europe, which has been shaped to a considerable extent by the European Parliament. Among these three new supervisory authorities will be one that is responsible for markets and securities: the European Securities and Markets Authority (ESMA).
ESMA will have the last word in connection with the registration and oversight of credit rating agencies and be responsible for ensuring that the credit rating agencies actually comply with the new regulations. If it so wishes, ESMA can delegate this cross-border responsibility to national supervisory authorities if these supervisory authorities are small and only operate nationally.
This proposal is therefore nothing more than an adaptation of the regulation of April 2009 to the new circumstances, but it strengthens the role of ESMA. It gives the new supervisory authority more powers and - something that is completely new - it gives ESMA the power to punish non-application of the regulation. I very much welcome this, because I believe that strengthening the position of a new supervisory authority of European mould will genuinely increase its credibility on the market.
I just have one point of criticism. When drawing up the regulation in April 2009, we took a political decision with regard to how we should deal with ratings from third countries in Europe. We said at that time that they can be used in Europe if they either comply with the equivalence procedure or are supported by a credit rating agency that is registered and approved in Europe, the so-called endorsement procedure.
The Commission has now changed this at level 2 and said that endorsement will no longer be possible. Therefore, only the equivalence procedure actually applies. I consider this - as it was undertaken unilaterally - to be an undemocratic way of going about things, and I believe that we should stick to the decision that we made at the time in April 2009.
As the Commissioner also mentioned, there are still a lot of outstanding issues where credit rating agencies are concerned, namely, the lack of competition, insufficient transparency, the business model as to whether the issuer or the investor should pay, which need to be looked at critically. There are questions with regard to the payment system and also with regard to excessive dependency, because in reality, it is the case that, as a result of regulatory provisions, many ratings agencies have become de facto regulatory certification authorities. I am taking this up in the own-initiative report, and I am pleased that the Commission is going to table a legislative proposal on this matter in the next year.
Sven Giegold
Mr President, Mr Chastel, Mr Barnier, Mr Gauzès, ladies and gentlemen and shadow rapporteurs, I am indeed pleased that we have now taken this step and that for the first time, a sector of the European financial system will be placed under direct European supervision. It is also a step towards a strong Europe in an internal market and the firm control of a sector that contributed to the crisis. I would like to make one more comment on this. Mr Barnier, the selection process is, of course, currently under way for the new authorities, and the new authorities are only as good as their staff. I can only hope that the staff will genuinely be selected on the basis of expertise, independence from the financial industry that they are to control and the clear desire to serve in the public interest, and that we will not see national quotas again in the selection process that disregard these important criteria.
In addition, we still have a great deal to do in the area of credit rating agencies. We still have no real transparency when it comes to the information with which the credit rating agencies work and there is far too great a use of regulatory ratings in the financial sector and in the regulations governing the financial industry. We have serious conflicts of interest, we quite clearly have a market power of three major providers and there is no liability for negligently issued ratings. Commissioner, it is good that the consultation is now under way and we await the results with interest. Civil society, in particular, should be involved in this consultation, but then you need to put forward a courageous proposal. I am already looking forward to your proposal. Please be as courageous as you have been up to now, and let us produce legislation together during the next year that solves the problems that are still present on the credit rating market in a genuinely European way. We owe this to our citizens.
Ashley Fox
Mr President, I would like to thank Mr Gauzès for his excellent work on this subject. I am pleased that Articles 8a and 8b were removed during the trialogue. Initially, the Commission's draft proposed creating secure websites. I was never convinced. We can see how the situation unfolds in the United States, and if the sites turn out to be useful, we can always introduce them here in Europe afterwards.
Mr President, I am delighted to inform you that my group will vote in favour of this report tomorrow, and I thank Mr Gauzès once again.
Jürgen Klute
Mr President, Mr Chastel, Mr Barnier, ladies and gentlemen, the last few months since the beginning of this year have shown the damage that credit rating agencies can do. There is therefore an urgent need for action. I, too, therefore welcome the directive, in particular, the fact that the supervision and registration of credit rating agencies will be transferred to ESMA. That is an important and positive step in the right direction.
However, numerous good and progressive proposals fell by the wayside during the negotiations on the report. I would like to mention this once again. Thus, the appointment of ESMA remains the only real and positive change. The proposals for a public database for the issuing of credit ratings have been dropped, as has any reference to the establishment of a public credit rating agency. The consistent and continual examination of issued ratings by the supervisory authorities has also been forgotten about. Moreover, the Commission had proposed the promotion of unsolicited credit ratings in order to deal with the disastrous issuer instructions for the evaluation of financial market products. This, too, has come to nothing.
I hope that these aspects will be taken into consideration in the reports on this matter that are still to come and that were mentioned by Mr Gauzès and by you, Mr Barnier.
Hans-Peter Martin
(DE) Mr President, Commissioner, we are nearing the time of fervent prayers in light of today's news, once again concerning the euro, for which we are grateful. I very much hope that, with your courageous approach, you will not be too far behind the times. I would like to endorse what the previous speaker said and ask you urgently to ensure, in your sphere of influence, that selections will not only be made on the basis of national quotas, but also that party political preferences will be put aside so that we can finally break with a very awkward tradition in connection with officials, which is specific to Europe, and actually bring in the best people.
My second request is for much greater transparency with regard to the competitors on the international market outside the EU, which have constantly made a political issue out of their ratings and have suggested that they have an omniscience that in no way corresponds to what is actually happening on the market or even their importance.
Ildikó Gáll-Pelcz
(HU) Mr President, Commissioner, Mr Gauzès, ladies and gentlemen, it is truly a great pleasure for me to note that Mr Gauzès has created such an excellent report. The topic is of extreme importance, and looking at the habits and operation of credit rating agencies, it always has relevance. The rapporteur's effort to ensure that credit rating agencies and their products are controlled in an integrated way, on the basis of uniform EU standards, deserves support. However, it is important to know what exactly is being rated and how. We must ask these questions, as it is common knowledge that prior to the crisis, these credit rating agencies gave excellent ratings to several thousand billion dollars worth of doubtful or bad securities, thereby unfortunately providing unlimited ground for speculation.
First of all, we must examine the issue of independence, because if it is true that banks and certain investor groups are financing the fees of the evaluations, we might ask the question whether the decisions of credit rating agencies are indeed free of external interests. The second issue is the methodology of ratings. The third issue is that with concerted downgrades and negative rumours, any country can be made insolvent, and in this way, it can be forced to take out new loans and thus remain an increasingly vulnerable client in the debtors' market. Small, open economies and Member States outside the euro area are particularly vulnerable.
I am therefore convinced that it is incorrect to accept that credit rating agencies are not responsible for the ratings they give. Ladies and gentlemen, let us put ratings in their appropriate place, and rely on them only to the extent of their credibility, and consider them as guidelines when establishing the regulatory framework. The report is more than worthy of support. The global economic crisis has shown that the regulation and EU level supervision of the operations of these institutions are necessary.
Evelyn Regner
(DE) Mr President, Mr Chastel, Commissioner, credit rating agencies played, and are still playing, a dishonourable role in the financial crisis. There are too few of them, they are too powerful and too lacking in transparency, and their structure and importance is an example of how badly things have gone awry with our global financial system.
Confidence in credit rating agencies can only be restored by establishing new, sound rules for them. Tomorrow, we will vote on one step in this development, the necessary adaptation of credit rating agencies to the new European financial market supervisory structure and adaptation to the new comitology procedure, the delegated acts.
ESMA will be brought into being. It is authorised to permanently revise ratings, carry out a thorough inspection of credit rating agencies and also to impose penalties that are higher than the profit gained from breaking the law. All of these are new developments that are, as a minimum, absolutely necessary.
However, I would like to point out that the European Securities and Markets Authority should be staffed in such a way as to enable it to actually carry out its tasks efficiently and not by a relatively small staff of ESMA employees who are expected to perform almost superhuman tasks.
We should be completely open with regard to the forthcoming major reform of the credit rating agencies and today, we should discuss what seems to be almost impossible or hard to imagine. After all, special purpose entities in which banks deposited their junk bonds received the highest credit rating from the credit rating agencies. Thus, in the major revision, we should consider creating a European public rating agency and changing and examining the payment model. Finally, we should, of course, consider whether there is a need for a second rating. We need a serious, robust form of regulation so that it cannot happen again that three large agencies can bear so much of the responsibility for this current sorry financial situation.
Seán Kelly
Mr President, this reminds me of a phrase in Latin that goes quis custodiet custodes, who will guard the guards? The same is true here. Who is going to rate the credit agencies? Thankfully, we now have an instrument that will do that and, certainly, the credit rating agencies have brought no credit on themselves; rather; they have discredited themselves by their behaviour over the last couple of years and they have exacerbated the financial situation rather than alleviate it.
So I am delighted that the European Parliament and our authorities are taking control of the situation and I compliment Mr Gauzès, Mr Barnier and the Council for putting in place an instrument that will deal with this. I am certainly looking forward to tomorrow's vote on this and, if I am given the opportunity, I will vote three or four times to bring these vultures under control.
Zigmantas Balčytis
(LT) Firstly, I would like to congratulate the rapporteur on the preparation of this very important document. To date, much has been done as regards the creation of a system for financial control and its operation in the European Union. Credit rating agencies play a very important role as they have a direct impact on the operation of the financial system, its soundness and stability. I feel that one major problem is the fact that the EU financial supervisory authorities being set up do not yet have real powers which would enable them to have a direct impact and to take binding decisions. I therefore support the proposals giving one of the European supervisory authorities, in this case, the European Securities and Markets Authority, greater powers to ensure and monitor the transparency of the work of credit rating agencies certified by the EU in order to avoid distortions of the principles of the financial market and the single internal market.
Csanád Szegedi
(HU) Mr President, ladies and gentlemen, first of all, if we wish to be honest, we must unfortunately declare that credit rating agencies are essentially subsidiaries of the international plutocracy. Through the agencies, they put pressure on countries in an attempt to influence their decisions. The greatest problem with ratings is that they are almost entirely subjective and do not offer an accurate picture of the economic condition of the countries concerned at a given moment in time. These ratings, which are a far cry from reality, clearly hinder countries in recovering from the crisis.
Meanwhile, there are, of course, objective indicators, such as the general government deficit or external and internal indebtedness. On the other hand, the establishment of an organisation, a supervisory body, which essentially provides quality control for these institutions, and thereby prevents them from giving often erroneous ratings, is a big step towards a solution. However, I would, at any rate, like to address a question to Mr Barnier regarding the ESMA: we have talked much about how it would impose various sanctions, but when will we know what these sanctions will be, what their extent will be and when they can be introduced? I thank you in advance for your reply.
Elena Băsescu
(RO) Mr President, the aim of the amendments suggested by Mr Gauzès's report is to provide additional details concerning ESMA's new powers in relation to national agencies. My view is that the remit should be defined very clearly. In addition, financial market participants should be able to identify the competent authority in the rating agencies sector.
I think that the new authority should have sole responsibility for registering and supervising existing rating agencies. They should have the opportunity to access information about the financial instruments being evaluated by competitors. At the same time, access to websites should only be given if the confidentiality of the information requested can be guaranteed.
Finally, I wish to stress the importance of a credit rating agency being registered by a competent authority and its validity throughout the whole EU.
Gay Mitchell
Mr President, I am pleased that this is before us here this evening. I have to say that one of the points that is very rarely made is that, until recently, the public sector in Ireland was being regulated by the private sector; it was being regulated effectively by the credit rating agencies and the markets. I am one of those who welcome the fact that we got away from the private sector and, at least, we have the shield of the ECB, the EU and the IMF in the circumstances we are in.
I might not agree with the exact package but I think it is a better position for us to be in than to be at the mercy of the credit rating agencies and the markets. The markets are supposed to be free; I think that is something we might have a debate on some other day. But, in relation to the credit rating agencies, one of those agencies was getting USD 800 million a year for rating structured finances. Their impartiality really is being called into account and, when we look back on what they did in the past and even when we look back on what they do now, I think we will look back in dismay. It is time they were called to account and I am glad that there will be stronger supervision for these bodies.
Michel Barnier
Mr President, I would like to respond accurately, but succinctly to all those who have spoken, to whom I give my thanks.
First, Mr Bodu, I obviously share your point of view on the risks of the issuer-pays model. I made this point myself in my speech just now. It is therefore a subject which forms part of our consultation in the future proposal, the third stage. As I said to Mr Fox and Mrs Băsescu, we will indeed also return to the matter of structured products. Mr Fox, I listened carefully to your concerns about security as regards exchanges of information, and we will keep an eye on this; we will come back to this point. We will also continue to rely on the competence of ESMA in this area. For us, this is a question of efficiency.
Mr Pittella, thank you for your encouragement. I think that it is good that, like Mr Klute and Mrs Gáll-Pelcz, you emphasise the importance of this new supervisory authority.
There are still some difficult issues to be addressed, which we have identified, and you yourself quite rightly reminded us of them: the lack of competition in this sector, the issue of rating sovereign debt, which Mr Kelly mentioned just now, and which poses a particular problem. We will take these ideas into account in the new consultation phase.
I share Mr Klinz's view on the importance of penalties and the ability of ESMA to impose them. Mrs Regner also mentioned this point.
On the issue of third countries, Mr Klinz, the aim is to ensure that our requirements remain rigorous, and I say this also to Mr Mitchell, who mentioned Europe's credibility with respect to these decisions which must be taken.
I am grateful to Mr Giegold for his positive assessment of the progress that we have made together today. On the subject of recruiting people to manage the European authorities, I obviously cannot provide any specific information about names at the moment, but I would like to say to you, Mr Giegold, and also to Mr Martin, that the process is now under way, that it is being conducted completely objectively, and that, as far as I am concerned, the criteria according to which the choice must be made are competence and independence.
I would also say to Mrs Regner that the agencies will gain in power. From the very first teams, they will develop in accordance with the competences that they have been and will be given. We are anxious to ensure the credibility of the agencies' work in terms of methods and competences.
Mr Klute, thank you for your comments. You have clearly identified the problems which remain to be dealt with, and I am conscious, as I have said to several Members, that we will have to thoroughly examine these issues. That is why the idea of dealing with this issue of regulating the agencies in three stages seems to me to be constructive and positive.
Mr Balčytis, the agencies, as I have said myself, are not creating the problems. They just need to evaluate the problems properly and the thermometer needs to work properly. With regard to products, businesses and states, we have the right, considering the importance of these ratings, to expect and to take steps to obtain an evaluation or rating which is objective and credible. I think that from this point of view, Mr Balčytis, you should not underestimate the role that ESMA will play.
Finally, I would also say in response to Mr Szegedi that, regarding the level of the penalties, the specifications for ESMA in the text that you will be adopting go into detail on this, and that ESMA will apply these penalties in accordance with the proportionality principle.
Mr President, ladies and gentlemen, I thank you in advance for your vote of support for this new stage, which will show - I repeat once more - that Europe is making concrete and objective progress, that it is learning the lessons of the crisis, thanks to the support and the impetus given by the Belgian Presidency, and thanks to the support of all the groups in the European Parliament.
Olivier Chastel
Mr President, ladies and gentlemen, first, I would like to come back to the fact that many good questions have been asked in this debate. Commissioner Barnier addressed them one by one. I would simply like to say to you that this modification, this amendment of the regulation, is a first step in granting the necessary supervisory powers to the European Securities and Markets Authority, and that, as has been said, other revisions of this regulation will take place shortly. I think that, on this issue, and on many other important issues raised today, this will truly be an opportunity to bring together the whole debate in the revision which the Commission is getting ready to propose to us.
On the same note, I would like to return for a few moments to the removal of the provisions on transparency of credit ratings and associated information, which Commissioner Barnier himself mentioned just now. I do not think that this in any way means that the European institutions do not support the idea of transparency of credit ratings - quite the contrary. However, at this stage, when a decision is being taken, the best solution was to coordinate ourselves in advance on the basis of developments on the international stage, in order not to affect the competitiveness of the European markets. For the moment, therefore, better solutions to this issue are still being researched, discussed and developed, and we think that the best political compromise is the one on which you will be voting tomorrow.
In conclusion, I would like to repeat that this is an important step, as many of you have stressed, which will help to improve the stability of the financial markets and which will support the development of a more effective supervisory framework.
Jean-Paul Gauzès
Mr President, Mr Chastel, Mr Barnier, after the comments that you have heard, you can draw two conclusions.
The first is that Parliament will overwhelmingly support this report tomorrow, which will show once again that Parliament, or a large majority of it, appreciates the actions on regulation and supervision that are being taken by the Commission and which have been strongly supported by the Belgian Presidency.
The second conclusion that we can draw is that I will not come to a conclusion today, but that a new debate will open up, on the basis of this consultation, of Mr Klinz's own-initiative report, to examine all these difficult questions.
Thus, we cannot avoid the fact that in 2009, when we brought about the first regulation, we were already asking ourselves these questions. If we have not dealt with these questions, it is because we have not found an appropriate response. I hope, therefore, that, thanks to the thought that is being given to the matter with the submission of Mr Klinz's report, the discussion about consultation which is taking place will this time enable us to provide responses to complete the regulation on rating agencies.
In conclusion, however, if you will allow me, I will repeat a phrase by the President of the Securities and Markets Authority, who said that, at the very least, it would be good if the financial markets detoxified themselves of the rating agencies to allow investors to gain a greater personal appreciation of situations and risks. I think that that would also be a guarantee.
President
The debate is closed.
The vote will take place tomorrow (Wednesday, 15 December 2010).
Written statements (Rule 149)
George Sabin Cutaş
As a result of underestimating the credit risk, credit rating agencies were one of the factors that triggered the global financial crisis. On the other hand, there is no real competition in the credit rating agency sector. This situation increases the danger of conflicts of interest and, by extension, of a lack of transparency and quality in terms of awarding ratings to the various financial instruments. On 1 January 2011, the regulation giving rise to the creation of the European Securities and Markets Authority will come into force. Its main power will be to supervise agencies of this kind. Introducing a mechanism for monitoring and supervising credit rating agencies at EU level is proving to be a necessity. I think that this new authority needs to exercise its mandate as soon as it is created. I would like to point out that the decision made by the United States to introduce tighter supervisory regulations has paved the way for global harmonisation.
Alfredo Pallone
The European Union has already implemented rules, which will come into force at the end of the year. The rules for credit rating agencies that wish to operate in the EU and thus obtain a licence include, among other things, the obligation to register themselves and to comply with specific transparency and 'good behaviour' rules. I do not believe that these rules are strict enough, and I welcome the further measure that we are discussing within the Committee on Economic and Monetary Affairs. These agencies currently have a great deal of power; they can plunge a State and/or even a system (downgrading countries and causing a chain reaction of fear on the world markets) into crisis with one of their ratings. Their work is important in terms of guaranteeing reliability and stability, but there are doubts as to the rules and the criteria on which their ratings are based. Mr Gauzès's report, which proposes bringing credit rating agencies under the supervision of the European Securities and Markets Authority, is therefore along the right lines.