Directive where necessary, regulation where possible

European Directive on Markets in Financial Instruments must guarantee all market participants legal certainty and a level playing field

Frankfurt, 16 January 2006 - “Should the European Commission regulate major aspects of the Directive on Markets in Financial Instruments (MiFID) in the form of a regulation rather than a directive, this will create legal uncertainty and competitive disadvantages for the banks in Germany and in other countries,”, said Harald Noack, Deputy General Manager of the Association of German Banks, when presenting a new booklet on the European securities markets. “We therefore advocate: a directive where necessary and a regulation where possible.”

The European Commission intends to shortly submit a proposal for the MiFID’s technical implementing measures. “We would warmly welcome it if the Commission were to take the German position into account in this proposal”, said Mr Noack. Although a regulation would mean that the detailed provisions of the MiFID would take direct effect in all member states, the same rules would still not apply throughout the EU. This was because, although a regulation’s wording was the same in all member states, it was by no means clearer than in a directive. The provisions of a regulation would also have to be interpreted. Moreover, corresponding national legal provisions would continue to exist. This would lead to great uncertainty.

“It would therefore be desirable and appropriate to enact inherently clear-cut technical rules in a regulation. The EU should, however, put rules with civil-law implications in a directive, which would then have to be transposed into national law”, added Mr Noack. The transposition process would allow problem areas to be identified and also defused. “It is not a question of inflating European legislation with the help of a directive. What we need is legal certainty, not additional special rules”, Mr Noack explained. After all, the MiFID would trigger the most radical transformation the financial services industry has undergone to date. “It will become the new bible for Europe’s financial markets, laying down the rules governing how the banks interact with their customers.”

The legal framework for Europe’s financial markets is currently undergoing a complete reorganisation, with the MiFID only one of 42 European directives that have to be implemented in the financial markets by 2008. The Banking Association’s new booklet entitled Europäische Wertpapiermärkte – Konsolidierung des Rechtsrahmens (European securities markets – consolidation of the legal framework) gives an overview of the experience made by the German banks with the MiFID and other directives of the Financial Services Action Plan (FSAP). It is available as a PDF-file at www.bankverband.de/broschueren and can also be ordered by e-mail from pressestelle@bdb.de or by fax at +49 30 1663 1299 (no dial-a-fax service).

Statement Harald Noack
Brochure - summary [PDF - 114 KB]