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EU unveils plans for overhaul of investment rules
2/8/2006
BRUSSELS, Feb 7 (AFP): The European Union's executive unveiled plans yesterday to make it easier for investors to shop around for securities across EU borders and increase competition by banks and brokerages.
The plans aim to create one giant European capital market by bringing investment rules up to date and to spur economic growth across the 25-nation bloc. Internal Market Commissioner Charlie McCreevy said the plans "will provide a high level of protection for investors while keeping red tape to a minimum."
The rules are to be reviewed the European Parliament and the European Securities Committee in the coming months and are expected to go into force in November 2007.
The plans lay out technical rules covering how investment houses are organised and operate in order to encourage investor protection and transparency in financial markets.
For instance, they set down rules to avoid conflicts of interest and improve investment research and advice, which have been the source of scandals in recent years.
One of the more radical provisions calls for the end to rules in some member states requiring banks and brokerage houses to route client orders through exchanges.
The European Commission is eager to see obstacles to cross-border investment broken down in order to stimulate much-needed economic growth in the bloc.
"All the economic evidence we have suggests that if we can drive down the costs of capital both for retail consumers, small businesses and big businesses, we do an awful lot of good for the European economy," said the head of the commission's internal market division, David White.
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