Committee on Economic and Monetary Affairs Ordinary meeting
Legend
Transcript markers
- text Sentence being played
- text Search result
- text Intervention cited by the link you opened
Click a sentence to play the video from that moment. Select text to quote it with the speaker, timestamp and link.
More options
Offset
Transcript offset
Export
Live capture
Versions of this video
Transcripts may differ slightly from one version to another.
ECON European Parliament
Follow its sittingsClaudia Buch
Let me come to the second recent development, the development of new AI tools and the related cyber risks. But let me put this into a bit broader perspective because ultimately, one key driver of banks' competitiveness is their ability to further develop sustainable digital business models. So in doing so, they need to look at their operational resilience, balancing the risks and benefits of digital innovation, including the use of artificial intelligence, AI tools. More than 85% of banks under our supervision use AI tools. About 40% use them in a way that is relevant for their business model.
Now the development of new frontier large language models could change banks' cyber defenses. The speed, scale, and accessibility of advanced cyber tools are increasing and the response time available to defenders is shrinking. Moreover, the critical infrastructure on which banks rely could become the target of cyberattacks. These are cloud services, telecommunication networks, payment systems, but also electricity supply. So to maintain trust in their operations, banks must respond effectively to cyber threats.
This implies on the side of the banks that the management must take ownership of this issue and provide adequate resources. The new challenges require strong IT governance, effective cyber risk management, and also sound outsourcing arrangements. Banks have built up capacities over the past few years and they need multi-year investment strategies going forward. So their currently good profits give them space to make those necessary investments.
From the supervisory side, we support banks through guidance and also disseminating good practices. We performed a cyber resilience stress test a couple of years ago, we conduct on-site inspections, we have threat-led penetration tests, and through all of this we have identified weaknesses and now focus on the remediation of findings by the banks.
The Digital Operational Resilience Act (DORA) establishes an additional oversight framework for critical service providers and requires banks to manage related risks, basically related to their preparedness and closing gaps in cybersecurity and also good crisis management processes. Let me come back to the question I raised at the beginning: so what can be done in terms of a reform agenda? How does the evolving risk environment require an acceleration of a European reform agenda to promote growth and resilience? The ECB's high-level task force has proposed ways to simplify the EU's capital framework. And this should be done in a way that preserves microprudential, macroprudential, and also resolution functions.
And from the point of view of the supervisor, of course, Pillar 2 requirements and guidance remain essential to address bank-specific risks that are not fully captured by Pillar 1 requirements. The leverage ratio and the Basel output floor safeguard against risks being underestimated in a highly uncertain environment. But the current framework can be improved.
The number of macroprudential buffers can be reduced. National implementation of macroprudential buffers can be harmonized. And we need to avoid overlaps. We actually have a new pillar two methodology which provides more clarity on the interaction between pillar one and pillar two requirements so that we can also address and remove overlaps. So this new methodology is part of a big reform agenda that I've described here in previous hearings.
So let me just say here that the reforms of European banking supervision are well on track with clear benefits for the banks. So we have more targeted communication, faster decision making and also more risk-based activities generally, but particularly in this space of on-site inspections. This year we are reviewing our supervisory guides, clarifying their non-binding nature and phasing out guides that have been superseded. We're also working on further enhancing the proportionality of supervision and reporting for small and non-complex institutions.
So this is all part of an overall reform agenda and that overall reform agenda should also include completing the banking union with European deposit insurance to provide equal protection to depositors, weaken the bank-sovereign nexus and supporting integration. So that's the first element. The second, capital and liquidity should be able to move across borders subject of course due to subject to safeguards in times of stress. And, and I mentioned this, harmonization of national rules so that banks can develop cross-border business models that require sufficient scale would be the third necessary element. So taken together this can strengthen integration, competition and thereby growth while safeguarding resilience.
With that let me close and I look forward to a very productive discussion. Thanks a lot.
Aurore Lalucq
Thank you so much. Now I give the floor to Fernando Navarrete for one minute and a half.
Fernando Navarrete Rojas
Thank you. Thank you, Chair. Thank you, Ms. Buch. I, I would like to ask you specifically on your last comment on, on scale, how to get more scale. And one of the impediments that banking industry is claiming is lack of harmonization in the interpretations of the rule.
So we've done a great deal on our side just to move from directives to regulations.
We've done a great deal with level two, but then it comes to level three, so interpretation of the rules by supervisors and things apparently break loose. So we get different answers to the same rulebook within the Banking Union.
Book, within the Banking Union, and more worrisome to me is within the European Union between the Eurozone vis-à-vis other national supervisors outside of the Eurozone. So I would like to ask you internally within the Eurozone or the Banking Union, what procedures do you have internal? I think you have alluded briefly on that to ensure that different banks in different jurisdictions get the same answer to the same problem, but also an assessment of how it is working coordination with supervisors beyond the Banking Union, but within the European Union, in order to also get that the same problem gets the same answer within the Union. Thank you.
Claudia Buch
Thank you very much for your question. Yes, indeed, scale is a very important aspect when we think about also the competitiveness of banks going forward. So we've been talking about digitalization, AI, so all this requires investments into IT and in the end also scale to make these investments sufficiently profitable.
So this is why we are stressing so much the need to further integrate the banking market, the need to remove frictions within the the banking union, within the single market for for banking that could impede cross-border activity. And indeed there's actually a recent study by the International Monetary Fund which shows that these differences in rules that are affecting banks across Europe are actually quite a big impediment to the integration of the market. So when I say these differences in rules affecting banks, I do not mean the single rulebook because the single rulebook, the the prudential rules for the banks are actually the same. But we have many other rules that also differ across countries. For many good reasons, but the differences are there.
So this is about consumer protection, insolvency legislation, the mortgage market. So if you want to expand cross-border as a bank, this can be an impediment to roll out a pan-European business model. So this we advocate, this is why we're advocating also for harmonizing those rules that do affect banks but which are not, you know, strictly speaking, prudential regulations. Now, your question is also about do the banks get different answers in the banking union when it comes to the, let's start with the single rulebook.
And here I would say no, because we do have a single rulebook. We also have a mechanism, as you know, through the European Banking Authority in case there's questions about how to interpret the rules, level one, level two. Then there's a Q&A, a question and answer section. So all the answers that the banks get from the supervisors should be, should be the same, or else they should tell us if they feel that this is not, not the case. But this is, this is clear, no?
but then of course you have we we we have the issue that there's many rules that apply to supervision so related to authorizations to fit and proper assessments where we're working also with different legal frameworks across countries and this is there we have again a clear mechanism this is the options and discretions framework of how we how we apply the different rules across countries to to provide exactly that clarity that is needed because I'm I fully agree with you that this is absolutely essential.
Going beyond the banking union, I think we also have very good mechanisms. I mean, we have the colleges for banks that are operating partly inside, partly outside of the banking union, so also to clarify exactly the issues you're talking about. And we are also in a very close and very close touch with countries within Europe but outside the banking union, so the Nordic countries, for example, to discuss precisely those issues where there might be insufficient clarity. So this is something, to the extent that we can deal with it, we take it very seriously and we make sure that the same rules apply for all the banks across the banking union.
Aurore Lalucq
Thank you. Et c'est moi qui vais vous poser une question. Je vais vous poser des questions en français, Claudia. J'ai une première question. Ça va ?
Ça fonctionne ? Est-ce que ça fonctionne ? Est-ce que l'interprétation fonctionne ?
Ouais, c'est bon ? Ça va ? Ok. Une première question, on vient de vivre une vague de chaleur, ce qui nous rappelle le caractère très violent et brutal, particulièrement sur ce continent, du dérèglement climatique. Pendant le mandat dernier, on avait beaucoup parlé de la question des actifs échoués, des stranded assets, et du fait que le risque climatique puisse devenir un risque systémique.
Je voulais savoir comment ce que vous observez en tant que superviseur.
Est-ce que vous voyez ces risques se matérialiser et est-ce qu'on arrive mieux à estimer leur coût, notamment pour les banques ? Sur la question ensuite de l'intelligence artificielle, je me demandais comment vous suiviez concrètement au SSM le déploiement de l'intelligence artificielle au sein des banques. Est-ce qu'il y avait des écarts importants entre les établissements et quand l'IA est utilisée dans les modèles internes ou de la gestion des risques, comment on s'assure que ça renforce les banques et que ça ne les affaiblisse pas ou que ça ne crée pas de nouveaux risques en réalité ?
Donc voilà, je voulais voir comment vous étudiez les choses au sein des institutions bancaires. Merci.
Claudia Buch
Again, thank you very much for these, for these questions, which of course are very, very topical, as you mentioned at the beginning. So let me start with the issue of climate risk, how it's affecting the banks and how we are looking at this. So, I mean, the one point that one always needs to make very clear at the beginning, we don't, we are not climate policymakers. We're also not assessing climate policies. But we do assess how the banks are dealing with climate-related and also nature-related risks.
And these risks are real and the banks need to, need to manage them well. So we have a very clear program, we've had a very clear program in place since 2020 when we started asking the banks, is climate risk management, the management of nature-related risks, is this part of your risk management processes? And the honest answer of most of the banks was, well, not really. So there wasn't much in place in terms of managing climate-related risks. And then we step by step worked with the banks to improve the risk management frameworks because this is ultimately what we can, can do.
And we've done this through self-assessments, climate stress tests, and then also formulating expectations of what these risk management frameworks should should look like. And we're now at a point where a significant share of the banks have good frameworks in place. There's been significant progress in the industry, and I would say that we've really moved the industry forward in a very very parallel fashion so that the banks can also learn from each other. So we've just put out information on what are good practices and and how can the banks also learn from each other how to manage these these risks. And by now, actually 90% of the banks are telling us that they consider climate and nature-related risks as being relevant risks for them that they need to manage manage well.
So we cannot manage the risks for the banks, but we need to make sure they have the right frameworks in place.
And this is, well you could say that this is an improvement but of course I mean the better outcome would be if risks are not there but this is not our role. We can't address the risk situation, we can only make sure that the risks are being managed well.
And let me say one thing that is of course very important for the risk management of the banks themselves is that they have good and reliable data that needs to come from their corporate customers because in the end the exposure is through their credit customers and so they need to understand how the clients are exposed to climate and nature related risks. So with all you know understanding we have for for not having excessive reporting and also mitigating and addressing reporting costs I think it's really important for the banks that they can manage these risks well that they have the necessary information that they need so this is a balance that one needs to needs to strike.
Your second point about artificial intelligence, so a lot can be said about artificial intelligence because of course the banks are using it for many different purposes. So I gave you the number that we have like 85% of the banks that are using some AI tools. About half of them are using it also for core business activities. And this can be about improving their, their, the services they provide to, to customers. So it can be in the delivery of core services, it can be fraud detection, it can be credit scoring.
So there's a wide range of activities. And we have regular surveys where we're asking the banks how they're using these, these tools and how they also have sufficient mitigants in place to address risks. Because of course we all know that AI tools can be very useful, but there's also risks associated with them. And this is something of course that the banks again need to manage, manage well.
So they in the end remain responsible for a credit decision that is being taken and they shouldn't just rely on a model giving them an answer. One of the things that has recently appeared in the debate and which is also very important for the banks is the development of frontier AI models that have much improved capabilities to detect vulnerabilities in IT systems and in infrastructures, but at the same time might also be turned around and make it easier for non-benign participants to attack the banks and to stage cyberattacks. And so this is why this is not an entirely new risk, but the scale and intensity with which this has appeared, this is something new. And so the banks need adequate responses.
They need to make it a core management responsibility to make sure there's sufficient resources in cyber defense, in risk management in that space. So we're interacting a lot with the banks to make sure they understand what is ongoing and share information, share again good practices in the sector.
Pierre Pimpie
Thank you so much. For PPE, Pier-Pampy.
Donc c'est en français.
Alors certes les règles sont strictes donc en ce qui concerne donc les comptes, la lutte contre le blanchiment, donc ces choses-là. Et en fait cela supporte un coût et on voit que beaucoup de banques préfèrent fermer des comptes plutôt que de prendre des risques ou d'assumer le coût de surveillance sur ces comptes-là.
Mais on voit que dans le même temps, et bien le rapport qui a été voté récemment sur l'euro numérique prévoit des assouplissements donc afin de favoriser l'inclusion. Et donc je voudrais savoir comment vous envisagez cette divergence, donc cette rigueur pour les comptes bancaires et puis ces assouplissements pour ce qui concerne l'euro numérique.
Je vous remercie.
Claudia Buch
Thank you for your question, which I would like to respond to from a supervisor perspective, because I think you also mentioned aspects which are related to consumer protection, AML, and this is not within our mandate, but of course we also look very carefully as to what is happening in the in the sector and which the whether the banks are exposed to to risks of compliance with relative relevant rules. And let me say maybe a general statement about because you started by saying the rules are very strict and this is costly. Well, I'm talking about prudential rules. Financial crises are unfortunately also very costly.
So this is why I think we have now a good framework in place in terms of prudential rules, supervision, while making sure we're sufficiently proportionate with regard to the underlying risk. We have a good framework in place that has made the sector more resilient. We have good supervision which is making sure that risks are mitigated and that if a financial crisis or a banking crisis should happen, so this is not our role to prevent it, we wouldn't be able to do it, but to to mitigate the cost of crisis, to make crisis less likely so that in the end also the taxpayer, the consumers, the people that rely on services from the banks, that they are not affected.
So this I think is the overall picture. So in that sense I don't think we have rules which are too strict but which strike a good balance between making the system sound and safe so that it's servicing all of us while at the same time of course making banks able to perform the services that they perform. And so the specific issue that you mentioned that accounts maybe closed or not, so this is something which is more for the consumer protection authority, so I can't really comment on this. With regard to the digital euro, here again I would also like to take a broader perspective.
I think in the end, and I've said it here before, I think the digital euro is first of all the response of the euro system to the digitalization of financial services. So in the end, we want to live in a world where consumers, the people who need to make payments, have access to safe means of payments through the central bank. Cash will never disappear, but the use of cash has gone down in many countries. So we need to make sure that also the central bank provides a means of payments for every citizen.
So I think this is the overarching overarching theme. And and I think also what what the digital euro now does, the how it's being designed, what has also been discussed here in this in this house, is making sure that exactly that function is there, while at the same time we've provided input to the whole discussion to make sure that also the banks can develop their digital business model around the digital euro and also the infrastructure that it provides. So I'm actually quite confident that all this is striking a good balance, servicing the needs of the of the consumers, of the savers, for whom we ultimately work to make sure that they have access to to safe means of payments and safe safe deposits.
Marlena Maląg
Dziękuję, pani przewodnicząca, będę mówiła po polsku.
Do obiegu trafiła już nieoficjalnie wersja raportu Komisji na temat ogólnej sytuacji bankowej, która z kolei będzie stanowiła podstawę do rewizji prawa bankowego. Oprócz oczekiwanych konstatacji, że w obecnych regułach dotyczących wymogów kapitałowych brakuje podejścia proporcjonalnego i że potrzebne jest ograniczenie obowiązków sprawozdawczych, przynajmniej dla tych mniejszych banków, raport zawiera postulaty pogłębienia integracji transgranicznej grup bankowych, które mogą budzić obawy dla państw takich jak Polska, gdzie znaczną rolę odgrywa kapitał zagraniczny.
Komisja wskazuje, że obecne przepisy wymagają utrzymania kapitału płynności na wielu poziomach, w tym poszczególnych spółek zależnych działających w różnych państwach członkowskich i sugeruje umożliwienie bardziej elastycznego zarządzania kapitałem. Z perspektywy państw host jednak propozycje luzowania ograniczeń w transferze zasobów wewnętrznych grup są potrzebne jako potencjalne osłabienie bezpieczeństwa krajowego sektora bankowego. Państwa host od lat twierdzą, że większa integracja musiałaby zostać uzupełniona dodatkowymi zabezpieczeniami w przepisach prawa Unii Europejskiej.
I moje pytanie do pani, jak ten problem możemy rozwiązać, jakie zabezpieczenia, jak te zabezpieczenia powinny wyglądać? Dziękuję bardzo.
Claudia Buch
Thank you for your question. So I don't want to comment on the details of the Commission report where we've all seen the draft report that was leaked, but we haven't seen the final report, so it could also change.
So let me say a bit what also what is in the Eurosystem's response to the consultation of the Commission that that is publicly available and also I mentioned the high-level task force of the ECB's Governing Council. So what is important for us in the whole debate and I sketched a bit the elements of the reform agenda is that we maintain resilience in the system that we we can still meet our prudential objectives that there's more integration in in Europe more harmonization and also of course that we comply with international standards. So I think this is the kind of the the the framework in which the reforms should be should be designed and and from what I've seen there's a lot of positive elements in the proposal but of course we need to see how it how it plays plays out.
And the one aspect that you mentioned proportionality this is very very important for us because everything that we do needs to be very proportionate to the underlying risk and this is actually the theme of our whole reform agenda to be efficient effective and also risk-based and that always means we need to consider what are the risks and what are the institutions we are dealing with. And very concretely we are now working on what more can we do within the framework of SNCI small and non-complex institutions to make sure that supervision is proportionate but also reporting. I think this is really this is really key. So I think there's a lot of gains that we can have from further streamlining reducing reporting where we can justify it with from a from a risk perspective.
So already now the smaller banks are reporting much less than the, than the larger banks, but we are exploring what more can we, can we do. On the cross-border activity, I wouldn't necessarily see cross-border activity as a, as a risk or as a, as a threat. So because we've known, and I, I mentioned the, the work that the International Monetary Fund has now done, there's, there's a lot of productivity gains in terms of growth that Europe can reap from, from a better integration of the banking market, having more harmonization across countries.
Of course, whenever there's activity, domestic or cross-border, we also need to manage the associated risks. And on the home-host issue that you've mentioned when it comes to the free movement of liquidity and capital that we're advocating for, of course, we as the integrated supervisor in Europe, we can basically internalize the home and the host perspective and make sure that liquidity and capital is also there in times of stress. And we're working very closely with the non-Banking Union countries to precisely understand what the issues are there. We have, of course, the supervisory colleges and we're in very close contact also with the colleagues in your jurisdictions and others so that we understand the issues that might arise in European banking groups.
So I think on balance with the framework we have in place, I think we're we're more on the on the positive side. So so integration is something positive and of course as with every banking activity, we need to make sure that the risks are adequately managed.
Jussi Saramo
Thank you. The Left, Mr. Gusmão.
Thank you. Thank you, Madam Chair, and thank you for a very interesting answers. Actually, you have answered to many of my questions of AI, what the banks are using it, so I I change perspective a little.
It looks like more and more companies outside the financial sector have been very disappointed on the potential of AI to increase their productivity, at least for now. And the projected revenues for AI companies, they are, they do not seem to match the valuation of these companies. And we know that this digital economy has been the only fast-growing sector on US markets, at least. And many statistics, they would point that there's an exceptionally serious bubble on the US digital economy.
At the same time, the global situation is exceptionally unstable. So my question is how serious you think is the situation for the European banking sector? Do you think there is a bubble and if there is a bubble and it bursts, how dangerous it is for our banking sector?
We know that there's now a tendency to, to open the rules that already made after the past financial crisis and now it, it looks like we are, there might be something similar coming up. Thank you.
Claudia Buch
Thank you for the very, very broad and interesting question and that is of course, I mean, one of the key themes. If you read the financial stability reports, there's a lot of discussion around do we have overvaluations in equity markets, is this, how is this related to AI, what of the valuations that we're seeing on the markets are justified by, by future productivity growth and so forth. And we don't have any, any better information than the many analysts that are out there that, that are looking at this. So I can't, and it's always difficult to say whether or not there's a bubble, so I don't want to really be in that, in that business.
But but I mean we we cannot rule out that there's fragilities, vulnerabilities in the system. And you mentioned also there's financial activity that has moved outside of the banking sector. So there's a lot of discussion also about private credit, non-bank financial intermediation, how that is potentially linked also to the financing of data centers that are needed to support AI activity. And we are just I mean we then step back and take a very supervisory perspective and say to what extent are the banks exposed to private credit markets? So we've done very detailed work on understanding how banks are related to non-bank financial intermediaries.
Again, can they manage the risks well? We've collected data to understand these these linkages.
So this is something where that we really look into. But I've also said it, I believe also here before, that of course, just if you take that part on of private credit, non-bank financial intermediation, we and also the banks often lack information about the interlinkages in that market.
So more reporting on private credit activities, not for the banks but for the actors in that market, potentially also more regulation that is containing and addressing systemic risk would be something very important. So we're really pushing also the international agenda there in the Financial Stability Board, for example, we have exactly those discussions because there's limits as to what we can do and also what banks can do in their individual risk management. Some of these developments that you have mentioned, that I have mentioned, could lead to fragilities in the system. So we don't know where, you know, geopolitical risk could lead to vulnerabilities in the global financial system. But what we've asked the banks is what could be an adverse scenario, geopolitical risk scenario, that could lead to significant capital depletion within the bank.
So this is the reverse geopolitical stress test that we've conducted this year, which is very different from the traditional EBA, European Banking Authority stress test, which typically gives one scenario and then you have different capital depletions across the banks. Here we've fixed the capital depletions, but the banks can tell us about different scenarios that would lead to that depletion. So the results will be much more qualitative than the results from the previous stress test. They will come out in July, so the overall picture, I unfortunately, maybe we can talk about it in the next hearing, I can't give you here.
But this is exactly our approach to try and understand a bit more what is happening in this very uncertain future environment, to shed a bit more light into this, into this uncertainty, because I think we need to work with scenarios and we need to make sure the banks work with scenarios. And of course, and it's also what I said in my introductory statement, in this environment where we have so many uncertainties, I think it would be really a mistake to weaken supervision, to weaken regulation. I think the system we have in place is precisely there to make sure the resilience of the sector is there, of the banking sector is there, so that it can support the economy also in more difficult times. And so this is why we are very strongly advocating for, for safeguarding the resilience we have in the system.
Siegbert Frank Droese
Thank you. ID, Engin Eroglu.
Thank you, Chair. I speak German. Frau Buch, vielen Dank, dass Sie da sind für Ihren Bericht.
Sie sprachen ja kurz den digitalen Euro an, da gestatte ich mir eine Vorbemerkung. Also wir haben natürlich letzte Woche die Abstimmung hier, wir können die Freude nicht teilen. Unsere Vorsitzenden zum Beispiel, die ja regelrecht ekstatisch war. Und der digitale Euro führt eben sehr viele Europäer aus unserer Überzeugung in die monetäre Knechtschaft. Wir sind derzeit stärkste Kraft in Deutschland und wenn wir in Deutschland, im größten Mitgliedsland Europas, die Regierungsgewalt innehaben in wenigen Jahren, in kurzer Zeit, dann kann ich garantieren, werden wir das rückabwickeln.
Wir wollen eben nicht, dass die Deutschen in monetärer Knechtschaft landen und wir werden dort alle Mittel einsetzen, also um mit Draghi zu sprechen: whatever it takes. Sie sprachen davon, Frau Buch, die Finanzkrise kostet Geld.
Ja, das wissen wir alle. Seit der Finanzkrise wurden die europäischen Bankenaufsicht, der regulatorische Rahmen kontinuierlich ausgeweitet. Gleichzeitig betonen die europäischen Institutionen derzeit im Rahmen der Omnibus-Initiative die Notwendigkeit, unnötige Bürokratie abzubauen und die Wettbewerbsfähigkeit Europas zu stärken. Wo sehen Sie denn aktuell konkretes Potenzial, den Aufsichtsrahmen insbesondere für kleinere und mittlere nicht systemrelevante Banken zu vereinfachen, ohne die Finanzstabilität zu gefährden? Vielen Dank.
Claudia Buch
Well, first of all, I don't think that the digital euro has negative implications for European citizens across Europe. And I've mentioned the reasons why. It's providing a digital means of payments provided by the central bank, and this is a benefit for European citizens. And I think the Bundesbank has also been very, very clear about this.
The second point, what more can we do to make sure that supervision regulation is proportionate to and also addressing the needs of smaller institutions? There's a lot in the framework already as I've mentioned and we're very closely working on further ways to improve, enhance proportionality, what we can do in terms of supervision, regulation, but I think the report that the Commission will bring forward will also be a good opportunity to look at further improvements that are possible in terms of the regulatory environment.
Aurore Lalucq
Thank you so much. Now, EPP second round of question, Luděk Niedermayer, the floor is yours.
Luděk Niedermayer
Thank you very much and thank you Madam, Madam Chair for being here. Let me ask one question on the banking package.
If I can interpret statements of you and ECB, it seems that you believe that current capital level of the banks is adequate because we are living in risky environment. But one of the goal of the banking package is to simplify substantially. But you know that complications in the banking regulation are always, very often the results of different tweaks, different special treatment or provisions that are allowing some banks to have lower capital requirement. So how to settle this problem? Because if we simplify and remove these special treatments, the capital level requirement will go up.
But if you believe that capital requirement is more or less adequate, you basically want to broadly speak keep where it is.
So how how demanding, how complicated can be this exercise?
Claudia Buch
Well, thank you very much for this for this question. We indeed we need to be a bit more nuanced in this debate on simplification. And and we can, I mean, just let me take the example of supervision. We are in the process of streamlining, simplifying supervision. We want to be more efficient, which could mean we just do things faster.
But then, of course, we need to also make sure that we address the risks appropriately. So we are shifting our resources from the activities that are low risk to the activities that require more time, more analysis to be to be risk-based. So just simplification in and of itself is not the solution.
We need to be make sure that we that we address risks. And that is the same with regulation. So there's a lot of complexity in the regulation which is actually addressing the complex business models that many banks have. So to make sure that also in that sense the regulation is proportionate to the underlying risks.
So just by way of simplifying we may end up in a situation where we can't appropriately address the underlying risks. So this is why it's so important to really have a very clear, very clear guardrails and to go through the regulatory aspect step by step to say what is it that is undue complexity that we don't really need and where are complexities that are needed precisely so that the system can serve its purpose. And the high-level task force has made these proposals, for example for the capital stack where we have macroprudential capital buffers just as an example that can be combined without undermining the resilience of the system but at the same time streamlining the system and making it simpler.
So there there are more of these examples and the many different national rules that apply are another example because they're not necessarily about the resilience in the system, but they're just they've grown historically, as I said, for very good reasons and I don't want to question those good reasons, but they now make the system very complex. And this is now a policy discussion that needs to take place, what differences do we need and what differences don't we need, which we can where we can further streamline, simplify the system.
Evelyn Regner
Dankeschön, sehr geehrte Frau Buch, noch eine Nachfrage zur KI. Sie haben den Maßnahmenkatalog sehr anschaulich dargestellt, danke dafür. Aber machen die Banken ihre Aufgaben? Was in Ihrer Erfahrung, wie gehen die dem nach? Welche KI verwenden die Banken, welche verwenden Sie?
Ist das nicht eine US-KI? Wie gehen Sie damit um, auch mit diesen Cyberrisiken hier rundherum? Und eine zweite Frage auch noch zu Simplification, die Sie jetzt angesprochen haben. Sie verwenden oft den Ausdruck Simplification without Deregulation. Können Sie uns da ein praktisches Beispiel schon nennen, wo eben eine Simplification stattgefunden hat, also die Aufsicht Berichtspflichten quasi für Banken vereinfacht hat und trotzdem ist die Finanzstabilität da nicht geschwächt worden?
Also ist das nicht manchmal ein bisschen ein Widerspruch?
Claudia Buch
Thanks for the for the question. The first one was on how banks use artificial intelligence, what what models do they do they use? As I said before, we do actually very detailed focused surveys of the banks how they about their IT activities and also artificial intelligence. And from that we know that the banks use artificial intelligence for many different applications. And as I said earlier, we then of course ask the banks also to make sure that they manage the associated risks.
And this can be very different. So to some extent AI is used precisely for risk management, fraud detection, but it's also used for for credit scoring. And there can be risks associated with it. You can't just rely on the scoring you receive from from an artificial intelligence tool, from an from an agent, but you also need human judgment when you make credit decisions. So this is something that we monitor very closely and we're in very close touch with the banks to understand how they manage these risks because ultimately it's their responsibility.
So the risk management you can't outsource to an artificial intelligence tool.
And I would say then generally I also mentioned the risk related to frontier AI models and the cyber risk that is associated with that. And my feeling is that the banks take this very, very seriously because they know how their business model can can be impaired if a cyberattack is successful, if some of their key operations are not working, if the data are compromised. So I think here we have an we have an area where the interests of of us, of society and the banks are to a large extent aligned. And of course the the issue is about how do how does everybody share relevant information that is necessary for the risk to be to be managed and also very practically that sufficient people are there to do the the patching, to do the risk management, that sufficient budgets are there. So this is where these managerial decisions are so are so important.
An example for simplification without deregulation. So I gave one example before about the combination of macro buffers, so this is one very concrete example. I would like to give one example also from our own supervisory work, but of course we are not the regulator, but so I would rather say this is simplification without weakening resilience. And this is the work we do on the fast-track approval for securitization, so standardized securitization products. As you know, we need to do this approval process so that the banks can use securitization, and we do this now in a faster way.
Faster does not mean we pay less attention to the underlying risks. So we have now a standardized template that the banks need to give to us, so that also makes it easier for us to see the bigger picture. We see it in a faster way, and we use precisely this information to also monitor the financial stability risks implications that can arise from these securitizations, because you know, the ECB has also warned about the risks of synthetic securitization, the vulnerabilities that can build up in the sector.
So this is precisely what we are doing, to make sure that whatever we can do in a faster way, so not having undue bureaucratic process, that we do, but we spend the time and the information we have precisely to look at resilience and the underlying risk.
Claudia Buch
No, very quickly. But very, I can, yeah, just very, very quickly. I mean, thanks a lot for the, for the questions. And I should say that I think this is actually, as I mentioned at the beginning, so we have a complex regulatory and institutional environment, we have a complex risk environment, but it's really now an opportunity to, to strengthen Europe, to, to bring the banking union, to bring integration forward. And I think then we don't have, you know, unpleasant trade-offs between growth and, and resilience.
So I hope that this reform agenda goes forward in the way that I've, that I've sketched. Thanks a lot.
Aurore Lalucq
Okay, we now turn to the presentation of the draft report on the market integration and supervision package, which follows the first exchange of view held in the committee on June the 3rd. This package consists of three legislative proposals: a MiFIR regulation, whose rapporteur is Markus Ferber, a MiFID directive, whose rapporteur is Eero Heinäluoma, and the Settlement Finality Regulation, whose rapporteur is Giovanni Crosetto. And I will give the floor to the rapporteur of the MiFIR regulation, Mr. Markus Ferber, for seven minutes.
Markus Ferber
Ja, vielen Dank, Frau Vorsitzende, liebe Kolleginnen, liebe Kollegen. Jeder, der sich die Marktintegrations- und Aufsichtspaket einmal angeschaut hat, weiß, das Dossier ist komplex und man kann sich leicht in den Details verlieren.
Deswegen möchte ich ein bisschen mehr über das Leitmotiv meines Berichtsentwurfs darstellen. Der Prüfstein für jede Bestimmung in diesem Paket ist für mich der gleiche. Schaffen wir wirklich Marktintegration, und das ist die Überschrift, und damit auch eine Verfahrensvereinfachung? Wird hier eine Schicht abgebaut oder eine zusätzliche aufgebaut? Auf diesen Maßstab habe ich meinen Berichtsentwurf ausgerichtet und die Kommission hat dankenswerterweise die richtige Richtung vorgegeben und mein Bericht baut auf dem Kommissionsvorschlag auf und entwickelt ihn noch zielgerichteter etwas weiter.
Das Konzept, wo es am klarsten deutlich wird, was echte Integration bedeutet, ist die zentrale Datenplattform nach Artikel 35c der ESMA-Verordnung.
Was einmal dort gemeldet wird, darf kein nationaler Aufseher ein zweites Mal anfordern. Ein gemeinsames Datenwörterbuch und harmonisierte Meldevorlagen sichern die technische Interoperabilität. Die Meldepflichten aus EMIR, aus Artikel 21a der CSDR, aus dem MiFIR-Nachhandelsbereich werden als integrierte Module eingebunden und die Logik ist: wer einmal gemeldet hat, hat seine Meldepflicht erfüllt. Und dann kommen wir natürlich zur Aufsicht. Die Kommission schlägt ESMA-Direktaufsicht für signifikante CCPs und CSDs vor und belässt die übrigen unter nationaler Aufsicht.
Signifikanzschwellen erhalten per Definitionem eine zweigeteilte Aufsichtslandschaft. Sie zementieren die Fragmentierung, und wir wollen ja eigentlich Marktintegration erreichen. Der Berichtsentwurf, in meinem Berichtsentwurf übertrage ich deshalb die Direktaufsicht auf alle EU-CCPs und alle EU-CSDs.
Ich finde, das reicht nicht.
Das klingt zwar nach Zentralisierung und ist für einen Bayern untypisch, aber es ist keine Zentralisierung. Bei CCPs und bei CSDs haben wir wirklich mit europäischen Einheiten zu tun, die per Definition im grenzüberschreitend tätig sind und dann sollten sie auch zentral beaufsichtigt werden. Anders verhält sich's bei Sektoren mit vielen lokal verwurzelten Akteuren, beispielsweise mit Blick auf Crypto Asset Service Providers. Da haben wir über 200, zum Teil sehr, sehr kleine. Dort kann man sich Proportionalität durchaus vorstellen und so habe ich's auch in meinem Berichtsentwurf angelegt.
Die Logik des Kommissionsvorschlags ist eigentlich relativ einfach. Es ist Vereinfachung. Das bedeutet auch, wer einmal beaufsichtigt wird, sollte auch nur einmal zahlen. In meinem Berichtsentwurf verankere ich verhältnismäßige Aufsichtsgebühren und ein striktes Verbot der Doppelbelastung durch ESMA und nationale Aufseher für die gleiche Tätigkeit.
In Sektoren unter direkter ESMA-Zuständigkeit wird ein jährlicher Gebührenüberblick Transparenz für die Marktteilnehmer schaffen. Das strukturell wichtigste Defizit im Kommissionsvorschlag ist das Fehlen eines gesetzlichen Wettbewerbsfähigkeitsmandats für die ESMA. Eine Behörde ohne explizites Wettbewerbsfähigkeitsziel wird es systematisch untergewichten. Das ist eine Gesetzmäßigkeit, und deswegen führe ich ein Wettbewerbsfähigkeitsziel nach dem Vorbild der britischen FCA ein, verankert in Artikel 1 der ESMA-Verordnung, operationalisiert durch Wettbewerbsfähigkeitsbewertungen im RTS- und ITS-Prozess und durch ein eigenes Kapitel im ESMA-Jahresbericht.
Bei der Governance geht es vor allem darum, ESMA als europäische Behörde ausreichenden Handlungsspielraum zu geben. Ein gestärktes Executive Board mit fünf unabhängigen Mitgliedern und einer erhöhten Schwelle für Veto der nationalen Aufseher verhindert institutionelle Lähmung und reduziert den Einfluss nationaler Partikularinteressen. Beim DLT, Digital Ledger Technology Pilotregime, haben wir gesehen, dass diese Technologie in der Kapitalmarktinfrastruktur funktionieren kann.
Deswegen begrenzte Nutzung, weil künstliche Obergrenzen und eine kommerzielle Skalierung dies verhindern, will ich das aufbrechen. Wir beenden mit meinem Berichtsentwurf den Pilotcharakter, das Regime wird dauerhaft. Die Schwellenwerte steigen auf eine Billion Euro für das reguläre Regime und auf 25 Milliarden Euro für das vereinfachte Regime. Die Sunset-Klausel entfällt und es wird ein klarer Weg aufgezeigt, wie man vom DLT-Regime in die CSDR- und MiFID-Welt wechseln kann. Ich denke, dass wir hier im Bereich der Tokenisierung von Finanzinstrumenten führend sein können, aber das können wir nur, wenn ein dauerhafter Rahmen vorhanden ist.
Diese eingangs skizzierte Logik, Integration durch Abbau von Doppelungen und Vereinfachungen im Aufsichtsprozess, ist auch der Maßstab, den ich an die anderen Texte anwende.
Deswegen darf ich als Schattenberichterstatter vielleicht auch zu den anderen zwei Berichten kurz was sagen. Das erklärte Ziel des Berichtsentwurfs für die Master-Directive ist mehr Skalierungsfähigkeit im europäischen Asset Management. Dieses Ziel teile ich. Aber lassen Sie mich ein paar wenige Punkte skizzieren. Erstens, eine vollständig neue ESMA-Aufsichtsstruktur über Verwahrstellen mit Auskunftspflichten, Vor-Ort-Prüfungen, Geschäftsunterbrechungsbefugnissen und Bußgeldern.
Ich glaube nicht, dass das der richtige Ansatz ist.
Aurore Lalucq
Yeah, but if you want to be translated, if you want to have some interpretation, you need to slow down a little bit and I will give you one minute more if it is needed.
Markus Ferber
Also, es werden hier neue Aufsichtsstrukturen geschaffen. Diese neue Schicht bringt aber keinen Integrationsgewinn. Sie ist eigentlich das Gegenteil von dem, was in der Überschrift des Paketes steht. Zweitens, die direkte ESMA-Aufsicht über große Asset Manager ab 100 Milliarden Euro für UCITS-Verwaltungsgesellschaften und ab 150 Milliarden Euro für Alternative Investment Funds und umfassende Durchgriffsbefugnisse selbst bei mittelgroßen Asset Managers. Dazu will ich nur sagen, diese Investmentfonds sind überwiegend national tätig.
Die Zahl der Akteure ist groß und lokales Aufsichtswissen hat wirklich einen Mehrwert. Eine neue Zuständigkeitsebene schafft nur zusätzliche Bürokratie, zusätzliche Kosten und keine bessere Integration. Drittens, der Vorschlag auf einen Gehaltsdeckel für Asset Manager basierend auf ESG-Kriterien, eine 90-prozentige Mindestausschüttungspflicht beim Wertpapierverleih und hochkomplexe neue Makrovorgaben und Stresstests. Jeder dieser Punkte fügt Anforderungen hinzu, ohne einen Integrationsgewinn zu erzeugen. Jeder dieser Punkte läuft auch dem Wettbewerbsfähigkeitsgedanken entgegen.
Und letztes Stichwort, Löschung der Nebentätigkeitsausnahme in der MiFID. Ich will schon mal sagen, wenn wir uns die Energiepreise in der Europäischen Union anschauen und wenn wir die noch weiter in die Höhe treiben wollen, dann sollten wir diesem Weg folgen. Ich halte das wirklich für einen ganz gefährlichen Weg, diese Nebentätigkeitsausnahme zu streichen. Sie ist geschaffen worden, um hier die Volatilitäten zu reduzieren. Deswegen ist es in dieser Situation das Gefährlichste, wenn man sie streichen will.
Zum Settlement Finality Regulation noch ganz kurz. Wichtig ist hier, dass das Dossier technologieoffen ausgestaltet wird. Sicherheiten und Abwicklungsendgültigkeit müssen auch für tokenisierte Instrumente und DLT-basiertes Zentralbankgeld gelten, kohärent mit dem, was die Verordnung für EMIR und CSDR vorsieht.
Wenn wir uns darauf verständigen können, unterstützen wir als EVP das gerne. Vielen Dank.
Eero Heinäluoma
Thank you, Madam President.
For my group, it's really essential that we have a high level of ambition when we are tackling this really important MiFID package. To support the EU economy, we should tackle regulatory fragmentation effectively, and centralized supervision here would be needed. This will be the litmus test also when we are looking at our attitude towards the proposal. It's not an ideological obsession, this is common sense if we are serious about supporting the EU economy and turning the simplification agenda in practice. This is what savers, investors, and also issuers expect from us.
We cannot afford another ten years of talking and organizing events around Capital Market Union.
On the master directive, I believe several of the technical proposals made by the Commission are going to the right direction. A depositary passport should be a no-brainer in an integrated market and we cannot continue with endless national gold plating. At the same time, if we want to achieve a real integrated capital market, more is needed. We need to put significant asset management companies under direct supervision of ESMA. Indeed, it's essential that our supervisory regimes are future-proof and if we see growth of some of the companies, it's clear we cannot stick to the status quo.
We also take the concerns expressed by the ECB towards possible blind spots missed by local supervisors very serious. Therefore, I think we can go also further to the first draft proposals. I'm happy that my colleague Markus takes similar approach for the crypto-asset service providers, putting only the significant ones under ESMA direct supervision. Of course, I'm aware that there are still some questions around technical points and important ones, and they are also needed to discuss.
But the principle should be clear: significant asset management companies should come under direct ESMA supervision. Then ESMA and Better Finance reports, they are quite clear: savers and investors deserve better protection. Therefore, we need stricter rules around security lending. I fully support the call of the European Central Bank that the more integrated framework for supervising funds and asset managers should be accompanied by amendments to the macroprudential framework.
To fully gain the benefits of the savings and investment union, capital markets should be a resilient and sustainable source of financing, even in times of market stress. This requires a macroprudential framework that can detect and address emerging systemic risk across the NBFI sector, including in specific sectors like the real estate sector in particular. Finally, better compliance by asset managers with the ESG agenda is and remains key, as we only witnessed the last couple of weeks with the heatwaves here. Asset managers have indeed also their responsibility here, and as shown in the data, some fall really short here.
To turn this into action, the best way is to link this to the level of variable remuneration. On the ESMA regulation, I believe my good colleague Markus also made some important proposals here. I welcome the strengthening of the governance of ESMA. This is absolutely essential. Furthermore, bringing all CCPs and CSDs under ESMA direct supervision makes a lot of sense.
Also, ideas to tackle duplicative reporting and better data access are welcome. Of course, my group fully supports more transparency in the trading field, and so an ambitious consolidated tape is an essential part of the exercise.
The Commission proposal is a good step in this respect. Furthermore, significant trading venues need to come under direct ESMA supervision and our commitment to a very swift centralized supervision should be made more clear. If there is one sector by nature which does not know national barriers, it's the crypto sector. Allocating the supervision of certain CASPs to NCAs is therefore not the best solution and rather an invitation for forum shopping, as we can see already today.
It's really positive that the rapporteur brings the discussion around multi-issuance of stablecoins under this package. For my group, this is essential to solve this issue with the most stringent approach as recommended by the ECB. Given its cross-border nature, checking compliance with these safeguards should also be a task for ESMA. My group welcomes measures which can help boost innovation in the financial sector, provided they are proportionate and financial stability risks are contained.
I think the DLT proposals, they need therefore once again, there is need to look them once again. Then on the third pillar of the package, I believe MEP Crosetto made an important draft. It's really indeed essential to have a most under a regulation. At the same time, it's important to underline that this regulation is without prejudice to the responsibility of Member States regarding essential state functions concerning public security, defense, and national security in accordance with Union law.
To conclude, this is a key package and as co-legislator, we have an important responsibility to turn this into a reality and to do it swiftly. I believe parts of the draft report show a good level of ambition and given the dynamic in the Council and the upcoming trilogues, I believe we should stick to this high-level commitment.
I look forward to constructive cooperation with my colleagues.
Giovanni Crosetto
Yes. Thank you. I start from my my dossier and I think that this reform is a valuable opportunity to address a long-standing legal fragmentation and ambiguity while also modernizing the framework to reflect the digital age, such as DLT and tokenization. Europe should be really open to innovation, but innovation can scale only if is supported by legal certainty.
And the same protection that exists for traditional market infrastructures must also be credible and effective for new digital models. We consider that the replacement of the existing directive by a directly applicable regulation represent a major opportunity to establish a more coherent and harmonized framework for settlement finality across the Union.
Greater harmonization should reduce legal fragmentation, improve legal certainty and support the further integration of European financial markets. This is especially true among various aspects with regards to the uniform and unequivocal identification of the moments of finality, that are time of entry of a transfer order in a designated system, its relevant irrevocability and subsequent finality, which is peculiarly important also in the event of the default of a counterparty to the transaction. Indeed, we strongly supported the intention of the European Commission to harmonize the timing when a transfer order becomes irrevocable, the timing when settlement becomes legally final and binding and the way this interacts with the timing of insolvency.
Likewise, we supported the new definition, the new proposal of system that has common rules, straightforward rules and standardized procedures, as well as we value the new framework for the designated system. In our view, we have to modernize the legal framework in light of technological development, including DLT, tokenization and emerging forms of market infrastructure. The future regulation should embrace innovation while preserving legal certainty, operational resilience and technological neutrality. New technologies should be accommodated without imposing unnecessary legal or operational constraint that could hinder innovation or market development.
Moreover, the legal framework should ensure that equivalent activities receive equivalent protection irrespective of the underlying technology used. We consider that legal certainty should remain the primary objective of the future framework. In particular, the rules governing transfer orders, settlement finality, collateral security, and insolvency-related protection should remain clear, predictable, and capable of operating effectively across different technological and organizational models.
And finally, we underline the importance of ensuring that the regulation remains proportionate and operationally workable for market participants and financial market infrastructures. Regulatory requirements should strengthen resilience and legal certainty without creating unnecessary duplication, excessive compliance burdens, or barriers to market participation. Now let me add some comments on the other two files.
And I start from a reasoning that the challenges facing policymakers nowadays are no longer the same of the previous years, since we are facing profound transformations. Europe must now mobilize unprecedented level of investment to support industrial renewal, technological leadership, defense capability, energy security and strategic autonomy. This perspective has important policy implication. Financial regulation should not be designed solely through the lens of risk mitigation. It must also consider its impact on investment, innovation and competitiveness.
And for this reason, we strongly welcome the new approach of the introduction of a secondary competitiveness mandate for ESMA, alongside its existing supervisory and convergence functions. While at the same time, we are more worried about the burden that ESMA can today objectively handle. ESMA has limited experience of direct supervision across different domains.
As long as ESMA will not have developed sound and robust supervisory expertise and culture, and also a credible crisis management framework is established at the European level, the need for national proximity to supervise the entities will remain in place. This means the national competent authorities need to remain central in the framework and work together with ESMA, instead of being set aside or left with just emergency tasks while decisions are taken by ESMA. In particular, a greater involvement of NCAs should be foreseen both in the decision-making phase and the daily supervisory process. This will require a supervisory approach that can draw not only on clear and consistent rules, but also different objectives, likewise a structured dialogue with supervised entities.
ESMA transition to central supervision will require both behavioral and operational evolution, with a gradual accumulation of specialist expertise and supervisory judgment. This evolution should be regarded as a multi-year institutional journey rather than a short-term organizational change program. For this reason, we think that it's reasonable to propose to scale down direct supervision of CASPs, bringing under ESMA only the most significant CASPs rather than the broader population initially envisaged.
So as we welcome the clarification on supervisory fees to avoid the double charging, to prevent market participants from being charged twice for the same function. Following this kind of approach, we do not see the scope for the direct ESMA supervision of significant depositories irrespective of the supervision exercised by the relevant national competent authorities. So as we do not see it for direct ESMA authorization and supervision of large asset management groups. Thank you very much.
Aurore Lalucq
Thank you. Now the shadow rapporteur, Ms. Enikő Győri, on behalf of Mr. Knot.
Enikő Győri
Yes, thank you.
Unfortunately Mr. Knot is not here so I will speak on his behalf. On this package our position is clear. We support the ambition to deepen European capital markets. Europe needs more private investment, fewer cross-border barriers and better access to finance for companies, especially SMEs and companies in smaller capital markets. And from that point of view, there are useful elements in these new drafts.
We welcome the stronger reference to competitiveness in ESMA's mandate, safeguards against double charging of supervisory fees, simplification in EMIR reporting and a more predictable framework for tokenized market infrastructure. On the MiFID directive, we also support the principle of a depository passport, especially for smaller markets where access to depository services can be limited. And on settlement finality, we support stronger legal certainty, better collateral protection, including CCP margins and default funds, and improved transitional arrangements so existing systems do not face a legal cliff edge.
But across the package, we have a major central concern, and that's that market integration should not entail a strong centralization of the supervision. The master regulation would move all EU CCPs and CSDs towards direct ESMA supervision. This directive would give ESMA a much stronger role over asset management groups and depositories. And in settlement finality, mandatory ESMA and EBA technical standards on irrevocability and final settlements could become too rigid. And these are not just technical questions.
They affect national markets, legal systems, insolvency law, central bank systems, and the specific design of market infrastructures.
What smaller and non-euro markets need is proportionality. National competent authorities know their markets and should remain responsible where there is no clear systemic or cross-border justification for EU-level supervision. So yes to capital market integration, simplification, innovation, legal certainty, and a well-designed depository passport. But a clear no to automatic centralization, no to centralization by amendment, and no to new burdens that go beyond the purpose, the original purpose of this package.
If you talk to industry, they would agree with that. They don't want double charges, and the only players who would benefit from this system are the very big ones, and I wouldn't like European financial markets with very few financial moguls on the scene making life for smaller players and smaller markets impossible. We therefore support stronger proportionality and subsidiarity safeguards across the package. The aim should be a stronger European capital market and not a bigger European supervisor for just its own sake.
Thank you so much.
João Cotrim De Figueiredo
Thank you, Chair. As you said, on behalf of Billy Kelleher and my own, I want to start by thanking all the three rapporteurs for the excellent work. This market infrastructure and supervision package is probably one of the most important files this committee will handle this mandate because it's absolutely essential that we complete the Savings and Investment Union. It is an economic necessity. Not just Draghi and Letta, but many others have since warned us of our investment gap, and it has been widening.
So mobilizing retail investors is absolutely essential to bridge that gap.
That will only be possible if markets are healthy, competitive, and attractive. Only such markets will allow us to finance competitiveness, technological innovation, the several transitions that we are involved in, and also our defense efforts. And by the way, to keep the European social model that we are so rightly proud of. In Renew Europe, we are guided by four objectives here: more effective supervision, fewer barriers to cross-border business, greater certainty for investors, and deeper integration favoring increased investment ability.
On the MiFIR regulation, we share Mr. Markus Ferber's ambition to tackle fragmentation more decisively, and we welcome the explicit focus he has on competitiveness. On ESMA, we support stronger, more effective supervision with governance that can actually take decisions. But stronger powers will demand proper checks and balances, particularly between ESMA's supervisory and regulatory roles. So we will look carefully both at the composition and the governance of the executive board. On market structure, we must say that the Commission could have been bolder.
The report focuses too much on equity market structure, particularly on the systematic internalizer provisions. I think we should not prejudge ESMA's ongoing equity market review before its evidence is even on the table.
On the MiFID directive, we recognise Mr. Eero's Heinäluoma's, I hope I haven't assassinated your name, Eero, significant work and share the direction of travel. But too much weight is given to macroprudential elements. Financial stability is obviously fundamental and the post-crisis framework has already strengthened it substantially. But many of these questions were extensively negotiated in several reviews, the AIFMD, the UCITS last mandate, and we should not reopen settled debates without a compelling reason.
We are also particularly cautious about centralizing supervision of asset managers given the size and sheer diversity of that sector. On the settlement finality regulation, the Commission has delivered a strong, well-balanced proposal and we welcome Mr. Giovanni Corsetto's targeted approach to this, which preserves its core while improving significantly efficiency and providing sensible transition periods. Colleagues, summing up this topic as in many others, we don't have the luxury of time. Every day that this package takes to be approved is another day that European savers have reasons to keep their money in a bank account earning next to nothing or send it to New York or San Francisco. This is the real cost of the delay.
So let us run this procedure with discipline and a sense of urgency. The temptation on a file this large is to make it carry everything. If we do, it'll carry nothing because it will not arrive in time to matter.
Renew Europe will engage on all three files in that spirit and at that pace. Thank you very much.
Kira Marie Peter-Hansen
Thank you very much and thanks to all three rapporteurs for the draft report and I will go through them one by one.
First of all, for the for the regulation, we think it's a very good draft report and some of the positive elements that we see is the establishment of a single cross-sectoral data platform into the ESMA regulation, also expanding ESMA direct supervisory powers to all CCPs in the EMIR and lastly expanding ESMA supervisory powers to all CSDs in the CSDR. So those are some of the highlights that we see in the draft report that we very much welcome. Some of the focus points that we will have in the in the negotiations are the following. First of all, while we acknowledge that competitiveness is an element in any well-functioning market in the in the global economy, it's important for us that it doesn't come at the expense of financial stability and consumer protection or sustainability. So we'll table amendments in this direction.
And we believe as well that that ESMA supervisory powers should be expanded not only to all CCPs, but also to all trading venues and to all CSDs. And lastly, for us, it makes sense to keep the improvements made by the Commission to the consolidated tape and increase the scope of the consolidated tape instead of taking it out. I think this is important both for the transparency of the market, but also to foster a sound and effective capital market union. But overall, we think the regulation draft report goes in a in a good direction. Moving towards the the directive, we also think it's a very good draft report.
And here we are very much pleased to see the increase of the limits of the UCITS investments into securitization. And we are also very positive about lowering the threshold of AUM to consider an alternative investment fund manager as a large group to be under annual review. And including the possibility for ESMA also to adopt supervisory decisions as proposed in the draft report. And secondly, we agree very much with the proposal to define significant alternative investment fund managers and keeping the ESMA annual review for certain size. So these are some of the positive elements that we see in the draft report.
Where we will make improvements or amendments would be to to also include the supervision of asset managers. And I think we acknowledge that ESMA can't and should not supervise all thousands of asset managers, but we believe that there is a mandate to be able to supervise at least the most significant ones.
And secondly, we also believe that the macroprudential framework can be strengthened in order to detect and also address emergent systemic risks across the entire financial system. And lastly, our ambition to curbing speculation on essential commodities is the same as it was during the last MiFID review, and we believe the stability of energy and food prices has to be protected in order to not add to the cost of living crisis.
So this will be our focus within the directive. And moving to the to the last report, we also think it's a very good draft report. And I believe that it creates a lot of legal clarity and increases interoperability in the market. And the clarification of when transfer orders, for example, become irrevocable and when settlements become final can help streamline practices between Member States. And thereby make the the markets generally more more resilient.
And I think we often find each other in the different ends of the political spectrum, but I think we both agree that we want European savings and investments to go into the European economic economy. And I think your draft report contributes to to this and we welcome that very much. I don't know how much time I have, but I conclude now by saying that I look forward to working with all three rapporteurs and the shadows. And I hope that we can work on all three files together to make sure that they go in the same direction. Thank you.
Aurore Lalucq
Thank you. I think that Mr. Pedula is not here. No. So any requests from the floor? No.
So I will now give the floor to the Commission represented by Jean Berregan.
Jean BERREGAN
Thank you, Madam Chair, honorable members. Let me start by thanking the rapporteur and the shadows for their work on this really very important file. It's not the moment for me to give detailed reactions, but suffice to say that this package is a cornerstone of the Savings and Investment Union strategy. That's why the political momentum behind this file matters so much. The latest signal is pretty clear.
The One Europe, One Market roadmap agreed between the presidents of the Parliament, Council, and Commission commits the three institutions to reaching an agreement on the package by the end of '26.
This shows that both speed and ambition are essential to the success of this reform. First, speed. If we want to meet the end-of-year deadline, it's essential to maintain the pace of work in the Parliament and the Council and to speed up the timeline wherever possible. We encourage both co-legislators to be ready to start trilogues as soon as possible. Delays would carry a real cost because Europe simply can't afford to move too slowly on financial integration while global competition intensifies the way it is.
Second, ambition. We welcome the high level of ambition shown in the draft reports.
In several important areas, the rapporteurs go beyond the Commission proposal, notably by extending ESMA's direct supervisory role and by strengthening ESMA's governance. This reflects one key priority of the package, and that is that EU supervision must match the scale and integration of our markets. In certain areas, I think it will be important to ensure that the amendments to the Commission proposal remain fully aligned with the proposal's core objectives and are workable in practice.
So we'll need a clear understanding of the objectives underpinning some of these proposed changes and to explore solutions that can effectively respond to those objectives while safeguarding the overall ambition and coherence of the package. And here I would include just as examples, the suggestions for a competitiveness mandate, okay, but it must not weaken ESMA's core mandate. Amendments to the consolidated tape should not result in a suboptimal tape to the detriment of market integration and transparency. Macroprudential tools for asset managers should remain in line with EU competitiveness objectives. Supervision of a sufficient number of CASPs where ESMA's role is vital to avoid supervisory fragmentation and forum shopping.
And on data and reporting, we need to be sure that simplification is just that and doesn't create unintended gaps, unintended costs, or inconsistencies. The Commission of course stands ready to work constructively with the Parliament on technical refinements to ensure that the proposal delivers its intended benefits effectively, proportionately, and as I said, without unintended disruption. So I conclude that this is a defining piece of legislation for the Savings and Investment Union, and I know that we can count on the Parliament to preserve the vision that underlies it, a vision that's needed to bring it over the line with a high level of ambition. Thank you, Madam Chair.
Aurore Lalucq
Thank you, and I really give the floor back to the rapporteur. Markus Ferber had to leave, so I will give the floor to Eero Heinäluoma for some concluding remarks.
Eero Heinäluoma
So may I thank my colleagues and also the Commission for very constructive comments. And what is important here is that there is really large commitment to the timetable and understanding of the need for deep reforms in this area. I got the impression that this is doable, that we are not so far away of us. There are some really critical and also difficult questions to resolve.
There are differences between the proposals and the comments which we have heard, but still my feeling is that we can do it in the agreed timetable before the end of the year. So many thanks for your comments and ready to cooperate also during the summer time.
Giovanni Crosetto
Sì, grazie.
I will replace in Italian. Ringrazio anch'io i colleghi relatori e relatori ombra per il contributo a questa importante discussione e sono contento di sentire che le proposte principali contenute nel mio dossier sono in linea con con il pensiero dei colleghi, soprattutto per quanto riguarda io penso la nuova definizione di sistema proposta dalla Commissione che di fatto si discosta dalla definizione precedente contenuta nella nella direttiva.
Io penso e sono felice di sapere che lo stesso fanno i colleghi che dotare questi sistemi di regole comuni e di procedure standardizzate sia veramente la strada migliore per andare a dare certezza non solo legale a questi a questi sistemi, a questi framework. Inoltre sono felice di sentire che appunto l'approccio verso verso la modernizzazione di questi framework legali tenendo conto dell'innovazione tecnologica tra cui DLT e tokenizzazione abbia accolto il favore il favore dei colleghi.
Rimango su un punto che io penso che sia un obiettivo che in primis è stato lanciato dalla Commissione Europea e cioè quello di chiudere i nostri gap e di lavorare affinché la competitività dei nostri mercati e dei nostri sistemi finanziari aumenti davvero.
finanziari aumenti davvero allora che ho visto invece essere essere punti sui quali ci sarà magari maggiori maggiori distanze ma io sono certo che coi colleghi sapremo trovare trovare un dialogo l'invito che faccio è quello di cercare di di valutare veramente se oggi ESMA ha quell'expertise quella cultura e di fatto quell'esperienza anche solo in termini di di dipendenti no per andare ad affrontare quei compiti e quel peso no che determinate proposte gli darebbero ma io sono sicuro che troveremo durante gli shadow meeting gli equilibri e i compromessi giusti. Grazie.
Aurore Lalucq
Thank you to all of you and the deadline for amendments for the MiFIR regulation is set on July 16 at 11:00, for the MiFID directive and SFAR on the same day at 3:00 PM. Thank you so much for this discussion.
OK, so we now turn to the draft recommendation on the draft Council decision on the conclusion on behalf of the European Union of the agreement between the European Union and the United Kingdom of Great Britain and Northern Ireland regarding cooperation of the application of their respective competition law. Just think it's possible to get out of this room and be quiet at the same time. Thank you.
The present supplement agreement complements the EU-UK Trade and Cooperation Agreement of 2020. It sets a framework and principle of cooperation on competition matters between on the one hand the Commission and EU member state competition authority and on the other the UK's Competition and Market Authorities. Following the withdrawal of the UK from the Union, it is the first dedicated EU-UK agreement fully focused on competition cooperation and competition matters.
This agreement adds to the existing agreements on competition matters with the USA, Canada, Japan, South Korea and Switzerland and I now give the floor to the rapporteur Eero Heinäluoma.
Eero Heinäluoma
Thank you Madam President and I would first like to thank the secretariat and also to my colleagues and assistants and staff for good cooperation during preparation of this paper.
And I would once more like to emphasize that there is really important that cooperation between the agencies and authorities is functioning very well under competition area. It's important for the interests of the European Union, but I have noticed that also it's important for the Great Britain, both politicians and civil servants. So when there is no amendments, I'm happy to interpret it that the members of the committee are satisfied to the proposal and I hope that it can be accepted.
Aurore Lalucq
I suppose because there is no amendment and no colleagues and shadow rapporteur in the room, so thank you to the ECON secretariat, by the way, you are absolutely right to mention them. And I don't think you need to have the floor for some concluding remarks. And the vote in ECON is scheduled for July 15th.
Thank you so much to the rapporteur and thank you to the ECON secretariat. And the next committee meeting will take place in July 15th in Brussels.
Ask anything about this video — I analyse its transcript to answer.