European stock markets may have to set money aside to cover unforeseen events such as winding up the exchange, according to a European Commission document. The consultation paper to be published by EU Internal Markets and Services Commissioner Charlie McCreevy on Tuesday will also outline a timetable for possible new rules on mortgages and funds. However, completing the heavy flow of legislation stemming from the previous Commission which left office last November will be the first priority, according to McCreevy's paper, obtained by Reuters.
"The key, now, is to make it function well," says the paper, which outlines policy proposals from 2005-2010. A single market in financial services improves the economy and job creation, the Commission says. New legislation would have to pass a "rigorous, 'better regulation' approach" based on early consultation, and the benefit must significantly outweigh costs.
Unfinished business includes measures such as "a (possible) directive on post-trade financial services (clearing and settlement), the new Insurance Solvency framework, a (possible) legislative proposal on payments, and a (possible) directive on capital requirements for regulated markets".
Regulated markets refers largely to stock exchanges, but a spokesman for the industry said existing legislation could be used to cover against events such as closing down an exchange.
"No directive is needed," said Gregor Pozniak, deputy secretary general of the Federation of European Securities Exchanges.
UK exchanges are effectively the only ones in the EU that already set aside money.
There will be a public consultation on the green paper, or consultation document, until August 1, and the Commission will publish its final policy programme or white paper in November.
FUNDS and MORGTAGES: As reported by Reuters last month, key themes include developing relations between EU and US regulators, especially in accounting standards, though dialogue with China, India and Japan was also important.
The previous Commission focused on the wholesale financial market such as how banks, exchanges and listed companies interact. McCreevy's goal is to shape a single market out of the fragmented retail market for small investors.
In July, the Commission will publish a green paper on creating a unified market for asset managers. A green paper on pan-European mortgages is due around the same time as well, though no firm proposal is expected before 2006.
The Commission will create forum groups - typically a step before a green paper - to examine what information should be provided, mediation on cross-border disputes, and what are the obstacles to opening a bank account in another country. The Commission is also looking at whether new rules are needed for credit rating agencies and financial analysts, but has decided not to add further detail to its new take-over rules.
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