Common ground for the capital markets
Building a common market based on the free movement of goods, people, services and capital is one of the cornerstones of the European Union. A common market enables all EU citizens and companies easily and effectively to conduct activities and put capital to profit in the EU's entire territory. The idea of a common market also aims at accelerating the development of the economies of member states and improving their competitiveness in the world.
The essential condition for creating the EU common market in the field of financial services is the harmonisation of legal regulations and the introduction of the "European passport" principle. Convergence of legal regulations and close co-operation between state regulatory bodies will enable the implementation of the "single passport" principle, which means that licences issued by competent bodies in one EU country are accepted in all other EU countries. The harmonisation of legal regulations encompasses: the mutual recognition of prospectuses for public offerings prepared in EU countries, the specification of transparency requirements for listed companies, a single passport for licences of investment companies and open-end investment funds in the union, the assurance of fair trading, the prohibition of insider dealing and price manipulation, and the introduction of an investor protection scheme that guarantees money be returned in cases of investment company bankrupties.
During our membership negotiations we agreed to fully implement, by the day of accession to the EU, the acquis communautaire in the field of capital markets, with one exception - Poland has been granted a five-year transition period until the end of 2007, a provision that regulates the minimum investor protection range which the country will gradually achieve. As a result of negotiations, we have prepared amendments to the Law on the Public Trading of Securities and the Law on Investment Funds, as well as new enforcement provisions. The most important amendments include the introduction of:
" The mutual recognition of prospectuses and admissions to public trading
" a single passport for licences for investment companies
" obligatory participation for brokerage companies in the compensation system, which has been entrusted to the National Depository for Securities
" market segmentation and separation of official markets
" a principle of co-operation between member states in terms of enforcement rules and the exchange of information
At present, we are conducting preparations for the harmonisation of our law with coming EU regulations.
Three years ago the EU adopted the Financial Services Action Plan (FSAP) and Risk Capital Action Plan (which refers to financial resources for small and medium-sized enterprises) in order to boost the development of the European financial market. The FSAP aims at creating an integrated, efficient and transparent European financial market by 2005. In addition, the Committee of European Securities Regulators (CESR) was established in 2001 in order to accelerate the adoption of implementation measures for a common securities market. Its role is to prepare draft regulations concerning securities and to make sure that member states efficiently implement the new regulations.
The union's current legislative activity concerning the capital market is concentrated on three issues: insider trading and price manipulation, prospectuses and investment services. In order to prevent insider trading and price manipulation, the draft directive proposes, for example, increasing the powers of institutions that supervise capital markets, broadening the scope of information available for institutions supervising capital markets and the possibility of imposing administrative sanctions for insider trading and price manipulation.
Activities concerning prospectuses are focused on solutions aimed at simplifying the way of raising capital in the EU through an assurance that issuers will be able to raise capital in the union's whole territory on the basis of a prospectus admitted in one member state. Furthermore, in cases where prospectuses are prepared in a language (usually English) that is generally accepted by the financial sector of the country in which the offer is held, it will be necessary to translate only the short version of the prospectuses into the official language of that country.
EU legislation is also considering the inclusion of advisory services in the catalogue of investment services in order for investment firms to create the possibilities of operating alternative trading systems and making internal transactions within a brokerage house or simplifying the rules of action by qualified investors on the market.
Poland's accession to the EU will bring profits for domestic entities on the capital market mainly because of access to the union's internal market and the practical possibility of using the freedom of providing investment services and capital flows. Polish brokerage houses and investment funds will be able to conduct their activities in any of the member states on the basis of the licences granted in the country, and the securities of our entities will be admitted to public trading in the whole EU.
Summing up, integration means new prospects for development, access to a large, flexible market with a whole range of financial instruments and opportunities to raise capital. On the other hand, competition on the domestic market will increase due to the free access of foreign entities to our capital market. It is important to be prepared to use all the opportunities. Most of the preparatory tasks are fulfilled, as far as the capital market is concerned, with the legal, institutional and technical infrastructures of our capital market harmonised with European standards. However, as legal regulations are subject to constant changes also in the EU, the process of harmonisation in this field will still continue.
The essential condition for creating the EU common market in the field of financial services is the harmonisation of legal regulations and the introduction of the "European passport" principle. Convergence of legal regulations and close co-operation between state regulatory bodies will enable the implementation of the "single passport" principle, which means that licences issued by competent bodies in one EU country are accepted in all other EU countries. The harmonisation of legal regulations encompasses: the mutual recognition of prospectuses for public offerings prepared in EU countries, the specification of transparency requirements for listed companies, a single passport for licences of investment companies and open-end investment funds in the union, the assurance of fair trading, the prohibition of insider dealing and price manipulation, and the introduction of an investor protection scheme that guarantees money be returned in cases of investment company bankrupties.
During our membership negotiations we agreed to fully implement, by the day of accession to the EU, the acquis communautaire in the field of capital markets, with one exception - Poland has been granted a five-year transition period until the end of 2007, a provision that regulates the minimum investor protection range which the country will gradually achieve. As a result of negotiations, we have prepared amendments to the Law on the Public Trading of Securities and the Law on Investment Funds, as well as new enforcement provisions. The most important amendments include the introduction of:
" The mutual recognition of prospectuses and admissions to public trading
" a single passport for licences for investment companies
" obligatory participation for brokerage companies in the compensation system, which has been entrusted to the National Depository for Securities
" market segmentation and separation of official markets
" a principle of co-operation between member states in terms of enforcement rules and the exchange of information
At present, we are conducting preparations for the harmonisation of our law with coming EU regulations.
Three years ago the EU adopted the Financial Services Action Plan (FSAP) and Risk Capital Action Plan (which refers to financial resources for small and medium-sized enterprises) in order to boost the development of the European financial market. The FSAP aims at creating an integrated, efficient and transparent European financial market by 2005. In addition, the Committee of European Securities Regulators (CESR) was established in 2001 in order to accelerate the adoption of implementation measures for a common securities market. Its role is to prepare draft regulations concerning securities and to make sure that member states efficiently implement the new regulations.
The union's current legislative activity concerning the capital market is concentrated on three issues: insider trading and price manipulation, prospectuses and investment services. In order to prevent insider trading and price manipulation, the draft directive proposes, for example, increasing the powers of institutions that supervise capital markets, broadening the scope of information available for institutions supervising capital markets and the possibility of imposing administrative sanctions for insider trading and price manipulation.
Activities concerning prospectuses are focused on solutions aimed at simplifying the way of raising capital in the EU through an assurance that issuers will be able to raise capital in the union's whole territory on the basis of a prospectus admitted in one member state. Furthermore, in cases where prospectuses are prepared in a language (usually English) that is generally accepted by the financial sector of the country in which the offer is held, it will be necessary to translate only the short version of the prospectuses into the official language of that country.
EU legislation is also considering the inclusion of advisory services in the catalogue of investment services in order for investment firms to create the possibilities of operating alternative trading systems and making internal transactions within a brokerage house or simplifying the rules of action by qualified investors on the market.
Poland's accession to the EU will bring profits for domestic entities on the capital market mainly because of access to the union's internal market and the practical possibility of using the freedom of providing investment services and capital flows. Polish brokerage houses and investment funds will be able to conduct their activities in any of the member states on the basis of the licences granted in the country, and the securities of our entities will be admitted to public trading in the whole EU.
Summing up, integration means new prospects for development, access to a large, flexible market with a whole range of financial instruments and opportunities to raise capital. On the other hand, competition on the domestic market will increase due to the free access of foreign entities to our capital market. It is important to be prepared to use all the opportunities. Most of the preparatory tasks are fulfilled, as far as the capital market is concerned, with the legal, institutional and technical infrastructures of our capital market harmonised with European standards. However, as legal regulations are subject to constant changes also in the EU, the process of harmonisation in this field will still continue.
