§ Mr. Tim SmithTo ask the Secretary of State for Trade and Industry if he will make a statement on progress in negotiations on the draft investment services and capital adequacy directives.
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§ Mr. RedwoodThe draft investment services directive was discussed at ECOFIN on 8 April. The difficulties created by the proposal, originally put forward by France, that certain transactions should be confined to "regulated markets" have yet to be resolved. Member states' officials continue to seek the basis for a satisfactory solution and a further ECOFIN discussion is planned for 3 June. It looks increasingly difficult to complete negotiations on the directive during the Luxembourg presidency.
In addition to the regulated markets issue, there are a number of other important issues still to be resolved. These include the question of whether natural persons, appointed representatives and members of the professions should be included in the scope of the directive. The Government are seeking to ensure that natural persons will be included but that there will be a satisfactory exclusion for members of the professions.
On all these issues, the Government remain firmly committed to the principle that the investment services directive should be a genuinely liberalising measure which must not compromise the ability of investors anywhere in the European Community to choose how to invest their money.
There has as yet been no ECOFIN discussion of the draft capital adequacy directive. Discussions between officials have made some progress towards agreement on the treatment of market risk, but the definition of capital and a number of other important technical issues have yet to be resolved. Negotiations are likely to continue into the Dutch presidency. The Government's objective remains a directive that imposes capital standards protecting investors without imposing an unnecessary burden on practitioners. Capital required should be related to risks run.
On both directives the Government are continuing closely to consult interested parties in the United Kingdom to ensure that we can achieve the best possible outcome for United Kingdom investors and United Kingdom investment firms and financial markets, though since both directives are ultimately subject to qualified majority voting in the Council of Ministers the final outcome may not fully satisfy all our negotiating objectives.