Elisa Ferreira is parliament's rapporteur on the single resolution mechanism and single bank resolution fund: uniform rules and procedure for the resolution of credit institutions and certain investment firms
After the 2008 crisis, EU member states committed almost €4.5 trillion and spent six times the European budget to rescue failing banks. National budgets, the economy and the citizens, particularly in the eurozone, suffered irreparable losses. A new culture to address banking crises was needed and the European parliament, particularly since 2010, engaged in building it. The first step for banking union was the single supervisory mechanism (SSM) which called for a single resolution mechanism (SRM) of an equivalent European nature.
Based on an interesting proposal by the commission, parliament established very clear objectives: the SRM should protect taxpayers and bank losses should be primarily supported by shareholders and other creditors (bail-in). Also, a single resolution fund (SRF) to be funded by banks on the basis of their risk profile should provide finance for other resolution actions. Resolution decisions should, in addition, be rules-based and address banks regardless of the member state they originate from, while the decision making process should be swift, predictable and efficient, capable of resolving a bank over a weekend.
After difficult negotiations with council, an agreement was reached. Both the declaration of the non-viability of a bank and the decision making process in resolution will be free from political interference by member states as the role of the European central bank is reinforced (in declaring a bank 'failing or likely to fail') and any subsequent resolution decisions will be taken at an expert technical level - the executive session of the single resolution board.
"The [single resolution mechanism] should protect taxpayers and bank losses should be primarily supported by shareholders and other creditors"
Only an exceptionally high use of the SRF (more than €5bn) can, under limited circumstances, be questioned by the plenary of the board, made up of representatives of all the participating national resolution authorities. Furthermore, the commission will normally be the competent authority to endorse or change the proposed resolution scheme, the intervention of the council being limited to very exceptional cases - whenever the commission decides that insolvency is preferable to resolution or proposes to use a materially different amount of the fund.
Regarding the SRF, the parliament regrets the member states' option for an intergovernmental agreement (IGA) to regulate the transfer and mutualisation of the contributions. Progress was, however, achieved through frontloading of the pace of mutualisation of the contributions (in the first three years, almost 70 per cent of the banks' contributions will be 'common') and in eight years, rather than the initial 10, the SRF will be completed. A political statement by council confirms the intention by member states to speed up the ratification process of the IGA; the board and national governments will work on the enhancement of the borrowing capacity of the fund, which is essential for its credibility.
With the SSM active after November and the SRM fully operational in January 2016,the banking union will be almost complete. Parliament played a decisive role in making the SRM more efficient, more European and more democratic. We hope it will play the desired role to stabilise the banking system and put it back at the service of growth and jobs.
Markus Ferber is parliaments' rapporteur on financial supervision: markets in financial instruments; OTC derivatives, central counterparties and trade repositories
I strongly believe that the European parliament confirming the trilogue compromise on the MiFID II file marking a very good day for financial markets regulation in Europe. Roughly two and half years of tough negotiation on this extraordinarily complex file have passed since the European commission first presented its proposal. This process is eventually coming to an end now.
"Financial markets that work in a better way will also help the real economy financing its investments and hedging its risks"
MiFID II is certainly one of the most important elements of the post-crisis financial markets architecture in Europe. Its key idea is that there shall be no financial instrument and no trading venue remaining unregulated. Thereby, MiFID II will be essential to fulfil the G20 obligations that have been agreed on by the respective national leaders in Pittsburgh in 2009. As Europe is already running late in doing so, it is high time that MiFID was voted on.
Those changes in the market structure go together with an increase in pre- and post-trade-transparency, easier access to relevant market infrastructure, stricter rules governing new trading techniques such as high-frequency-trading, clear position limits in commodity markets and a whole set of new rules protecting investors. If you take all these things together, you will see that financial markets will be more transparent, more efficient and more resilient after MiFID and its sister regulation MiFIR will have entered fully into force. This will be in 2017 when all transitional periods have ended.
Apparently, financial markets that work in a better way will also help the real economy financing its investments and hedging its risks. In addition to that, MiFID II will also introduce so-called SME growth markets that are specifically aimed at catering for the needs of small and medium enterprises which often struggle to get the financing they need. So, in the long run, MiFID II will also help the European economy to grow.
Stakeholder response on MiFID: Natalia Alonso is head of Oxfam's EU office
We welcome the European parliament's overwhelming backing to stop the scandal of banks and other speculators making a profit by betting on food prices. European and national regulators must now move swiftly to implement the legislation. Food is a right, not something bankers can recklessly gamble on. In recent years, high and volatile food prices on global markets have caused hunger, political instability and conflict in many developing countries.