Harmonisation of Securities Law

The Giovannini Reports of 2001 and 2003 described three spheres of difficulties within the post trading sector, relating to

1. technical requirements and industry practices;
2. taxation; and,
3. legal certainty.

Within these three areas, the Reports identified fifteen specific obstacles to the emergence of a truly single post-trading market in the EU, the so called "Giovannini Barriers". The Commission mandated an expert group, the Legal Certainty Group, to advise on the dismantling of the barriers having legal issues at their source. The Group, in its 2008 Advice on Solutions to Legal Barriers related to Post-Trading within the EU called for EU-wide harmonisation of certain areas of law and the preparation of EU legislation in this field. This advice was endorsed by Commissioner McCreevy and the ECOFIN Council, which concluded on 2 December 2008 that

"EU legislation is needed in this area providing for a more harmonised legal framework for intermediated securities and a better protection of investors' rights enshrined in their securities". Furthermore, the Council invited the Commission "to present its response to the Legal Certainty Group Advice as a matter of urgency, including an outline of proposed legislative measures, accompanied by precise timelines for their effective submission to the European legislator, bearing in mind the benefits of maintaining global compatibility with other jurisdictions."

The Commission Services are currently preparing a draft Directive on legal certainty of securities holding and transactions (Securities Law Directive – SLD). The Directive is expected to address three issues:

1. the legal framework of holding and disposition of securities held in securities accounts, covering aspects belonging to the sphere of substantive law as well as conflict-of-laws;
2. the legal framework governing the exercise of investor's rights flowing from securities through a "chain" of intermediaries, in particular in cross-border situations;
3. the submission of any activity of safekeeping and administration of securities under an appropriate supervisory regime.

Timetable of the project

Second public consultation of interested stakeholders

The Commission invites all interested parties to submit their comments in a second public consultation, held from 05.11.2010 to 01.01.2011. Due to many requests, we will take into account late answers coming in before 21.01.2011.

• Midday Express (05.11.2010)
• Consultation webpage

First public consultation of interested stakeholders

The Commission invited any interested parties to submit their comments in a first public consultation, held from 16.04.2009 to 11.06.2009. A second public consultation is scheduled for March-April 2010.

• Press release
• Consultation webpage

Background documentation

• Legal Certainty Group website
• CESAME Group report
• Geneva Securities Convention
• European Commission work on the Hague Securities Convention
• European Commission Financial Services website
• Commission Communication on Clearing and Settlement (2004)
• Second Giovannini Report (2003)
• First Giovannini Report (2001)