The clock is now ticking for two deadlines in the tortuous progress of the EU's thunderbolt Markets in Financial Instruments Directive (MiFID), which will liberalise the sales of financial securities across the EU and kick life into capital markets. Following recent adoption of implementation measures by the European Parliament and Council of the text for the directive, the next deadline comes up in January, when national governments across the member states have to incorporate it into national law.

That will then set off another clock, counting down to 1 November 2007, for implementation. This will tear down barriers to cross-border trading erected by the member states and bring in a harmonised rulebook that will abolish all manner of protectionist legislation, meaning that a firm regulated in one country will be able to sell its services throughout the EU.

From then on, stock exchanges, will no longer have exclusive rights over the buying and selling of domestic stocks and shares, and there will be a bevy of compliance obligations on financial services companies to protect customers. For example, trading firms will have to consider clients' best interests on the sales of financial securities. The relevant phrase is ‘best execution'.

However, there could be a third clock ticking away too. JPMorgan has come up with a report that estimates that MiFID could shave €19bn off market capitalisation of eight major European banks, which could see earnings fall by as much 7%. Up to now, the banks have hidden behind a lack of transparency, a protection now set to disappear.

Will further lobbying by the banks gain them delay from the November 2007 deadline? The banks may well have set a third clock ticking away, with later implementation dates in mind. In some countries, pressures on national governments could save their bacon… for a while, at least!


remium growth rate for the European insurance industry rose by 4.5% in 2005 as compared with 2004, it is revealed in the 2005-2006 annual report of the Comité Européen des Assurances (CEA). The CEA is the Brussels-based body that co-ordinates the interests of the sector in the 25 members states, plus Iceland, Liechtenstein, Norway, Switzerland and Turkey.

Its provisional figures indicate that the inflation-adjusted growth resulting in a total premium income of €978bn for 2005. This should be seen against the years immediately following the financial crisis of 2001, which were characterised by a relatively low premium growth rate for the European insurance industry, of between 1-3%.

The premium figures could also be compared with global figures. According to the European insurance and reinsurance federation, whose member associations represent more than 5,000 insurance and reinsurance companies, Europe's share of world-wide premiums at 32%. This is to be compared with Asia at 24 % and the US at 40%.

The annual report showed a marked contrast in the growth in premium income between the life and non-life markets. The growth for the life and pensions insurance market was strong, with an inflation-adjusted rate of 6%, while the non-life insurance market reported premium growth of 1.855%.

The strong growth recorded on the life market reflected consumer confidence in life products, be they pension or alternative investment products. The growth, said the annual report, was high in several western countries, such as Portugal (43.15%, Sweden 23.4%, and Belgium 22.4%), but also and primarily in eastern countries where double-digit growth was the norm in over half of the markets. This evolution in eastern countries demonstrated an improved economic environment and a catching-up effect.


he European Commission is proposing a directive to tighten the procedures for supervisory authorities in its member states for assessing proposed mergers and acquisitions (M&A) in the banking, insurance and securities sectors.

Current EU rules allow supervisory authorities to block proposed M&A if they consider that the ‘sound and prudent management' of the target company could be put at risk.

The proposed new directive, which amends various existing rules in these sectors, will mean that supervisory authorities will have to be clear, transparent and consistent when assessing cross-border mergers and acquisitions. They will leave no room for political interference or protectionism.

Upgrades to company law to protect shareholders in the small and medium-sized enterprises (SMEs) sector are going through to modify two existing directives, the 4th and 7th company law Directives. The 4th applies to the financial statements from individual companies' and the 7th Directive applies to consolidated accounts for groups. In cases of listed companies, the upgrades are to some extent being trumped by IFRS. All listed companies have to apply this code in their consolidated accounts.

The revisions to company law, which are being processed as a legislative amendment, introduce two main principles. One is over "companies' transactions with their managers, the latter's family members, or other so-called ‘related parties'". The new code will demand "disclosure", "but only where such transactions are material and not carried out at arm's length".

There will also be tighter control on disclosing the use of Special purchase vehicles (SPVs - known to be used by companies to distance themselves from liabilities), which could be used to evade accounting rules to the detriment of investors.

Other elements in the revised legislation include confirmation that all board members should have collective responsibility for company financial statements. Implementation of the upgrades should be during 2007. Further revisions in the sector are currently under discussion in the Commission.