Directive 1997/9 - Investor-compensation schemes - Main contents

official title

 

Legal instrument	Directive
Number legal act	Directive 1997/9
Original proposal	COM(1993)381
CELEX number i	31997L0009

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Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes

Official Journal L 084 , 26/03/1997 P. 0022 - 0031

DIRECTIVE 97/9/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 3 March 1997 on investor-compensation schemes

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 57 (2) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social Committee (2),

Having regard to the opinion of the European Monetary Institute (3),

Acting in accordance with the procedure laid down in Article 189b of the Treaty (4) in the light of the joint text approved by the Conciliation Committee on 18 December 1996,

• (1) 

  Whereas on 10 May 1993 the Council adopted Directive 93/22/EEC on investment services in the securities field (5); whereas that Directive is an essential instrument for the achievement of the internal market for investment firms;

• (2) 

  Whereas Directive 93/22/EEC lays down prudential rules which investment firms must observe at all times, including rules the purpose of which is to protect as far as possible investor's rights in respect of money or instruments belonging to them;

• (3) 

  Whereas, however, no system of supervision can provide complete protection, particularly where acts of fraud are committed;

• (4) 

  Whereas the protection of investors and the maintenance of confidence in the financial system are an important aspect of the completion and proper functioning of the internal market in this area; whereas to that end it is therefore essential that each Member State should have an investor-compensation scheme that guarantees a harmonized minimum level of protection at least for the small investor in the event of an investment firm being unable to meet its obligations to its investor clients;

• (5) 

  Whereas small investors will therefore be able to purchase investment services from branches of Community investment firms or on the basis of the cross-border provision of services as confidently as from domestic investment firms, in the knowledge that a harmonized minimum level of protection would be available to them in the event of an investment firm being unable to meet its obligations to its investor clients;

• (6) 

  Whereas, in the absence of such minimum harmonization, a host Member State might consider itself justified, by considerations of investor protection, in requiring membership of its compensation scheme when a Community investment firm operating through a branch or under the freedom to provide services either belonged to no investor-compensation scheme in its home Member State or belonged to a scheme which was not regarded as offering equivalent protection; whereas such a requirement might prejudice the operation of the internal market;

• (7) 

  Whereas although most Member States currently have some investor-compensation arrangements those arrangements do not in general cover all investment firms that hold the single authorization provided for in Directive 93/22/EEC;

• (8) 

  Whereas, therefore, every Member State should be required to have an investor-compensation scheme or schemes to which every such investment firm would belong; whereas each scheme must cover money and instruments held by an investment firm in connection with an investor's investment operations which, where an investment firm is unable to meet its obligations to its investor clients, cannot be returned to the investor; whereas this is entirely without prejudice to the rules and procedures applicable in each Member State as regards the decisions to be taken in the event of the insolvency or winding-up of an investment firm;

• (9) 

  Whereas the definition of investment...

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