The European Parliament 2009-2011: Key Legislation Approved By MEPs

The European Parliament's current President, Jerzy Buzek, is soon to hand over the reins to his successor, who will be chosen by the full body of MEPs at the Strasbourg plenary session in January 2012. This mid-way point between the European elections of 2009 and 2014 gives an opportunity to review some of the main legislation adopted by MEPs over the last two and a half years.

This background note is divided into 11 sections with links to press releases and further information.

REF. : 20111205BKG33270

Economic and financial affairs

Caps on bankers' bonuses and stricter capital requirements. Under new rules on bankers' bonuses, upfront cash bonuses will be capped at 30% of the total bonus and 20% for particularly large bonuses. Between 40 and 60% of any bonus must be deferred for at least three years and can be clawed back if investments do not perform as expected. At least 50% of the total bonus would be paid as "contingent capital" (funds to be called upon first in case of bank difficulties) and shares. Each bank will have to set limits to salary-related bonuses on the basis of EU-wide guidelines. Bonus-like pensions will also be covered. In addition, new capital rules for bank trading activities and re-securitisations will ensure banks properly cover the risks they are running on their trading activity for investments such as mortgage-backed securities, which were central to the crisis.

EP final vote: 7.7.2010

Rapporteur: Arlene McCarthy (S&D, UK)

Supervision of financial institutions. This legislation sets up four new bodies with binding powers: three new European Supervisory Authorities (banking; securities and insurance; occupational pension sectors) plus a new European Systemic Risk Board to detect risks to the financial sector as a whole, replacing the current system of EU consultative committees. The new bodies, which have been operational since January 2011, have powers to settle disputes among national financial supervisors, with binding decisions in the event of disagreements. They can also ban risky financial products and activities. The authorities will be located in Frankfurt, Paris and London. The ECB president will chair the Risk Board for the first 5 years. The aim is to identify risks in the system at an early stage and respond more effectively in emergencies, by reinforcing supervision at EU level, thus contributing to financial stability.

EP final vote: 22.9.2010

Rapporteurs: Antolín Sánchez Presedo (S&D, ES), Sven Giegold (Greens/EFA, DE), Sylvie Goulard (ALDE, FR), José Manuel García-Margallo y Marfil (EPP, ES), Peter Skinner (S&D, UK), Ramon Tremosa i Balcells (ALDE, ES)

Hedge funds and private equity. The aim of the alternative investment fund (AIF) managers' directive is to boost investor protection and financial stability by subjecting all AIF managers in the EU to a binding authorisation and supervision system. The new rules introduce a "passport" for marketing funds in other EU countries. The directive covers funds with a portfolio of more than €100 million, including hedge funds, private equity, commodity, real estate and infrastructure funds.

EP final vote: 11.11. 2010

Rapporteur: Jean-Paul Gauzès (EPP, FR)

Late payment of bills. A new directive imposes a 30-day standard deadline for the paymente of bills for goods or services by both private and public sector organisations. Public authorities can extend the deadline to 60 days only with proper justification. Member States may opt for a standard deadline of up to 60 days for payments by health sector bodies. Contracts between businesses can, however, set deadlines of more than 60 days, if expressly agreed and not grossly unfair. If a payment is late, the compensatory interest rate payable will be the reference rate plus a minimum 8%. Creditors will receive at least €40 in damages to cover administrative costs. This directive must be implemented by Member States within two years.

EP final vote: 20.10.2010

Rapporteur: Barbara Weiler (S&D, DE)

Economic governance. The "six-pack" (six EU laws designed to tighten up economic governance in the EU) deals with fiscal issues, including a reform of the EU Stability and Growth Pact and new regulations to detect and address macroeconomic imbalances within the EU and the euro area. There will be increased surveillance, not only of deficit and debt levels, but also of macroeconomic imbalances (such as housing bubbles, loss of competitiveness, trade deficit and surpluses) with more emphasis on preventive measures. Sanctions will be semi-automatic. Fraudulent practices will lead to fines. The Commission will have more oversight powers over national fiscal policies. Countries with more than 60% debt/PNB will have to reduce this figure by an average of 5% a year.

EP final vote: 28.9.2011

Rapporteurs: Corien Wortmann-Kool (EPP, NL), Diogo Feio (EPP, PT), Vicky Ford (ECR, UK), Elisa Ferreira (S&D, PT), Carl Christoffer Haglund (ALDE, FI), Sylvie Goulard (ALDE, FR)

Short selling and credit default swaps (CDS): the regulation strengthens rules on short selling and CDS trading, two practices accused of fuelling market volatility. Naked CDS trading - purchasing default insurance contracts without owning the related bonds - will be banned, with an exception in cases where a sovereign debt market is no longer functioning properly. As for naked short selling - whereby the trader doesn't already own the shares he wants to sell - the trader will be required to locate the shares and have a "reasonable expectation" of being able to borrow the shares from the located party. The European Securities and Markets Authority will be able to restrict short selling and require other authorities to introduce exceptional measures to deal with difficult situations. The regulation will enter into force in November 2012.

EP final vote: 15.11.2011

Rapporteur: Pascal Canfin (Greens/EFA, FR)