Parliament disagrees with the Council on investor compensation schemes in fraud cases

On the three proposals voted by the European Parliament, there are very significant differences between the position of the EP and, once adopted, Member States' position for the directive on investor compensation schemes. MEPs expects to continue the negotiations with the Council on the the two other proposals, one on derivatives and the other on short selling. With this aim, the final vote were postponed.

The Parliament voted in plenary session three proposals making derivatives trading less fragile, reducing speculative practices linked to short selling and reducing the time for the setting up of investor compensation schemes.

With regard to the compensation schemes legislation, Parliament voted to add protection to private investors against fraudulent and defaulting investment firms, particularly by adding "bad advice" as a case for claiming compensation. In addition, MEPs also halve the time allowed for fully capitalising national compensation schemes (five years instead of ten) and enable local authorities and NGOs, as well as private individuals, to file compensation claims. On the Economic Affairs Committee's suggestion of increasing the guaranteed minimum compensation to €100,000, MEPs agreed in keeping the original amount proposed by the Commission, which means €50,000. Moreover, in February 2011, European Commission consulted on measures to strengthen bank capital requirements for counterparty credit risk.

The report aims to bring greater safety, transparency and stability to the OTC derivatives market, which was valued at around €425 trillion in 2009, with over-the-counter derivatives (OTCs), central clearing parties (CCPs) and trade repositories. Information on OTC derivative contracts would have to be reported to 'trade repositories' and be accessible to supervisory authorities. OTC derivative contracts would need to be cleared through central counterparties (CCPs), thus reducing counterparty credit risk, i.e. the risk that one party to the contract defaults.