1. CLIFFORD CHANCE CURRENT REGULATORY DEVELOPMENTS IN THE EU Mark Harding Clifford Chance Chairman ISDA European Regulatory Committee London-2/1260936/01 TAIEX/ISDA Seminar National Bank of Hungary September 26, 2002

2. CLIFFORD CHANCE Current EU Regulatory Developments l How the Lamfalussy Committee changed the legislative process l Overview of EU Financial Services Action Plan l Market Abuse Directive l Proposed revision of Investment Services Directive

3. CLIFFORD CHANCE How the Lamfalussy Committee changed the legislative process l Objective:speedier, more effective legislative process in securities field l Level 1: framework directive l Level 2: implementing EU level measure (akin to delegated legislation)

4. CLIFFORD CHANCE How the Lamfalussy Committee changed the legislative process (cont) l Level 3:national implementing measures l Level 4:enforcement l Role of Commission, Parliament, Council, European Securities Committee and Committee of European Securities Regulators

5. CLIFFORD CHANCE EU Financial Services Action Plan l Strategic Objective 1 : a single EU wholesale market l Strategic Objective 2: open and secure retail markets l Strategic Objective 3: state-of-the-art prudential rules and supervision l General Objective: wider conditions for an optimal single financial market

6. CLIFFORD CHANCE Strategic Objective 1: Single EU Wholesale Market l Proposed Prospectus Directive l Proposal on Regular Reporting Requirements l Proposed Market Abuse Directive

7. CLIFFORD CHANCE Strategic Objective 1: Single EU Wholesale Market(cont) l Proposed revision of Investment Services Directive l Related proposals of Committee of European Securities Regulators: – Conduct of Business Rules – ATSs – Transparency

8. CLIFFORD CHANCE Strategic Objective 1: Single EU Wholesale Market (cont) l Collateral Directive l Proposed Takeover Directive l New UCITS Directives l Proposed Pension Funds Directive

9. CLIFFORD CHANCE Strategic Objective 2: Open and Secure Retail Markets l Distance Marketing of Financial Services Directive

10. CLIFFORD CHANCE Strategic Objective 3: State-of-the- Art Prudential Rules and Supervision l Insurance Winding-Up Directive l Bank Winding-Up Directive l Revised CAD l Proposed Financial Conglomerates Directive

11. CLIFFORD CHANCE Proposed Market Abuse Directive l Covers both insider dealing and market manipulation - replaces existing Insider Dealing Directive l Applies to broad range of financial instruments including securities and financial and commodity derivatives

12. CLIFFORD CHANCE Proposed Market Abuse Directive (cont) l Applies to financial instruments traded on a regulated market or whose value depends on an instrument traded on a regulated market l Allows criminal and administrative sanctions l Imposes new disclosure obligations on issuers

13. CLIFFORD CHANCE Proposed Market Abuse Directive (cont) l Has extra-territorial application l CESR work on Level 2 implementing measures l Importance of Level 3 national implementation

14. CLIFFORD CHANCE Proposed Revised Investment Services Directive l Second Commission Consultation Document – changes to scope of ISD – changes to regulatory classification of markets, ATSs – new transparency obligations – new prudential and conduct of business obligations for firms

15. CLIFFORD CHANCE Proposed Revised Investment Services Directive (cont) – New high level principles for regulated markets – new clearing and settlement provisions l Formal proposal for revised ISD expected shortly