Consultation on the review of the Prospectus Directive (Directive 2003/71/EC)

Enclosed is the European Structured Investment Products Association’s (EUSIPA) formal response to the Commission’s consultation on the review of the Prospectus Directive (Directive 2003/71/EC), published on 9 January 2009.

EUSIPA welcomes the Commission’s efforts to improve and simplify the Prospectus Directive (“the Directive”) to better meet the needs of issuers and investors.

The Directive has contributed significantly to strengthening investor protection and market efficiency in the cross-border issuance of securities in Europe and remains a key pillar to the development of a single European securities market. However, as set out in the Commission’s own assessment, there remain a number of important areas where the Directive has yet to fully realize its objective of enhancing market efficiency.

Inefficiencies largely arise from disproportionate administrative burdens and inconsistencies in implementation arising from legislative ambiguity in the Directive.

Our response fully endorses the Commission’s proposed revisions and highlights two further core areas not addressed in the consultation document and which merit prioritization as part of the forthcoming amendments to the Directive.

These relate to:

  • Registration document regime
    • Today only the stand alone prospectus can be presented on the basis of a three-part document comprising the registration document, securities note and summary. A base prospectus does not benefit from this efficient tripartite disclosure regime. This inconsistency needs to be addressed in the current revisions.
    • Clarification that the Directive’s passporting regime also applies at the level of the registration document, not just the prospectus itself. On this basis issuers can efficiently make use of a registration document for prospectuses approved in different countries.
    • Linked with the above, the need to be able to supplement the registration document (not just the prospectus) – to avoid the current inefficiencies created by separate supplements of this information across multiple individual base prospectuses
  • Supplementary information regime:
    • Removal of duplicate supplementary information requirements where these are now covered by obligations under the Transparency Directive (2004/109/EC)
    • Clarification that the relevant period for publication of supplementary information concludes at the earlier of the closing of the offer to the public or when trading on a regulated market begins
    • we believe legal clarity demands this be addressed through a Level 1 text amendment
    •  Clarification that an investor’s right of withdrawal in the event of supplementary information only applies if the supplementary information is potentially negative to the investor and the investor’s purchase of the securities has not already been settledWe remain at the disposal of the Commission Services to provide additional material on these issues and look forward to discussing these matters further in the near future.