Commission report on the application of the export prohibition clause, Art. 7(1) of the Directive on investor-compensation Schemes (97/9/EC)
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 16. 02. 2000 COM(2000) 81 final COMMISSION REPORT on the application of the export prohibition clause, Art. 7(1) of the Directive on investor- compensation Schemes (97/9/EC) TABLE OF CONTENTS Commission report on the application of the export prohibition clause, Art. 7(1) of the Directive on investor-compensation Schemes (97/9/EC). 3 1. 2. 3. Introduction. 3 General principles regulating the cross-border validity of the cover within the EU. 4 The export prohibition clause. 4 3. 1. Guidance for the reasoning on whether the export-prohibition clause should be extended or not. 5 3. 2. Justifications for maintaining the export prohibition clause. 6 3. 3. Justifications for not extending the export prohibition clause. 7 4. Conclusions. 8 ANNEX. 10 1. Analysis of the main features of the compensation schemes set up in the EU Member States. 10 1. 1. Number and size of the existing schemes; membership. 10 1. 2. Amount and scope of the cover. 11 1. 3. Intervention of the scheme: triggering events and procedures. 11 1. 4. Financing and contributions. 12 1. 5. The top-up clause. 12 2. 3. LAW, ADDRESS OF THE SCHEME, PARTICIPANTS, STATUS. 13 COVER AND CONTRIBUTIONS. 24 2 COMMISSION REPORT on the application of the export prohibition clause, Art. 7(1) of the Directive on investor- compensation Schemes (97/9/EC) 1. INTRODUCTION The European Parliament and Council Directive 97/9/EC of 3 March 1997 on investor-compensation schemes (ICS Directive or ICSD) is one of the pillars of the European Framework for a Single Market in the financial services field. It has its origin in Article 12 of Directive 93/22/EC of 10 May 1993 on investment services (ISD). With the purpose of providing a European passport to investment firms based and authorised in one of the Member States, the ISD lays down prudential rules which investment firms must observe at all times, including organisational provisions aimed at preventing investment firms from using instruments and money belonging to investors. However, the ISD does not provide any protection to investors in case of fraud, breach of rules or other circumstances leading to the inability of an investment firm to repay money and return financial instruments to investors. This ultimate protection is therefore achieved, at a minimum harmonised level, through the ICSD. The ICSD entered into force on 26 March 1997, the deadline for implementation in the Member States being 26 September 1998(1). In order to protect primarily small investors and maintain confidence in the financial system, it requires Member States to establish and recognise “investor-compensation schemes” to provide cover to investors’ claims when an investment firm is unable to meet its obligations. Joining a scheme is a precondition for having an authorisation under the ISD; if the protection becomes unavailable, this authorisation shall be withdrawn (2). It should be pointed out that the ICSD applies to all investment firms, including credit institutions authorised to provide investment services. Moreover, the ICSD is modelled after the European Parliament and Council Directive 94/19/EC of 30 May 1994 on deposit-guarantee schemes (DGSD). Here, the purpose was to grant a minimum protection to depositors in the event of the closure of an insolvent credit institution. But, whereas in the DGSD a protection is provided for deposits arising from normal banking transactions, money claims arising from investment business carried out with a credit institution can be covered according to the provisions of the ICSD (3). This report complements the one prepared for the DGSD on the same subject, adopted by the Commission on 22/12/99. 1 2 3 Art. 15 of ICSD Art. 5 (4) of ICSD Art. 2 (3) of ICSD 3 2. GENERAL PRINCIPLES REGULATING THE CROSS-BORDER VALIDITY OF THE COVER WITHIN THE EU A basic principle set out in the ICSD is that if an investment firm belongs to a scheme, the scheme will also cover its investors at branches set up in other Member States (4). This provision extends to investment-compensation schemes the general principle of “mutual recognition”. In other terms, the home country provisions applied to the head office of an investment firm are extended also to its EU branches; the assumption being that these form, within the Internal Market, a single entity subject to single authorisation and centralised supervision of its activities. However, the Directive itself imposes two important exceptions to this principle. First of all, it states that, at least during a transitory period, and in order to avoid possible market disturbances, a scheme offering a higher or wider protection must downgrade its cover at branches located in other Member States where ICS are less generous. This clause, known as “export-ban” or “export prohibition clause”, exists also for deposit-guarantee schemes (5). The second exception, known as the “topping-up” clause, is that an investment firm belonging to a scheme offering a lower or narrower protection will have the right to adhere to a host scheme in order to upgrade its cover at branches located in other Member States where ICS are more generous. A similar clause also exists for deposit-guarantee schemes (6). Both clauses aim at avoiding unequal conditions of competition based on the cover offered to investors. The relevant difference is that the export prohibition clause reduces the level of protection for some investors, who would otherwise receive a higher protection, whereas the topping-up works in favour of an upgrade of the protection (though the decision to effectively increase the cover remains with the investment firm itself, which may decide not to join the host country scheme). The export-ban clause represents a relevant exception to the principle of the Single Market for investment services, in that it discriminates between investors of the same investment firm in case of insolvency. In addition, is estimated that market disturbances may be expected only for a short period of time. That is why the “export prohibition clause” is envisaged in the Directive only as a transitory measure and is due to expire at the end of 1999, unless the European Parliament and the Council decide otherwise, following a proposal from the Commission to extend its validity. it 3. THE EXPORT PROHIBITION CLAUSE According to art. 7 (1), sub-par. 2, of the Directive, the Commission is required to report on the export prohibition clause and to discuss the opportunity to extend its validity beyond 1999. The wording of this article is as follows: 4 5 6 Article 2(1) states that “Each Member State shall ensure that within its territory one or more investor- compensation schemes are introduced and officially recognised”. Article 7 establishes the principle that “investor-compensation schemes - introduced and officially recognised in a Member State in accordance with article 2(1) - shall also cover investors at branches set up by investment firms in other Member States”. Art. 4 (1), 2nd sub-par. , of DGSD for deposit-protection. Art. 4 (2) of the DGSD. 4 “Until 31 December 1999, neither the level nor the scope, including the percentage, of the cover provided for may exceed the maximum level or scope of the cover offered by the corresponding compensation scheme within the territory of the host Member State. Before that date, the Commission shall draw up a report on the basis of the experience acquired in applying this sub-paragraph and Art. 4(1) of Directive 94/19/EC (7) referred to above and shall consider the need to continue those provisions. If appropriate, the Commission shall submit a proposal for a Directive to the European Parliament and the Council, with a view to the extension of their validity. ” Reporting within the mentioned deadline is particularly important because it helps to clarify the legal framework which investment firms will face beyond 31. 12. 1999. The present section focuses on the export prohibition clause, with the purpose of in the light of recent providing views in favour or against developments. In particular, sub-session 3. 1 lists the criteria that should guide the reasoning on this issue; in sub-sessions 3. 2 and 3. 3, the main arguments in favour and against the prolongation of the validity of the clause are put forward and examined. its prolongation, 3. 1. Guidance for the reasoning on whether the export-prohibition clause should be extended or not We should start by pointing out that the wording of the export-prohibition clause in the ICSD stems from a compromise reached by the Commission and certain Member States for the DGSD during the negotiations related to that Directive (8). that time, some delegations were particularly concerned that At “market disturbances” could be caused by branches of credit institutions established in a host Member State offering levels of cover higher than those offered by domestic credit institutions. In other words, it was feared that differences in the level of deposit protection could drain deposits foreign institutions. There existed no evidence of this, as there was no evidence of how the new regulation on deposit-protection would have impacted on the preferences of depositors when choosing a credit institution. Similar reasons led, some years later, to accept an export-ban clause in the ISCD. from domestic institutions towards 7 8 The wording of the second and third subparagraphs of Article 4 od DGSD is as follows: “Until 31 December 1999 neither the level nor the scope, including the percentage of cover provided, shall exceed the maximum level or scope of cover offered by the corresponding guarantee scheme within the territory of the host Member State. Before that date, the Commission shall draw up a report on the basis of the experience acquired in applying the second subparagraph and shall consider the need to continue those arrangements. If appropriate, the Commission shall submit a proposal for a Directive to the European Parliament and the Council, with a view to the extension of their validity. ” This is explained very clearly in the Commission’s report on the DGSD. In particular, session 2. 1 underlines that, in the DGSD, the clause was the outcome of a compromise between the Commission, reluctant to accept the export prohibition, certain delegations, which on the contrary attached particular importance to this clause, and the Legal Service, which considered it to be admissible only as temporary. 5 A common element of the two directives is that the export-ban clause is temporary in nature, that is, it is going to end unless the European Parliament and the Council decide otherwise, following a proposal from the Commission with a view to the extension of its validity. This aspect was emphasised in the European Court’s judgement of 13 May 1997, related to the DGSD (9): in rejecting the action for annulment of the clause brought by the German Government, the Court states, in particular, that “in view of the complexity of the matter and the differences between the legislation of the Parliament and the Council were empowered to achieve the necessary harmonisation progressively”. the Member States, A second element can be appreciated comparing art. 7(1), sub-par. 2, of ICSD and art. 4(1), sub-par. 3, of DGSD, both relating to the criteria that should guide the Commission when preparing its report on the export-prohibition clause. Both reports shall be drawn up “on the basis of the experience acquired in applying” this clause. There can be a trade-off between the principle that the export-prohibition clause should be temporary and the consideration that any decision should be based on experience. In general, the longer the period of application of the clause, the longer the experience. The Commission should therefore try to hit a balance between the relevance attributed to the achievement of the Single Market for Financial Services, on the one side, and the necessity to avoid market disturbances arising from insufficient harmonisation of the basic rules, on the other side. But, if we again compare the two directives, we can see that in the ICSD an additional criterion should be respected: whereas the DGSD states that the report shall be drawn up “on the basis of the experience acquired in applying” this clause, the ICSD stipulates that the Commission shall base its report also on the experience acquired in applying. Art. 4(1) of Directive 94/19/EC” (10). The link with the DGSD is specially relevant in this respect. Though most of the Member States have now implemented the ICSD (14 out of 15), experience on how the provisions of the directive actually work is scarce. In most of the countries, the implementing measures were approved at the end of 1998/ beginning of 1999, and in some of them the framework was completed through administrative and government provisions in the final months of 1999. On the contrary, the credit institutions have benefited from a longer period to analyse the operation of this clause: Directive 94/19/EC was approved on 30 May 1994 and implemented by the Member States during 1995. This means that the experience with the export-ban clause in the DGSD and the decision taken in the banking sector must be considered a key element for the Commission’s decision on the ICSD. 3. 2. Justifications for maintaining the export prohibition clause The main argument put forward by certain Member States as a justification for maintaining the clause is that not enough experience is available yet on how the institutions nor export-ban clause really works. In other words, neither credit 9 10 On this point, see the Commission’s report on DGSD. Art. 4(1) of the DGSD precisely deals with the export-ban clause in the field of deposit-protection. 6 investment firms with branches in another Member State have, for reasons directly linked to their financial situation, been unable to meet their obligations, during the period under review (11). the possibility of market disturbances arising from Following this reasoning, different levels of the cover cannot be wholly ruled out today, as it could not be wholly ruled out when the Directive was approved in 1997 and therefore, the argument goes, the clause should be maintained in the future. In particular, before lifting the ban, certain Member States would like to see more experience of the degree of the convergence process in the European financial market and on cross-border defaults under investor compensation arrangements; the concern being that practice in paying compensation can be more complicated than passing the implementing law and could result in differences from one Member State to the other. 3. 3. Justifications for not extending the export prohibition clause The principle of a Single Financial Market. The export clause is an exception to the principle of a single financial market and creates obstacles to the exercise of the right of establishment and to the freedom to provide services. Moreover, it introduces discrimination between investors of the same investment firm in case of insolvency and becomes incompatible with the fact that, from both a legal and a financial viewpoint, an investment firm and its branches should be regarded as a single entity. It was against this background that the Council and Parliament adopted the export prohibition clause only as a transitory arrangement. The exception’s main justification was the complex and unclear situation existing before the adoption of the Directive. The developments of the financial sector. The financial sector has changed considerably since the adoption of the Directive, both as a result of the harmonisation of investor-compensation schemes and as a result of financial integration. € First, concerning the harmonisation of compensation schemes, much has happened during the transitional period, which ends on 31 December 1999. A regulatory minimum level of cover ( 20 000) is established in all Member States and the coverage of all branches – wherever established – is acquired. It is worth considering that, before the approval of the ICSD, most Member States did not even have a compensation scheme for investors’ protection. In comparison, the legislation in force today shows that levels of investor-compensation tend to converge for most Member States. In fact, by 1st January 2000, all Member States but four will have a 28. 000 per investor. The compulsory compensation level of between € only exceptions will be Denmark (for cash, € 20. 000), Belgium (for cash, cash and 20. 000), France ( 73. 000) (see annex). 70. 000 for financial instruments) and UK ( 40. 000; for financial instruments 20. 000; for securities 20. 000 and € 70. 000 for € € € € € € To sum up, the large differences that existed at the moment of adoption of the directive and which justified a temporary exception from the Single Market principle 11 See also the Commission’s report on DGSD, session 3. 2. 7 do no longer prevail. Consequently the principal justification to make an exception has disappeared. The second trend in the financial market, which has important consequences for the evaluation of the export prohibition clause, is the process of financial integration. This development has been experienced in the banking market as well (12). In the securities field, the growth of information technology and of electronic networks has been the main driving force for change; it has revolutionised the way in which securities markets and intermediaries operate. The process of globalisation in the economy has led to the internationalisation of financial portfolios and investment decisions. Technology has worked in favour of the elimination or circumvention of national boundaries. In the banking sector, competition has urged banks to embark on mergers and acquisitions to consolidate their position and be able to compete internationally. Securities firms belonging to banking groups have also been involved in this process. The introduction of the Euro has triggered structural changes, eliminating exchange risk and putting the basis for increased financial integration and competition. Work on achieving a truly single market for financial services is going on through the implementation of the Financial Services Action Plan, which identifies concrete and urgent actions to “secure the full benefits of the single currency and an optimally functioning European financial market” (13). To sum up, the factors for integration have been strong in the last few years and this is clearly going to continue. In the process of financial integration, the non-export clause is a residual element which splits the Single Market into national markets. It needs to be eliminated to promote a sound integration of the European financial market. Estimate of potential disturbances. As for possible market disturbances resulting from the expiration of the export prohibition clause, experience can be drawn from the banking sector. Here, “no Member State has any objective and factual information which might be used to support concrete concerns that such risks are likely or significant. Nor are Member States able to specify or quantify the potential market disturbances for domestic institutions in the event of an expiration of the export prohibition clause” (14). 4. CONCLUSIONS The investor compensation schemes in Member States have now been harmonised according to the principles and objectives of the Directive. Against this background, it seems disproportionate to prolong the export prohibition clause in order to avoid market disturbances that nobody could estimate or specify and which seem highly unlikely to happen. 12 13 14 See the Commission’s report on DGSD, session 3. 3. Financial Services – Implementing the Framework for financial markets: Action Plan. Commission Communication of 11. 5. 1999 COM(1999)232. See the Commission’s report on DGSD, session 3. 3. 8 A prolongation of the export prohibition clause would mean that the protection for such a remote risk would be considered more important than the completion of the Single Market for financial services. The Commission is aware that not all the Member States have implemented the ICSD early enough to have benefited from practical experience with the operation of its provisions (see section 3). In this respect, the strong links between the ICSD and the DGSD should be considered. First of all, because the ICSD is actually a transposition of the DGSD rules and principles in the securities field. Not only are the two directives complementary in some aspects (the 97/9/EC on investor-compensation schemes also applies to banks as far as investment services are concerned); they are also identical with regard to the articles concerning the cross-border provision of services. This is why any experience of problems or questions arising from the banks’ side might be used to supply useful information for investment firms. Secondly, there’s an interest of the European regulator to have a comprehensive picture of how the “twin” directives work. In this regard, it is important to keep in mind that, though the DGSD was approved in 1994 and the ICSD only in 1997, the deadline for the Commission to produce the reports on the export-ban clause is the same (31/12/1999). Moreover, the Commission is of the opinion that consistency with the DGSD should be preserved. Here, on the basis of the report adopted by the Commission according to art. 4(1) of DGSD, the export-ban clause is going to expire for deposit-guarantee schemes. It would be difficult to justify, after 1999, the “export-ban” clause in the in the DGSD. As far as customers’ protection is concerned, ICSD and not considering that some schemes cover both deposits and investors’ claims, discrimination would be introduced between depositors and investors of the same foreign branch of an institution. However, after the clause has expired (31 December 1999) the Commission will closely monitor the evolution of the situation, with particular attention to serious market disturbances, on the basis of elements supplied by the national authorities of Member States according to their preferences. The Commission can then consider the possibility of proposing appropriate legislative measures. 9 ANNEX THE IMPLEMENTATION OF DIRECTIVE 97/9/EC ON INVESTOR-COMPENSATION SCHEMES IN THE EEA STATES 1. ANALYSIS OF THE MAIN FEATURES OF THE COMPENSATION SCHEMES SET UP IN THE EU MEMBER STATES So far, 14 out of 15 Member States have formally implemented the Directive. The missing Member State is Luxembourg, which has informed the Commission that a draft bill was put to the Luxembourg Parliament in March 1999 and is still in the pipe line. The bill might be adopted by the end of 1999. In the following report, reference is made only to the 14 Member States which have notified implementation of the Directive. 1. 1. Number and size of the existing schemes; membership The Directive asks the Member States to ensure that within their territories “one or more ICS are introduced and officially recognised” and states that no investment firm may carry on investment business unless it belongs to such a scheme. The definition of “investment firm” is based on art. 2(1) of the ISD and includes credit institutions, if authorised to provide investment services. In the case of credit institutions, the Directive considers that some claims might be subject also to the DGSD and stipulates that: (1) each Member State shall direct such ambiguous claims under one or other of these Directives; (2) no claim shall be eligible for compensation more than once. These provisions have been implemented in 14 Member States. Most Member States have established only one scheme to provide compensation for investment services. In some of the Member States, the possibility to create additional private schemes is considered in the regulatory framework but has not been used so far. Germany, Spain, Ireland, The Netherlands and Austria have established more than one scheme but participation is linked to the type of the services provided, or to the nature of the institution. For instance, one scheme is for investment firms, the other/s for a specific category of banks. In Belgium, Denmark, France and Sweden, there is only one scheme which provides compensation to both investors and depositors (covering claims arising from ICS and DGS directives). As a consequence, it seems that, at this very early stage, investment firms and banks are not really free to choose the scheme to adhere to. As far as credit institutions are concerned, two options have prevailed: one consists in the establishment of a comprehensive fund, covering a bank’s depositors and the investor-compensation scheme covers cash investors. In the second option, claims only when arising from the provision of investment services whereas deposits are covered by a separate deposit-guarantee fund. Additional research is needed to verify how the first option is actually implemented and to make sure that no violation of either the DGSD or the ICSD occurs (for instance, in the calculation of the maximum cover per depositor/investor). 10 1. 2. Amount and scope of the cover The Directive stipulates that schemes should provide for a minimum cover of 20. 000 per investor’s claim and, below this amount, of at least 90% of the claim. Some investors might be excluded from the cover, owing to their nature (professional or institutional investors) or on the basis of their relationship with the investment firm in trouble. € These provisions have been implemented in 14 Member States. In particular, all the schemes have established a maximum limit to the amount that can be paid per investor in case of a compensation claim. With few exceptions, this amount sticks to the minimum indicated in the ICSD ( 20. 000). In particular, from 1/1/2000 on (which is the end of the “transitory” period) the covers are as follows: € • In most Member States the maximum cover per investor is € Ireland and Finland also have a “90% of the claim” limit below € Portugal ( 28. 000) are not far from that amount. 25. 000) and Sweden ( € 20. 000. Germany, € 20. 000. • Denmark has a € cover for securities; Belgium has a 20. 000 maximum cover for securities; but compensation for depositors (in case of a bank’s failure). 40. 000 maximum cover for cash and a € 20. 000 maximum € 20. 000 maximum cover for cash and a these amounts also include the € • For two Member States, the cover is significantly higher than the minimum € 73. 000 cover is envisaged, with some 70. 000 for 70. 000 for financial instruments is set (but the amount for cash also indicated in the ICSD: for UK, a percentage limits below this amount; in France, a double limit of cash and includes the compensation for depositors, in case of a bank’s failure). € € As regards the scope of the cover, the situation is less homogeneous. In Germany, Spain, The Netherlands, Austria and the UK, all the categories of investors listed in annex 1 of ICSD are excluded from the cover. This is not the case in the other Member States. Nevertheless, in all Member States, investment firms and institutions participating in the scheme are excluded from the cover. In some Member States, some kinds of derivatives are not covered. In Austria and Portugal, for instance, derivatives on commodities are not covered. 1. 3. Intervention of the scheme: triggering events and procedures With the purpose of concretely protecting investors, the Directive regulates in detail the development of the compensation procedure, establishing rules for customers’ information and deadlines for payments. All the Member States have formally implemented these rules. However, considering that no compensation claim has arisen in any of the Member States falling under the provisions of the Directive, no experience is yet available on how the Directive actually works. 11 1. 4. Financing and contributions One aspect of special interest is the solvency of the scheme itself. The Directive does not regulate the way in which ICS are to be financed, but establishes the following principles: (1) the cost of the scheme must be borne by investment firms themselves; (2) the financing capabilities of the schemes must be in proportion to their liabilities; (3) the stability of the financial system must not be jeopardised. There are in principle two kinds of schemes: those which periodically levy money and contributions from the participants; and those which only ask for commitments by the participants to pay certain amounts in case of compensation claims. In the first case, to make it easier for the fund to meet its obligations within the strict deadlines established in the regulation, a link is often established between the contributions levied and the value of financial instruments and money held by (or the number of clients of) the institutions participating in the scheme. The following additional mechanisms have also been envisaged by some Member States: supplementary contributions, to be levied when the assets of the fund are not sufficient to cover the claims; and borrowing facilities from banks or other schemes. Additional information is being collected to make sure that no violation of the mentioned principles occurs; for instance, when the borrowing facilities are provided by the Central Bank or a political body. For those funds which do not levy contributions from their members, a delay in the payment of compensation claims might occur if the resources of the immediately available. This option therefore deserves additional fund are not examination. 1. 5. The top-up clause All the 14 Member States have included the “topping-up” clause in their legislation, setting rules that enable branches of investment firms established in other Member States to participate in their schemes. For all of them, no experience is yet available on how the clause operates. Owing to the fact that the cover has been set at an amount close or equal to the minimum level in the Directive, it is estimated that no experience will be available, even in the future. For the UK, 14 branches of European institutions have applied to take part in the scheme but half of the requests come from one of the countries which has only recently implemented the Directive (France). These institutions might therefore reconsider their position now that their Home State has implemented the Directive (15). As for France, no application to the scheme has been received up to now, due perhaps to the fact that the ICSD was implemented only in late September 1999. 15 France has in fact introduced an even higher level of protection than UK. 12 2. LAW, ADDRESS OF THE SCHEME, PARTICIPANTS, STATUS COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS BELGIUM (B) Act of 17-12-1998; Decree of 17 December 1998; Executive orders concerning the deposit and financial instrument protection fund (Moniteur belge, 25 February 1999). DENMARK (DK) Act No 415 of 26-6-1998; executive order of April 9, 1999. Investment firms and credit institutions for investment services. The “sociétés de gestion de fortune”, which are not allowed to receive securities or money from their clients, are obliged to adhere on a separate basis: their contributions are levied only when a compensation claim arises, concerning another “société de fortune”. Credit institutions, mortgage credit institutions and securities brokers. Each forms a separate department and is supposed to cover its own losses. The fund is also responsible for depositor protection. Fonds de Protection des Depôts et des Instruments Financiers Boulevard de Berlaimont 14 B-1000 Brussels Mr H. Debremaeker Tel. ++32/2-221 38 92 Fax. ++32/2-221 32 41 The fund also provides deposit guarantee for banks. It Public, with legal capacity. is managed by a board of 12 people, representing the public sector and the financial industry. The “Commission Bancaire et financière” can take part in the meetings of the board. Private schemes can also be created. The Guarantee Fund for Depositors and Investors Niels Juels Gade7 PO Box 2082 DK – 1013 Copenhagen K The fund also provides deposit guarantee for banks. Private, established by law, under the supervision of the Danish Financial Supervisory Authority. 13 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS GERMANY (D) Gesetz zur Umsetzung der EG- Einlagensicherungs- richtlinie und EG- Anleger- entschaedigungs- richtlinie vom 16/7/98; Verordnung uber die Beitraege zu der Entschaedigungs- einrichtung der Wertpapierhandels- unternehmen bei der Kreditanstalt fur Wiederaufbau. The same (1) Entschädigungseinrichtung der Wertpapierhandelsunternehmen (EdW) Charlottenstr. 33/33a 10117 Berlin Tel. ++49/30-203 699 0 Fax:++49/30-203 699 5601 (1) Institutions providing financial services and investment firms (securities firms) for claims related to investment services; banks different from those indicated below (under 2) for claims related to investment services. Public. The Scheme was established by the “Kreditanstalt fur Wiederaufbau” as a special Fund, not capable of acting as a legal entity (2) Private savings banks, for money and securities related to the provision of investment services (2) Entschaedigungseinrichtung deutscher Banken GmbH, Private Burgstrasse 28, 10178 – Berlin Germany Fund (2) also provides deposit guarantee for banks. 14 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS GREECE (EL) Law 2533/1997 Investment firms. Banks may join the fund in the future. Athens Stock Exchange Members’ Guarantee Fund Fidiou 14-16, TK 10678 ATHENS Legal person of private law with a public function, under the supervision of the Capital Market Commission. (1) Compulsory: Financial institutions authorised to provide investment services. (1) N. A. SPAIN (E) L. 37 of 16/11/1998; some points of the Directive have to be regulated through a royal decree; the latter is going to partly modify the regulation concerning the “Fondo de garantia de dépositos bancarios”. Some of the answers are based on the content of the royal decree. (1) and (2): Private. Supervised by the “Comision Nacional del Mercado de Valores”. The schemes can be established as separate funds and are not capable of acting as legal entities. They are administered by limited companies the authorised supervision authority. by 15 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS (3), (4) and (5): Mixed (2) On a voluntary basis: Financial institutions which are members of the Stock exchange may build up a specific scheme (3) Banks (4) Banks (5) Banks (2) N. A. This possibility has not been exploited for the time being (3) Fondo de Garantía de Depósitos en Establecimientos bancarios (4) Fondo de Garantía de Depósitos en Cajas de Ahorro (5) Fondo de Garantía de Depósitos en Cooperativas de Crédito Address for all three institutes: José Ortega y Gasset 22 E - Madrid 28006 Tel. ++34/91-4316645 Fax ++34/91-5755728 Funds (3)-(5) also provide deposit guarantee for banks. 16 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS FRANCE (F) Law N. 99-532 of 25/6/1999 (art. 70 in particular amends art. 62 of Law N. 96- 597 of 2/7/1996). Acts of 29/9/99 nn. 99/14; 99/15; 99/16 and 99/17 Credit and financial services institutions authorised to provide investment services. N. A. The system is bringing together both the pre-existing schemes for deposit-guarantee of credit institutions and the pre-existing scheme covering the operations of French “Sociétés de Bourse” The Fund also provides deposit guarantee for banks. The scheme is administered by the Deposit Guarantee Fund. IRELAND (IRL) Investors Compensation Act N. 37/1998 (1) Credit institutions, investment firms whose activity is not restricted, stockbrokers. (2) Investment firms with restricted activity, insurance intermediaries when they provide investment services. Investor Compensation Company Ltd C/o The Central Bank of Ireland P. O. Box 559 Dame Street Dublin 2 The ICCL has established two funds: (1) Fund A The scheme is private, managed by a board. The Central Bank of Ireland is the supervisory authority and provides administration services to the ICCL. The ICCL can create more than one fund, each separate from the others, if it has prior approval from the supervisory authority. (2) Fund B 17 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS ITALY (I) Act N. 58/1998, art. 59. Decree n. 485 of 14 November 1997; Decree 30/6/1998. N. A. A draft bill has been filed with the Conseil d’Etat and the Parliament. Banks, investment services and financial institutions providing investment services; agenti di cambio. Investment firms and credit institutions for investment services. Fondo Nazionale di Garanzia Via del Corso, 184 00100 Roma – Italy N. A. Private, authorised by the Ministry of Treasury, regulated by statute. General principles are fixed by law and administrative regulation. Private, regulated by statute. The Scheme will be supervised by the “Commission de Surveillance du Secteur Financier”. LUXEMBOURG (L) Information is based on the parliamentary proposal NETHERLANDS (NL) (1) Section 28a of the Act on the Supervision of Securities Trade 1995, declared generally binding by Royal Decree of 21 September 1998 (1) Investment firms and credit institutions for investment services. Banks are covered by CGS; their participation in the ICS is only for the purpose of the funding of the scheme in case of shortage of funds (1) Investor Compensation Scheme of Securities Institutions for Claims of Investors (ICS) Stichting Toezicht Effectenverkeer (Securities Board of the Netherlands) P. O. Box 11723 1001 GS Amsterdam Private, regulated by a public law. The provisions are the outcome of close consultation between the supervisory authorities and the representative organisations of the securities sector. The “fund” is managed by a foundation. The securities authority (SBN) administers and verifies claims and makes payments. 18 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS (2) Section 84 of the Act on the Supervision of the Credit System 1992; Section 28a of the Act on the Supervision of Securities Trade 1995, declared generally binding by Royal Decree of 21 September 1998, and by Royal Decree of 28 September 1998. Act N. 63/1999, amending in particular the Banking Act and the Investment Services Act. AUSTRIA (A) (2) Banks. All claims on banks are covered by this scheme, even if they are relative to investment services (2) Collective Guarantee Scheme of Credit Institutions for Repayable Funds and Portfolio Investments (CGS) De Nederlandsche Bank NV (The Dutch Central Bank) PO Box 98 NL – 1000 AB Amsterdam Fund (2) also provides deposit guarantee for banks. Private, regulated by a public law. The provisions are the outcome of close consultation between the supervisory authorities and the representative organisations of the sector. There is no “fund” to be managed, since contributions are determined ex post. The supervisory authority (DCB) is responsible for implementing the scheme. (1) Credit institutions not belonging to one of the systems indicated below (from 2 to 5), for money and securities related to investment services (2) Sparkassen for money and securities related to investment services (1) Einlagensicherung der Banken und Bankiers Gesellschaft m. b. H. Private Börsegasse 11 A - 1013 Wien (2) Sparkassen- Haftungs Aktiengesellschaft Private Grimmelshausengasse 1 A - 1030 Wien 19 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS (3) Raiffeisenbanken for money and securities related to investment services (4) Volksbanken for money and securities related to investment services (5) Hypothekenbanken for money and securities related to investment services (6) Investment firms authorised as portfolio managers for money and securities received from their clients. (3) Österreichische Raiffeisen- Einlagensicherung reg. Gen m. b. H. Private Hollandstraße 2 A - 1020 Wien (4) Schulze-Delitzsch-Haftungs-genossenschaft reg. Gen. M. b. H. Private Schottengasse 10 A - 1010 Wien Funds (1)-(4) also provide deposit guarantee for banks. (5) Hypo-Haftungsgesellschaft m. b. H. Private Brucknerstraße 8 A - 1040 Wien Fund (5) also provides deposit guarantee for banks. (6) Entschaedigungssystem der Vermoegensverwalter in Gruendung durch: Private Rechtsanwalt Dr. Neumayer, Baumannstrasse 9/11, A-1030 Wien 20 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS Investment firms and banks for investment services. Investor Compensation System Av. Fontes Pereira de Melo 1056 –801 Lisbon - Portugal Investment firms and credit institutions. Investors’ Compensation Fund P. O. Box 1009 00101 Helsinki, Finland Mrs Leena Linnainmaa Tel ++358-940561244 Fax ++358-940561291 PORTUGAL (P) Decree-Law No 222/99 of 22-6-1999. Other regulation in progress. The system is now being implemented. FINLANDE (FIN) Act on Investment Firms No 579/1996 as amended by Act 518/1998; Securities Market Act (495/1989 as amended by Act 522/1998); Act on the right of a foreign investment firm to provide investment services in Finland (Act 580/1996 as amended by Act 519/1998). Public. The system is independently managed by a board, whose members (representatives of the supervisory authorities and of the industry) are nominated by the Ministry of Finance. The Securities Market Commission provides the technical and administrative support. Private, administered by representatives of the participating institutions. The rules of the fund are confirmed by the Ministry of Finance. 21 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS SWEDEN (S) Act 1999/158; Banking Business Act (1987/617); Securities Business Act (1991/981); Lag 1999/199; Ordinance 1996/595. Securities institutions (and banks) for investment services. Funds received by securities institutions in relation to investment services are covered by the Deposit Guarantee Scheme. UNITED KINGDOM (UK) Financial Services Act 1986 (FSACT); FS (compensation of investors) Rules 1994 as amended Any firm carrying on investment business as defined in FSACT and authorised under FSACT Deposit Guarantee Board Regeringsgatan 48 Box 7369, S-103 90 Stockholm Mr Hans Jacobson (Chairman) Mr Thomas Norling (Director) Tel. ++46/8-7878100, Fax :++46/8-241335 The fund also provides deposit guarantee for banks. Investor Compensation Scheme Ltd Cottons Centre Cottons Lane London SE1 2AB Public. The scheme operates by the Deposit Guarantee Board (under the Ministry of Finance). The same Board is also responsible for the Swedish Deposit Guarantee Scheme. Private company limited by guarantee subject to rules written by FSA. It has to produce a quarterly report for FSA. There is a Memorandum of Understanding between FSA and ICS. UK is planning to replace the existing ICS, the deposit guarantee scheme and other compensation schemes now operating in the UK with a single scheme. The proposal is included in a draft “Financial Services and Markets Bill” that will probably come into force in 2000. 22 COUNTRY LAW OR ACT PARTICIPANTS ADDRESS OF THE SCHEME STATUS ICELAND (IS) N. A. Information is based on the parliamentary proposal. There is a parliamentary proposal, which should be adopted as of January 2000. Commercial banks, savings banks, other credit institutions and investment firms for securities and cash related to securities trading N. A. In the parliamentary proposal, the scheme should be the same as the Deposit Guarantee Scheme according to Directive 94/19/EC. Private, self-owned institution; no links with supervision authorities. LIECHTENSTEIN (LIE) N. A. NORWAY (NOR) Act No 79 of 19-6-1997 on Securities Trading (section 8-13); Regulation n. 983 of 14 October 1996 on Investment Firms’ Investor Protection Arrangements N. A. N. A. N. A. Investment firms and credit institutions offering investment services. NO NAME OR ADDRESS The guarantee must be supplied by a savings- or commercial bank, an insurance company or a financial institution authorised according to Act n. 40 of 10 June 1988 on Financial Activity or equivalent institution in another EEA State. The scheme is regulated by public legislation and regulations, but is managed by the relevant private parties. The supervisory authority (Kredittilsynet) must receive a “guarantee declaration” before authorisation is given to the relevant investment firm. The same authority has been delegated certain powers related to the scheme. 23 3. COVER AND CONTRIBUTIONS COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS BELGIUM (B) Fonds de Protection des Depôts et des Instruments Financiers The fund also provides deposit guarantee for banks. ADDITIONAL SERVICES € 20. 000 for cash and 20. 000 for securities € 15. 000 for cash and 15. 000 for securities until 31/12/99 € € The fund can offer financial assistance in case of liquidation, unwinding, etc. of banks or “sociétés de Bourse” FROM THE COVER Investors listed in annex 1 of directive 97/9/EC are excluded from the cover, with few exceptions. In particular, the fund does not exclude: • Investors related to other firms belonging to the same group of the investment firm and in trouble persons personally holding up to 5% of the capital, auditors) • close relatives and third parties acting on (directors, managers liable members, behalf of the mentioned categories There are two kinds of contributions: the first is levied as soon as an institution joins the scheme; the second is related to the profits of the firm and to the amount of money and securities held and is due on a yearly basis. Additional contributions may be levied in case of a shortage of funds. 24 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS DENMARK (DK) The Guarantee Fund for Depositors and Investors The fund also provides deposit guarantee for banks. ADDITIONAL SERVICES 40. 000 for cash; 20. 000 for securities € € No difference between the three departments (the scheme is the same for credit institutions, mortgage credit institutions and securities brokers) but for certain kinds of deposits with credit institutions the cover is higher. No annual levies. A total amount considered sufficient to cover the claims has been fixed for each of the three departments. This is distributed among the members according to market share and redistributed each year. Part of the contributions are paid in (1/4 of the total). FROM THE COVER Institutions that participate in the fund are excluded from the cover. In particular, the fund does not exclude: • Government agencies • close relatives of directors, managers and the liable members of personally investment firm • persons holding up to 10% of the capital of the investment firm; close relatives of persons holding more than 10% • auditors • other firms in the same group • responsible investors • large companies • other institutional investors The category “other institutional investors” is not defined. 25 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS ADDITIONAL SERVICES FROM THE COVER GERMANY (D) (1) Entschädigungs- einrichtung der Wertpapierhandelsunte rnehmen (EdW) 90% of the claims arising from investment services, up to a max. of € 20. 000 per investor Investors listed in annex 1 of directive 97/9/EC are excluded from the cover. The category “other institutional investors” is not defined. Claims coming from money laundering or from other offences are excluded. Claims in a currency other than those of the EEA and the Euro are excluded. Two kinds of contributions are envisaged: the first – levied in August 1998 from the participating firms – was determined as a percentage of the amount of the administered funds (0,1% 50 and or 1%; minimum amount of 7. 300). The second (paid on a yearly basis) is determined as a percentage of the gross profits of the category (0,3%, € 1%, 2%; minimum amount, in 1999, 200). € € In case of a shortage of funds arising from a compensation claim, a special contribution can be levied from the participants. The scheme is also entitled to borrow money. Contributions for banks are linked to liabilities vs. clients. Special contributions can be raised if the fund falls below a certain limit. 26 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS (2) Entschaedigungs- einrichtung deutscher Banken GmbH Fund (2) also provides deposit guarantee for banks. GREECE (EL) Athens Stock Exchange Members’ Guarantee Fund ADDITIONAL SERVICES • 90% of the claims related to money, € up to a max. of 20. 000 per invest. ; • 90% of the claims to related securities, up to a € 20. 000 max. of per investor € 20. 000 FROM THE COVER The same Investors listed in annex 1 of directive 97/9/EC are excluded from the cover with the exception of institutions providing investment services, which are therefore covered. Contributions are levied on the basis of a formula which takes into account, among other elements, the “RDR” (reverse degree of risk) of each member (related to a member’s own capital) and the existence for that member of an adequate level of “self-protection” (assessed by the Guarantee Fund on the basis of the member’s internal control systems, management, connections with other companies, etc. ). Supplementary yearly contributions are levied in case the capital of the fund falls below a certain desired level (related to the value of the transactions on the Stock Exchange). 27 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS ADDITIONAL SERVICES FROM THE COVER intervention of In case of a shortage of funds, additional contributions can be levied the through the Capital Market Committee. A maximum amount for such additional contributions was fixed. Borrowing from any source is also possible, repayment for through supplementary contributions provided being Two funds for investment firms (name not available) € 20. 000 No additional services Investors listed in annex 1 of directive 97/9/EC are excluded from the cover. SPAIN (E) The answers are based on the content of the royal decree. 28 the value held by the first year, Contributions will be levied taking into account the number of clients and and of money and will instruments be the management determined company. For the contributions will be equal to at least the 50% of the amount due by the participating institutions. Topping-up or third countries’ institutions will contribute on the basis of agreements between the management company and the “home” scheme. COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS ADDITIONAL SERVICES FROM THE COVER In case of a shortage of funds, the company management levy after contributions, additional informing the supervisory authority. Borrowing on account of the fund is also possible. can € € € (3) Fondo de Garantía de Depósitos en Establecimientos bancarios (4) Fondo de Garantía de Depósitos en Cajas de Ahorro (5) Fondo de Garantía de Depósitos en Cooperativas de Crédito 20. 000 The same The same 20. 000 The same The same 20. 000 The same The same Funds (3), (4) and (5) also provide deposit guarantee for banks. 29 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS FRANCE (F) N. A. The system is bringing together all the pre-existing schemes (for deposit- guarantee of credit institutions and for the French “Sociétés de Bourse”) The Fund also provides deposit guarantee for banks. ADDITIONAL SERVICES € € 70. 000 for cash + 70. 000 for financial instruments. Part of the compensation can be paid through securities, of the same kind and value of those held by the investment firm on behalf of the investor. FROM THE COVER Investors listed in annex 1 of directive 97/9/EC are excluded from the cover. Claims coming from money laundering or from other offences are excluded. The Fund is going to issue certificates of association which investment firms will have to purchase. An annual interest is going to be paid on the certificates. The € global (initial) amount of the issue is 10 million. The fund will also receive the amounts paid by investment firms for the breach of rules. Ordinary and supplementary yearly contributions are also levied, on the basis of the amounts of funds and instruments held by the institutions, adjusted to take account of the soundness of their “financial situation” and costs. In case the yearly contributions are not enough to pay the compensation claims, different mechanisms are envisaged to establish how to use the fund’s reserves and funds. 30 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS IRELAND (IRL) (1) ICCL - Fund A ADDITIONAL SERVICES (1) 90% of the claims arising from investment services, up to a max. of € 20. 000 per investor FROM THE COVER (1) Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover. “Other professional investors” can be excluded on the basis of a declaration. Claims coming from money laundering or from other offences are excluded. (2) ICCL - Fund B (2) The same (2) The same (1) For Fund A, fixed and variable yearly contributions are levied. Both are based on the number of eligible clients. (1) and (2) In case of shortage of funds, the ICCL can borrow or raise money, subject to the approval of the supervisory authority. (2) For fund B, fixed yearly contributions are levied, based on the type of business. 1) and (2) In case of shortage of funds, the ICCL can borrow or raise money, subject to the approval of the supervisory authority. ITALY (I) Fondo Nazionale di Garanzia € 20. 000 per investor Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover. The category “other institutional investors” is not defined. Claims coming from money laundering or from other offences are excluded. Contributions are regulated in the Statute. They consist of a fixed and a variable amount, levied on a yearly basis. The variable contribution is related to profits and is determined by the executive board, taking into account the compensation claims received. 31 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS ADDITIONAL SERVICES 20. 000 per investor 20. 000 per investor FROM THE COVER Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover, with the exception of external auditors and their close relatives. Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover. The category “other institutional investors” is not defined. Claims coming from money laundering or from other offences are excluded. 20. 000 per investor The same as ICS € € € N. A. According to the parliamentary proposal, contributions can be levied, subject to a max. amount per year. The ICS is pre-financed by the supervisory authority (SBN); the SBN advances the funds; thereafter the fund reimburses the SBN up to a max. of 25 mln. Dfl; any remaining amount, up to another 25 mln. Dfl, is apportioned between the participating institutions, excluding banks; when necessary, another 25 mln. Dfl can be levied from all the institutions, including banks. The CGS is pre-financed by the supervisory authority (DCB); contributions from banks are determined ex post, in case a compensation claim arises. LUXEMBOURG (L) NETHERLANDS (NL) N. A. Information is based on the parliamentary proposal. (1) Investor Compensation Scheme of Securities Institutions for Claims of Investors (ICS) (2) Collective Guarantee Scheme of Credit Institutions for Repayable Funds and Portfolio Investments (CGS) Fund (2) also provides deposit guarantee for banks. 32 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS AUSTRIA (ÖS) (1) Einlagensicherung der Banken und Bankiers Gesellschaft m. b. H. (2) Sparkassen- Haftungs Aktiengesellschaft (3) Österreichische Raiffeisen- Einlagensicherung reg. Gen m. b. H. (4) Schulze-Delitzsch- Haftungs- genossenschaft reg. Gen. m. b. H. € € € € ADDITIONAL SERVICES 20. 000 per investor FROM THE COVER Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover. The category “other institutional investors” is not defined. Claims coming from money laundering or from other offences are excluded. Derivatives on commodities are not covered. Contributions are due only in case of a default. Each member will contribute according to the ratio of its commission returns to total commissions returns. If for major cases funding by one scheme were not sufficient, other schemes would have to contribute. 20. 000 per investor The same 20. 000 per investor The same The same The same 20. 000 per investor The same The same 33 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS ADDITIONAL SERVICES FROM THE COVER Funds (1)-(4) also provide deposit guarantee for banks. (5) Hypo- Haftungsgesellschaft m. b. H. (6) Entschaedigungs- system der Vermoegensverwalter Investor Compensation System € € € PORTUGAL (P) 20. 000 per investor The same 20. 000 per investor The same The same The same 25. 000 per investor Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover, with limited exceptions. The category “other institutional investors” is not defined. In particular, the fund does not exclude: • supranational institutions • large companies Claims coming from money laundering or from other offences are excluded. Some derivatives are not covered (commodities, credit) Contributions are due only in case of a default. A percentage of the members’ commitments is covered by collateral. Each member will contribute according to the ratio of the amount of its clients’ money and securities to the total amount for the system. A maximum annual limit will be established. In case of shortage of funds, the system is entitled to borrow from banks; the loans will be paid back with the participants’ contributions during the following years. 34 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS FINLANDE (FIN) Investors’ Compensation Fund ADDITIONAL SERVICES 90% of the claims arising from investment services, up to a max. of € 20. 000 per investor FROM THE COVER Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover, with some exceptions. In particular, certain investors (large companies, experienced investors, etc. can be excluded from the cover on an investor-by- investor basis, if the investment firm and the client agree. There are two kinds of yearly contributions: a fixed contribution, equal for all the members; an additional contribution, related to the services provided, to the number of clients, to the consolidated own funds of the institution. SWEDEN (S) Deposit Guarantee Board The fund also provides deposit guarantee for banks. € 250. 000 SEK ( for each investor. 28. 000) Funds received by securities institutions in relation to investment services are covered by the Deposit Guarantee Scheme. Most types of investors are covered. Only institutions providing investment services are excluded. Claims coming from money laundering or from other offences are excluded. At least half of the contributions are in cash; half may be covered by insurance. In case of a shortage of funds, the scheme can borrow. The loan will be paid back with the participants’ contributions during the following years. The payment of a fee is envisaged. The Board will establish detailed principles for the calculation, taking into account the amount of the protected assets. In case of a shortage of funds, the scheme can borrow from the National Debt Office. 35 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS UNITED KINGDOM (UK) Investor Compensation Scheme Ltd ADDITIONAL SERVICES € 48. 000 St. ( 73. 000) That is, 100% of the claim, up to a max. of St. 30. 000 per investor; then 90% of the following 20. 000 St. FROM THE COVER Investors listed in annex 1 of Directive 97/9/EC are excluded from the cover. The category “other institutional investors” can be defined by the ICS. ICELAND (IS) N. A. € 1,7 ml. IC ( 22. 000) Information is based on the parliamentary proposal. Only institutions that participate in the fund are excluded from the cover. ICS does not levy the individual firms directly, although it has the power to do so. ICS levies each of the competent authorities (IMRO, PIA, SFA) which, in turn, levy the participant firms in accordance with detailed rules, based on supervision fees and number of registered persons employed by the firm. In case of a shortage of funds, the scheme has a borrowing/overdraft facility of St. 20 ml. Also an interim levy can be made, subject to a max. amount per year. A problem of shortfall of funds could, nonetheless, in theory arise. The contribution is based on securities and cash held by the participating firm and on the number of employees. In case of a shortfall of funds, the scheme can borrow from the “deposit guarantee” fund up to a certain extent. LIECHTENSTEIN (LIE) N. A. N. A. N. A. N. A. 36 COUNTRY SCHEME LEVEL OF COVER INSTITUTIONS/CLAIMS EXCLUDED CONTRIBUTIONS NORWAY (NOR) NO NAME OR ADDRESS: the guarantee must be supplied by a savings- or commercial bank, an insurance company or a financial institution in the EEA countries. ADDITIONAL SERVICES 200. 000 NOK € ( 24. 000) per investor; max: 25 ml NOK € ( firm 3 ml. ) per investment FROM THE COVER Some professional investors are excluded (investment firms, banks, insurance undertakings and collective investment undertakings). Claims coming from money laundering or from other offences are excluded. The participants of each guarantee- agreement are free to agree on the price with the guarantee-provider. No provision in the case that the guarantee-provider has a shortage of funds. 37