© Joost Mulder 2013-2021
Unlike most national parliaments, the European Parliament does not have the "right of initiative". Only the European Commission can initiate legislation. MEPs who want legislation in a certain area have various ways to push the Commission into action, but they cannot simply start drafting a law themselves. One of the common mechanisms used by the Parliament is drafting a non-legislative report, asking the Commission to consider legislative action in a certain area. Often these "own-initiative" reports are linked to Commission consultations, where the Commission asks for confirmation of planned legislative action (White Papers) or is more generally asking for views on a certain topic (Green Papers).
In textbook law-making, the Commission takes the time to analyze and discuss policy options in a Commission Green Paper, followed by legislative measures in a White Paper, which are then transformed in a draft law (legislative proposal for a Directive or for a Regulation). In the field of finance, much of the legislation proposed by the Commission these days is simply transforming international agreements into legal drafting, adding details and differentiates where needed. Examples of these are the Basel Committee’s package on bank capital requirements implemented in Europe as the CRD IV, or the G20 Pittsburgh Summit declaration which led to the development of the European Markets Infrastructure Regulation (EMIR).
Although a large part of the legislative agenda follows from international commitments, it is still very important to engage with the European Commission ahead of legislative proposals. When considering legislation, the Commission will hold formal and informal meetings with stakeholders in order to better understand the sector it is regulating, and stakeholders can respond to written Commission consultations in an attempt to influence the Commission's thinking. Lobbyists will try to make sure that whatever the Commission proposes is in line with their interests and some lobbyists may even try to convince the Commission not to issue a legislative proposal at all. Others will encourage the Commission to work on issues where they see a need for legislation.
Inside the Commission, legislation is generally prepared by one DG "de file" or in charge. In finance, this is DG FISMA - Financial stability, financial services and capital markets union FISMA. Before publishing a legislative proposal, other DG's which work on different issues such as consumer protection, industrial policy or agriculture, give their opinion on DG FISMA's draft in a process called "inter-service consultation". Once this is completed, the full College of Commissioners will formally adopt the legislative proposal, after which it is published and sent to the Parliament and Council so that they can give their opinion.
The Parliament's competent committee appoints a rapporteur to negotiate on behalf of the Parliament, who starts by writing a draft report with amendments to the Commission’s proposal. For financial legislation, this is the Economic and Monetary Affairs Committee (ECON). Some MEPs have a special role as shadow rapporteur for their political group and will try to reach agreement on compromise amendments with the rapporteur. These are voted in Committee to form the Parliament's starting position for negotiations with the Council and Commission. Lobbyists will meet with key MEPs at any stage in this process to ask them to present favourable amendments or to prioritise certain issues in the compromise negotiations.
In order to define the position of the Council of the European Union, national experts and attachés from all 27 member states gather in Brussels in meetings of the relevant Council Working Party, e.g. on Financial Services, chaired by the country holding the rotating EU Presidency. Very controversial political issues are escalated to ambassadors (COREPER I or II) or ministers, (ECOFIN for financial dossiers), who also sign off the final negotiation position (called a General Approach) on behalf of their governments. Lobbyists will target any of these officials at any stage, in some cases up to the night before the final ministers meeting if very large interests are at stake.
In theory, the Council issues its opinion on the Committee report voted by Parliament in plenary. If Ministers reject Parliament's position, they present their "Common Position" and the proposal makes a second tour of the institutions (second reading). In practice, Parliament, Council and Commission representatives gather in informal meetings (trilogues) to hammer out an agreement that all can accept. That agreement can then be approved in a single amendment when Parliament votes on its report in plenary, after which the Council will formally endorse the Parliament's text. Although this system usually speeds up decision-making, it comes at the expense of democratic scrutiny as trilogues are not public.
Approval by the Council completes the "Level 1" process, after which the text is translated and published in the Official Journal to apply from a specified date. Regulations apply directly throughout the EU while Directives must be implemented into national law, generally within 18 to 24 months. Since the Lisbon Treaty, lawmakers can delegate the power to adopt legislative acts (delegated and implementing acts) on certain nonpolitical issues to the Commission. The Level 1 text may also delegate to the Commission the power to adopt "binding technical standards" that have been drafted by the three European Supervisory Authorities (EBA, ESMA and EIOPA) for financial legislation. In this "Level 2" process, the Commission and the authorities consult with stakeholders on their interpretation of the Level 1 agreement, a process closely monitored and influenced by lobbyists.