Brussels, 17/05/2011 (Agence Europe) - On Tuesday 17 May 2011 the ECOFIN Council reached agreement in principle on a draft EU regulation introducing rules for short-selling and sovereign debt CDS (credit default swaps) (see EUROPE 10377). The acting chair of the ECOFIN Council, György Matolcsy, said agreement had been reached based on the compromise solution presented by the Hungarian Presidency. In a joint statement, the European Commission and the ECOFIN Council pledged to take account of fear expressed by several countries, headed by the United Kingdom, about powers attributed to the European Securities and Market Authority (ESMA). Informal talks will now begin on the draft regulation between the European Parliament and the EU Council of Ministers.
The question of ESMA's powers was the main stumbling block in the talks on Tuesday. One group of countries (Bulgaria, Finland, the Czech Republic, Sweden and the United Kingdom) expressed concern about ESMA's ability to temporarily suspend naked short-selling of sovereign debt CDS in an emergency situation. Germany, France and Latvia, backed by the European Commission, warned about any attempt to water down the draft legislation. Spain suggested introducing political ring-fencing whereby the ECOFIN Council would decree a state of emergency, thereby giving ESMA the ability to take action.
The EP rapporteur, Pascal Canfin (Greens/EFA, France), issued a press release pointing out that there were great differences in the ECOFIN document from the EP's version when it came to sovereign debt and ESMA's powers. He regretted that the ECOFIN Council had not agreed to the European Parliament's suggestion of banning speculation on sovereign debt CDS, despite Germany's support. Canfin called for ESMA to be granted binding powers, warning that if it is still possible for a country to act alone on this issue, then there was no chance of achieving the regulation's aims. British Conservative MEP Syed Kamall described the ECOFIN Council's version of the draft regulation as less damaging than the EP committee's version. (M.B./transl.fl)