Brussels, 05/07/2011 (Agence Europe) - The members of the European Parliament adopted the position of the committee on economic and monetary affairs on the rules for derivative financial products, a market which has been valued at “12 times global GDP”, according to rapporteur Werner Langen (EPP, Germany). Amongst other things, they are pleading for all transactions in derivative products, whether they are traded through a stock exchange or over the counter (OTC), to be notified to national registers, to which national and European supervisors would have access. However, for OTC derivatives, they favour an obligation for compensation within specialist houses. By not adopting a legislative resolution, which would have put an end to the first reading, the EP is not closing the door to a political agreement this autumn with the Council, where the member states are still a long way from an agreement in principle.
We want rules that ensure that all transactions on derivative products feature in “trade repositories”, said Langen after the vote. The rapporteur is delighted that a vast majority of the EP is behind his report. He states that “as of 2012, it will be possible to have a global overview of the risks and their development”, which was not the case during the financial crisis in 2008. Then, fewer than 2% of inter-banking relations were genuinely traceable across stock exchange operations, which is the root cause of the great distrust observed on the inter-bank market, he stressed. The rapporteur has set himself the objective of concluding this dossier by the autumn, as the inter-institutional trialogue meetings are not scheduled until the end of the summer.
Langen listed the differences in approach between the European Parliament and the Council: the scope of application, the treatment of pension funds, the role for the European Securities and Markets Authority (ESMA), authorisation for third-country operators, the interoperability between the central counterparty clearinghouses (CCP). Noting that the scope of application of the texts under discussion at the Council changed constantly, Langen spoke of a “blocking minority” of hostile countries which are opposed to obligatory central compensation for all derivative products. The largest market in the EU, the United Kingdom, argues in favour of obligatory compensation for all derivative products, for reasons related to competition. The United States takes a similar line. “If a broad scope allows us to close off certain avenues to get round the rules and ensure convergence with the American approach, we cannot overlook the sensitive nature of this subject”, said European Commissioner Michel Barnier, at the plenary debate on Monday.
A temporary exemption for pension funds is planned for a period of three years, which will lead to ad hoc rules, Langen noted. He also wondered how best to bring in fair rules on either side of the Atlantic, with the American Congress pleading for savings banks to be exempted from the rules.
On the issue of supervision, Barnier reiterated the “balanced” position of the Commission, which is in step with that of the MEPs, which “reconciles the first responsibility of the member states in terms of approval and supervision” of the CCP with the “allocation of important roles” to ESMA and to the colleges of national supervisors. He also argued for “full and sincere reciprocity” in the application of rules favouring “an equality of competition based on the mutual recognition of the law of third countries, without extra-territorial application”. “If the United States want their operators to be registered, there needs to be reciprocity” in the rules, echoed Langen. (M.B./transl.fl)