Brussels, 19/05/2015 (Agence Europe) - The members of the European Parliament have approved, by 517 votes in favour, 146 against and 27 abstentions, a common position on the proposed regulation aiming to reinforce governance in creating financial benchmarks, which now paves the way for inter-institutional negotiations, as the Council is already ready.
“A few rotten apples in the banks messed up things (…), now we want systemic benchmarks to be safe in the future”, said the MEP Cora van Nieuwenhuizen (ALDE, Netherlands), rapporteur on this dossier. “We need safeguards in place for such benchmarks as LIBOR, we also need a large number of indices to avoid the market concentration and we need a balanced approach towards smaller and bigger benchmarks”, she explained.
The Parliament therefore intends to bring in proportionality and place stricter requirements on the so-called “critical” benchmarks, which influence financial instruments and contracts with an average value of at least €500 billion and which could therefore have a significant negative impact on the stability of the financial markets in Europe.
Qualitative criteria have been added to determine which benchmarks can be considered critical. The final decision to determine whether a benchmark is critical will be the responsibility of the European Securities and Markets Authority (ESMA) and the national authorities. However, a national authority could also deem a benchmark administered within its territory to be critical if it has a significant impact on the national market. The calculation of the critical reference benchmarks concerning at least two countries will be overseen by a college of supervisors, such as the ESMA and other competent authorities.
“The adopted legislation counters conflicts of interest in the production of benchmarks, provides the full transparency and introduces prudential supervision”, van Nieuwenhuizen explained.
Trialogue talks can now start, with an agreement hoped for by the end of the year. The rapporteur argues that the Council's position is already a better negotiation basis than the Commission's initial proposal. The Council's text principally differs from that of the Parliament on two points: the definition of critical benchmarks and the proportionality of the regime. (Elodie Lamer)