Financial Regulatory Forum

INTERVIEW-New EU authorities need more independence: supervisor

October 8, 2009

FINANCIAL IOSCO/SHORTSELLING    By Huw Jones
   BASEL, Switzerland, Oct 8 (Reuters) – Draft European Union plans for a sweeping reform of how financial markets are supervised need amending to minimise the potential influence of lobbyists, a top EU supervisor said on Thursday.
    The bloc’s executive European Commission has proposed setting up three new pan-EU authorities to centralise some aspects of banking, securities and insurance supervision.
   The aim is to apply lessons from the credit crunch through more consistent and streamlined application of rules.
   “It’s a very important initiative and if it goes through it will be the big breakthrough in the field,” Eddy Wymeersch, chairman of the Committee of European Securities Regulators (CESR) told Reuters.
   CESR groups national market watchdogs from the 27 EU states and is set to become the new European securities authority from 2010 if the draft law is adopted as anticipated.
   But it worries that that new authority won’t be independent enough and its rules would be too open to lobbying by the back door.
   “One of the sticky points is the relationship of the new authorities with the European Commission,” Wymeersch said.
   “They do not want their body subjected to Commission interference. This is a point that has to be further discussed,” said Wymeersch who is also chairman of Belgium’s banking, finance and insurance regulator.
   Under the draft law, the authority can adopt binding rules for EU markets but only after formal endorsement from the European Commission, which zealously guards its central role in the bloc’s financial rulemaking.
   “The question is to what extent the Commission can intervene. I would propose the Commission either endorses us or refuses, a clear position. If it’s refused, it should be under very restrictive conditions such as the higher interest of the Community,” Wymeersch.
   “According to the present proposal, the Commission can change, it can cherry pick, it can substitute and so on. It should be a system of take it or leave it,” Wymeersch said.
   “The Commission is subject, like everyone else, to a lot of lobbying and if some of the lobbyists are more successful than others then the Commission should not be able to intervene,” he added.
   Another “big sticking point” is financing.
   Paris-based CESR is expected to triple its staff to 90 within two years with its budget rising from 13 million euros initially to 21 million euros after 2013.
   CESR will have to invest millions of euros in technology systems to store credit ratings data and operate a database for company disclosures.
   Wymeersch says there is a need to look for different sources of funding to avoid relying on the Commission too much because  this could also impinge on the authority’s independence.
   (Reporting by Huw Jones; Editing by Ruth Pitchford)
   ((Reuters messaging: huw.jones.reuters.com@reuters.net; + 32 2 287 6817; huw.jones@thomsonreuters.com))
  Keywords: EU FINANCIAL/SUPERVISION 
  
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 Thursday, 08 October 2009 10:23:19RTRS [nL8150135] {EN}ENDS

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