eu summit: not much visisble progress on european banking union October 18, 2012
Posted by Bradley in : financial regulation , add a commentThe Draft Conclusions of the European Council Meeting (via euractiv) don’t suggest that there’s much progress on achieving the European Banking Union although they urge legislators to make progress. Meanwhile, in a speech in Poland, Andrea Enria of the EBA worried about the future of the single market as domestic bank regulators “strongly encourage a de-risking process which also entails lower exposures to counterparts in other more fragile or stressed Member States.” And he made the expertise argument again as a way of resolving the banking union issues:
I would invite to think out of the box and consider also decision making mechanisms that are less based on country representation and more on technical skills and accountability frameworks. We need the best people we have in Europe to design high quality rules and implement effective supervision, in the common interest of savers in the whole area; and we need mechanisms to ensure that their decisions do not unduly penalise any actor in the Single Market. More reliance on independent decision making bodies, composed of experts selected on the basis of their technical skills, would put all countries, in and outside the euro area, on the same footing. It would ensure that decisions are taken in the best European interest, not as a compromise amongst different national positions. Monitoring mechanisms could then ensure appropriate representation of all the Member States, high quality and unbiased processes, and the possibility to call back decisions that are not considered of an appropriate standard.
In a speech at the BBA’s conference Stephen Majjoor of ESMA said this:
I want to emphasise that for large parts of the financial markets the distinction between Eurozone and non-Eurozone member states has very limited relevance. For example, market infrastructures, investment firms, and investment funds span the Eurozone and the non-Eurozone and in all the directives, regulations, technical standards and guidance that are within ESMA’s scope, the Eurozone/non-Eurozone distinction hardly ever plays a role.
In other words, the rationales for developing a single rule book, consistent supervision and a single securities market are not affected by the integration of the Eurozone. We should remain focused on the economic benefits of the single market in securities for all 27 member states and jointly continue our important work of achieving a single rule book and a consistent approach to supervision.
These ideas of having technical experts make the rules and emphasizing the single-rule book seem designed to appeal to financial institutions based outside the eurozone, suggesting that they might benefit from going along with the European Banking Union/Single Supervisory Mechanism. But the broad brush rhetoric runs up against concern about the details (see, for example this report prepared for the International Regulatory Strategy Group of the City of London by Anita Millar).
Update: In report published today the UK’s House of Commons European Scrutiny Committee (focusing on the EU proposals about the EBA/SSM and on the UK Government’s reaction (described in the report)) wrote:
there is potential for harm to UK interests, particularly in relation to the single market. So we presume the Prime Minister will be cautious in expressing any support during the forthcoming European Council for the elements outlined in the report…As for the role of national parliaments in ensuring democratic legitimacy and accountability we are concerned: at the implications of the apparent presumption in the report about the primacy of the European Parliament; and the presumption that democratic legitimacy and accountability of a new strengthened EMU framework and cooperation under Article 13 of the SCG treaty should only be explored within the context of the European Semester.
We remind all concerned in this debate that national parliaments are representative of sovereign states. Incidentally, we note the rather odd phraseology – “we can use”- the Minister deploys. We presume he does not actually mean that governments use parliaments… These matters are of high importance for the UK…we recommend ..[a debate] for three hours on the Floor of the House..In making this debate recommendation we note, notwithstanding the Minister’s comments, that the document will not be cleared from scrutiny until the debate takes place and take the view that actions by the Government which amounted to agreement of the report would be a serious breach of the scrutiny reserve.
eu consultation: only english-reading stakeholders need respond October 16, 2012
Posted by Bradley in : consultation , add a commentI have been thinking about stakeholder definition in consultations in the EU recently. I have been particularly interested in the ways that different groups within the Commission define the stakeholders they are concerned with in different ways. Thus consultations that seem to be technical consultations sometimes invite consumer responses whereas other similarly technical consultations do not. And sometimes there’s a stakeholder definition which says anyone can respond but we are really interested in contributions from the following people and entities (i.e. the ones whose responses we will really focus on). The public consultation on the revision of the Recommendation on relevant markets (2007/879/EC) (deadline for responses Jan. 8, 2013) defines the “target group” as follows:
The consultation is open to all citizens and organisations concerned with the market-based approach to regulation within the electronic communications sector in the EU.
Contributions are particularly sought from public authorities (including National Regulatory Authorities and National Competition Authorities), the Body of European Regulators in Electronic Communications (BEREC), Member States, the electronic communications industry, research institutions and universities, consumer advocacy groups and other interested parties.
The tacking on of the “other interested parties” seems to modify the exclusiveness of the description of the people from whom contributions are particularly sought. But does it really, or are these words designed to counter the sort of critique I made before the quote. In some ways this doesn’t matter very much as the people who want to comment on the issues will do so whether they feel they are in the defined target group or not. But perhaps the target group definiition has an impact on press coverage of consultations?
Anyway, the questionnaire is only being published in English. Given that the EU is supposed to be committed to multilingualism I don’t understand this, although this sort of thing happens more often than we might like to think. And it’s one way of limiting responses to those who may have technical expertise.
treadmill stories October 13, 2012
Posted by Bradley in : life , add a commentDiscourse.net rounds up the story here, and the Haggler writes here. Oh, and we seem to have newspapers now.
the future of eu banking supervision October 10, 2012
Posted by Bradley in : financial regulation , add a commentWhat will the European Banking Union look like (if it gets off the ground)? Andrea Enria of the EBA spoke to the European Parliament. He intimated that the Single Supervisory Mechanism could involve delegation by the ECB of “operational conduct of day-to-day supervisory oversight” to national authorities. He suggested that the problems of thinking about adjusting the voting mechanisms in the EBA Board of Supervisors (this is the problem of how to allocate voting between the euro and non-euro area states) should be resolved by moving away from country representation:
While I understand these concerns, I am very worried that the solution could simply raise the required votes for approving a proposal, coming very close to a unanimity principle. Our ability to decide could be seriously hampered. I would suggest that new mechanisms for decision making be considered, which are less based on country representation and country weights. After all, the EBA is requested to make technical decisions that work for the Single Market, not to craft compromises amongst representatives from Member States. The mechanisms of independent panels and reverse majority voting proposed by the Commission for decisions on cases of breach of law and mediation could possibly be adapted and applied also in our standard setting function.
While this approach (if the Member States could agree on it) could get past the euro-area/ non-euro-area issues, I’m not a great fan of the idea that financial regulation is merely technical and should therefore be developed by groups of experts.
jinxed? October 10, 2012
Posted by Bradley in : life , 1 comment so farAfter we solved the treadmill problem (we hope) (which the consumerist notes here) we developed a newspaper delivery problem. We stopped the newspapers for the weekend and somehow that was treated as a signal we didn’t want to have newspapers delivered any more.
how to use fines for financial misconduct October 8, 2012
Posted by Bradley in : financial regulation , add a commentThe UK plans to change the rules so that fines for financial misconduct benefit the armed forces through the Armed Forces Covenant:
The additional funding can be made available in 2012-13 due to amendments which will be brought forward to the Financial Services Bill later this year. The amendments will mean that, in future, regulatory fines revenue in excess of enforcement case costs for the year will go to the Exchequer.
And the monies involved include the Barclays Libor fine.
I can understand why the Treasury would think that fines should contribute to the general welfare rater than reducing licensing fees for the financial industry. I don’t see quite why the Treasury wants to link financial misconduct to supporting people who have served their country in this way. Do they think that the financial regulators will act more aggressively in enforcement to benefit veterans? Surely not. And linking help for the armed services to what must be a quantitatively unpredictable source of funds seems odd to me.
saturday promenade October 8, 2012
Posted by Bradley in : life , add a comment
A view from the highline
new eu consultation on a possible framework for the recovery and resolution of nonbank financial institutions October 5, 2012
Posted by Bradley in : financial regulation , add a commentThe Commission has published a consultation document asking for views on the recovery and resolution of nonbank financial institutions with comments due by December 28th. The target group for the consultation is defined broadly as:
Member State authorities (crisis management, supervisory, judicial), financial industry, their stakeholders (customers, creditors, shareholders, employees), trade associations, academia, citizens.
It’s not entirely clear to me why the target group here (stakeholders) is defined so broadly when the financial indices consultation’s target group was defined in a way that looks (but arguably isn’t really because of the broad scope of the term “users”) narrower. In a context where the underlying problems – issues relating to the manipulation of Libor and other benchmarks- had received a significant amount of news coverage, the Commission defined the target group of the consultation as
Contributors to, providers of and users of indices and benchmarks
I’m not sure what principles (if any) are operating here with respect to stakeholder definition.
apples October 4, 2012
Posted by Bradley in : life , 1 comment so farOn the front page of the Tropical Life section of today’s Miami Herald (here’s the online version) there’s an article about apples which tells you about the advantages of a wide range of apples, including Cox’s Orange Pippins which I love, but which I have never seen in Miami. For a minute I thought the article was going to tell me where I could get interesting apples here. Sadly not.
high level committee: publication of responses to first consultation, second consultation October 3, 2012
Posted by Bradley in : consultation, financial regulation , add a commentThe responses to the first consultation carried out by the High-level Expert Group on reforming the structure of the EU banking sector are here. And there’s a new consultation based on the High Level Expert Group’s Report. Comments are due November 13th.