BRUSSELS – The Committee of European Securities Regulators (CESR) has published a new paper charting its vision for the evolution of European Union securities supervision.
CESR says it is pursuing an increasingly co-ordinated and convergent course for EU securities regulation – implementing Level 3 of the Lamfalussy process – and highlights the tools it has developed to help national regulators work together.
CESR divides Level 3 activities into three categories.
The first comprises tools for co-operation between supervisors to foster a common culture. In particular, CESR says this refers to operational co-operation, training supervisors, staff exchanges, database creation, and sharing arrangements for IT data.
The second defines common regulatory approaches through elaboration of standards, recommendations, guidelines and practical answers to daily application issues, mostly through the Financial Services Action Plan (FSAP) directives and relying on voluntary peer pressure rather than legally binding regulation.
The third represents conflict handling and peer pressure tools. CESR’s Review Panel has conducted mapping and reviews to chart obstacles ahead that might require mediation.
Key obstacles to Level 3 convergence are what CESR calls “legitimate national discretions”, meaning national level legislation that still can still override CESR supervision.
To counter this potential supervisory friction, CESR has called for stronger team spirit –stressing the detrimental effects of competition and the need for EU-level solidarity.
The paper emphasises the importance of equality in the powers of supervisors across the EU to aid this process, calling for concentration on monitoring through the EU’s Markets in Financial Instruments Directive and Transparency Directive.
When Level 3 implementation conflicts arise – leading to legal risk – CESR suggests the abolition of the national prerequisites and an increased recognition of CESR’s role – including urgent budget increases and powers to place sanctions on non-compliant members through the Review Panel.
The paper also addresses bilateral negotiations on securities agreements between EU member states and non-members, and the potential these have to negatively affect CESR’s Level 3 efforts. It also suggests an increase in transatlantic contact, with CESR conducting EU-level financial services regulatory dialogue, including technical talks, for example, with the US Securities and Exchange Commission (SEC).