Here come the directives

The mudslide of EU financial services directives is, well, daunting. It's not that firms are against the EU -- most financial services executives are pretty excited about cross-border marketing. The problem is that financial regulation on the continent is different. For starters, it is rules based. I remember one association official telling me, two years ago, how UK practices would revolutionise continental supervision. Now, it seems, things have flipped to be the other way around.

Indeed, in our cover story, a UK Financial Services Authority official admitted that the regulator is becoming increasingly marginalised in terms of policy-making. The FSA must implement a 'copy out' of directives, and one of the foundation cornerstones of UK's unique regulatory regime -- guidance -- is gone.

Contrast this with the US -- the country that initially spurned op risk is now embracing it. On my recent trip to New York, bank executives said they now understand the 'business case' for op risk. US regulators are conducting benchmarking studies and QIS4. A conference is planned. Suddenly, Europe no longer has the lead on op risk.

If the burden of EU directives becomes overwhelming, Europe's daring vision of the op risk discipline could be appropriated by US regulators and firms. OpRisk