# EU parliament OKs no-action powers but leaked doc signals delay

## Council note means regulators may not get no-action powers until at least November

The European Parliament has voted to grant pan-European financial watchdogs the power to postpone incoming rules in some cases. But a leaked document from another legislative body suggests the regulators may not be able to exercise their new powers until at least November.

For financial firms, this is good news and bad news. They will welcome the major step towards a formal no-action procedure in the European Union, already long in existence in the US. They may, though, have to wait a while yet before the three European Supervisory Authorities (ESAs) can reliably delay or suspend the enforcement of potentially damaging regulation.

“The parliament’s approval of no-action letters is an important development and it means they will now definitely be on the agenda in the trilogue [legislative] negotiations,” says Pedro Pinto, a director of advocacy at the Association for Financial Markets in Europe (Afme). “The letters are needed because the current way the ESAs address these issues doesn’t provide relief nor sufficient legal certainty.”

However, the final go-ahead from all three EU law-making bodies, including the European Commission, could be delayed – because of the Council of the European Union. A January 11 note from Romania, which holds the presidency of the council this year, recommends prioritising work on other reforms over the coming two months.

This makes it unlikely the council will finalise its position on no-action relief in time for the subsequent trilogue talks to conclude before the parliament breaks in April for elections in May.

All legislative work by the EU will then be suspended until a new commission is formed, with approval from the new parliament. The multi-step process dictates that a new commission will be formed in October or November, with the first trilogue completed the following month at the earliest.

### Parliament’s say

On January 10, the European Parliament approved its own version of a no-action mechanism, overcoming internal disagreements over what form it should take and whether the ESAs should even be given no-action powers in the first place.

The parliament’s text allows the watchdogs to postpone both primary and secondary legislation. Financial firms had advocated exactly such broad powers, saying that sometimes the rule from which they needed relief was contained in a level one law.

In the parliament’s iteration, the ESAs will be able to delay the enactment of a new rule in three scenarios: if doing so put market participants in breach of other EU regulatory obligations; if the authorities needed to clarify the rule; or if compliance posed a threat to market confidence, customer or investor protection, the functioning of financial or commodity markets, or the stability of the EU financial system.

The text says the European Commission, the parliament or the council may ask the authority to reconsider its decision to issue a no-action letter.

There is also a time limit on the relief: it can last up to six months and can be renewed only once for another six months.