Main results of the Council:

• The Council updated its general approach on legislative proposals on economic governance, with a view to concluding negotiations with the European Parliament before the end of the week.

• The proposals are part of the EU's response to the challenges posed by the sovereign debt crisis.

• They are aimed at enhancing budgetary discipline in the Member States and addressing macroeconomic imbalances within the EU, and more specifically in the euro area.

• It adopted recommendations on the Member States' national reform programmes and budgetary policies. It thus concluded the European Semester, which is being implemented this year for the first time as part of a broader reform of the EU's economic governance.

Derivatives:

The Council held a policy debate on a draft regulation aimed at increasing transparency and reducing risk in the over-the-counter (OTC) derivatives market. It asked the Permanent Representatives Committee to oversee further work on the proposal so as to enable the Council to reach agreement on a general approach as soon as possible. The draft regulation calls for reporting of OTC derivative contracts to trade repositories (i.e. central data centres) and the clearing of standard OTC derivative contracts through central counterparties (CCPs) in order to reduce counterparty risk (i.e. the risk of default by one party to the contract).

This is aimed at preventing the default of one market participant causing the collapse of other market players, thereby putting the entire financial system at risk. To be authorised, a CCP would have to hold a minimum amount of capital. Trade repositories would have to publish aggregate positions by class of derivatives, thereby offering market participants a clearer view of the OTC derivatives market. The European Securities and Markets Authority (ESMA) would be responsible for the surveillance of trade repositories and for granting and withdrawing their registration. The regulation would implement commitments made by G-20 leaders in September 2009. Once adopted, it would apply from the end of 2012.

The Council's debate focused on two issues:

• authorisation and supervision of CCPs, in particular the role played by ESMA;

• scope of the regulation, namely whether also to subject listed derivative contracts traded on regulated markets to clearing and reporting obligations.

Full conclusions document