31 July 2005

July 2005

Graham Bishop’s Personal Overview. 


As Brussels closes down for the summer, the usual pre-holiday rush occurred and the Commission issued two Green Papers – on UCITS and mortgage credit (these are reviewed in the appropriate category below). For the securities markets, the key developments were the EP’s plenary approval of Mrs. Kauppi’s report on Clearing and Settlement just before the UK’s Competition Commission gave a provisional conclusion about possible bids for the London Stock Exchange. The pivotal issue is likely to be access to clearing arrangements for any competing exchanges, as the CC argues that the removal of one of the three big exchanges would leave sufficient “exchange” competition. 

However, the summer effectively closed with the high-level Exchange of Views on the Commission’s Green Paper on Financial Services policy for the next five years. The discussion was broad but much attention continued to focus on supervision and regulation. If the goal of a single financial market is really achieved, it may be difficult for the key providers of cross-border services to meet multiple reporting requirements that differ in detail. The co-ordinating supervisor seems accepted but the lead regulator proposed by the major pan-EU players is still seen as a step too far – at this stage. At the retail level, could a “26th regime” be a solution in some cases? 

However, great stress was laid on the need to ensure that future measures are seen as necessary and fair so the enlarged role of Impact Assessments was an active topic. Graham Bishop has submitted a response to the Green Paper on this topic (Green Paper Consultation Report ), concluding that the Green Paper is right to stress the political orientation of acting in ways that ensure societal legitimacy. The new Impact Assessment Guidelines offer a sound approach to achieving the necessary rigour, but there are inherent limitations in the process. In part, these are logical and stem from the nature of the legislative process. If any Member States have solved these problems decisively, then the EU could learn from them. 

But the Green Paper does not address the inadequacies of EU financial data – a prerequisite for convincing and thorough impact assessments. The current moves to harmonise reporting requirements for some financial institutions offer a golden opportunity to correct this and, more importantly, lay the necessary foundations for a lead regulator for cross-border financial activities. The Commission should add this to its policy objectives for the next five years. 


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Graham Bishop

© Graham Bishop