10 December 2009

Sobel calls for consistent supervision and regulation of financial institutions

Although there is a high degree of cooperation between the U.S. and the EU, the devil is in the detail when it comes to translating high-level standards into concrete proposals, in particular, with regard to CRAs, hedge funds, and the treatment of OTC derivatives, he warned.

“Without consistent supervision and regulation, financial institutions will tend to move their activities to jurisdictions with looser standards, creating a race to the bottom and increased systemic risk”, Marc Sobel warned and called for closer cooperation of national regulators, in particular on CRAs, Hedge Funds, OTC derivatives, and Accounting.

 

Mark Sobel, US Treasury Assistant Secretary for International Affairs, noted that although there is a high degree of cooperation between the U.S. and the EU there devil is in the detail when it comes to translating high-level standards into concrete proposals, especially when filtered through our national traditions and cultures.

 

Supervision of CRAs should not go so far as to prevent them from operating globally when they adhere to strengthened standards, he said and looks forward to the CESR-SEC collaboration on this topic.

 

Also, the EU's proposals for the regulations of hedge funds raise the potential for a different regime for European-based managers, with the ability to access all of the EU with the so-called "passport" of one set of rules, and for third country firms operating under multiple, national private placement regimes without the ability to use an EU-wide passport. 

 

For OTC derivatives markets a global infrastructure is vital, he said. “We should work together to advance regulatory cooperation, ensure prudential supervisors have access to the data they need wherever it is located, and coordinate on clearing and exchange-trading requirements and any exemptions for end-users”, he said.

 

Full speech

 

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