30 March 2002

CEPS Comment: A new era in financial services regulation?

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“The Securities Committee could in some way be considered as an embryonic Securities and Exchange Commission (SEC)”, says Karel Lanoo. “It will have broad decision making powers, and will decide by qualified majority. Decisions in the Committee could thus go against the interests of certain member states. The structure of the European SEC will, however, remain de-centralised for some time to come.”

Creating a European Financial Services Authority (FSA) is unnecessary once the Lamfalussy approach will be adopted. “Functional cooperation among member states, rather than a Financial Services Authority, will most likely be more appropriate in a European context. An EU FSA would not be adequate for a host of reasons, most importantly from a financial regulatory perspective” Lanoo says.

But the Lamfalussy approach also raised several questions as there are:

the definition of ‘framework Directives’

what degree of harmonisation

how to open up securities settlement markets, and

the role of investors

“Whether the Lamfalussy approach will be followed in other areas of financial regulation remains to be seen. The European Commission may be reluctant to extend the approach to other areas, taking into account the problems of establishing it for securities markets in the first place. Moreover, Parliament will be suspicious of having created a precedent. Nevertheless, the implementation of Basel II is an obvious candidate.”

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