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The EBF issued its response on the Level 3 of the Lamfalussy Process underlining that high level of co-operation between the Level 3 Committees is essential, although also noting that supervisory tools and approaches to achieve convergence should not necessarily be identical from one sector to another.
“CRD and MiFID provide for two separate sets of requirements”, FBE says. “Likewise, there is a difference in approach to supervisory convergence when comparing MiFID with the CRD.”
Although it remains an important objective for Level 3 to promote more supervisory convergence, FBE complains about the lack of a robust European definition of the Level 3 concept. For the EBF supervisory convergence should be a principle-based, proportionate, outcome-focused approach to reaching consistent regulatory solutions and removing undue differences in regulatory practice, that is ultimately based on best supervisory practices.
“Consolidated supervision has not become a reality, which is to the detriment of cross-border banking groups”, the FBE notes. “Therefore, it should be considered whether the present entirely non-binding approach to supervisory cooperation in the prudential sector remains appropriate in order to respond to the challenges of effective and efficient group supervision or whether CEBS should be more strongly empowered.”
“In our view, supervisors should, at the very least, be required to comply with a decision made at CEBS’ level and, if not, duly explain and justify why they did not”, FBE says.
The EBF also sees timing remains an overarching concern. Taking the example of MiFID once more, today legislators and stakeholders are attempting to resolve some of the thorniest public policy questions that were not resolved in the Level 1 negotiations, and subsequently submitted to a future review; the possible extension of MiFID pre- and post-trade transparency requirements is a case in point. The practical reality for the industry subject to Lamfalussy legislation is that such practices cause a good deal of instability in the markets, whilst the most contentious areas of legislation are being resolved after implementation.