EPFSF report on Supervision of pan-European financial institutions

14 December 2005

The European Parliaments Financial Services Roundtable (EPFSF) held its last meeting in Strasbourg discussing the supervision of pan-European financial institutions. EPFSF states that the current system of national supervision leads to supervisory overlap and complexity for cross-border firms acting in the banking sector as well as for multi-jurisdictional operators of markets such as stock exchanges. Although most of the difficulties encountered by those two groups are similar, solutions may differ.

For financial institutions, if a crisis arose at a subsidiary located in a different member state to the parent company, it is not always clear which supervisor would be responsible for dealing with the situation. An efficient and effective supervisory framework requires all elements of the safety network for banks to fit into an overall architecture in which all stakeholders understand their responsibilities and are able to act together.

Further analysis of the situation is needed; any action should respond to market evolution and institutional changes should only be considered if evolutionary action is judged inadequate. For multi-jurisdictional operators of markets, the issue is to determine how several “home” regulators with equivalent concerns and duties over a multi-jurisdictional entity can exercise their powers in a manner that allows for smooth and cost efficient operation in several jurisdictions.

Briefing paper
Minutes

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