"From 2011 onwards, three new authorities are in place to further align rules and strengthen European supervision, in close cooperation with the European Systemic Risk Board. New rules, regarding alternative investment fund managers, credit derivatives, central counterparties and bank capital and liquidity ratios have been approved or are being finalized. Other rules regarding responsible mortgage lending, securities market operators and settlement systems are expected, " claims Lannoo.

 Karel Lannoo foresees three major trends that will shape financial markets in Europe in the coming year: regulation and implementation, market reaction and user protection, and financial stability monitoring.

1. Regulation and implementation

 "Sea change is coming in regulation and supervision, as well qualitative as quantitative. The Commission is already increasingly using regulations, rather than directives, to ensure uniform implementation across the EU. Moreover, the new authorities will have rulemaking powers, to arrive at a single rulebook for the EU. This will happen in a context of a new and expanded regulatory framework. On the supervisory side, the new authorities will control the national supervisors, and will make sure that European rules are applied uniformly and possibly also with the powers to impose directly sanctions on operators. The performance and impact of these changes will be followed closely."
 
2. Market reaction and user protection

"The crisis has led to a paradigm shift in policy and in investor’s and consumer’s attitudes, which will take a long time to be translated into business models of financial operators. Businesses with deep insight in the change and good understanding of user demands will benefit from first mover advantages. Others will restructure their business to escape the heavy regulatory load. What new models will emerge? Which will the shadow banking system evolve? And will non-financial network operators be new entrants in the world of finance?"

3. Financial stability monitoring

"Another impact of the crisis is the consensus on the need for macro-level monitoring. A new European systemic risk board was created, but it needs to start from scratch, since effective macro-prudential supervision has not been carried out systemically so far. What orientation and focus will be taken in macro supervision? How will it be communicated? How will this interact with the national level, where the responsibility for financial stability lies? And how will it relate to other policies, such as resolution and competition?"

Press release