Reuters: Vote on EU benchmarks law postponed to next European Parliament

07 March 2014

"The rules are going nowhere and they will not be voted in this mandate", said ECON chair Sharon Bowles. "We had a position that was stable and broadly supported before the Commission started to assassinate it", she added.

"The left wanted the inclusion of all commodities in the law and the right wanted all commodities out and so the agreement now is that it should be left to the next parliament", Bowles said.

The draft law sets out how benchmarks for the financial markets as well as commodities should be compiled, audited, governed and supervised, drawing heavily on reforms Britain has already introduced for Libor. Debate on the law has been complicated by the pending European Parliament elections in May as well as a change in the European Commission set for October. "The inclusion of all commodities does not carry majority support in the house and so agreement should be left to the next parliament", said Bowles, who is responsible for steering the draft law through parliament.

Bowles suggested that the Commission “geared up” some political parties to push for the postponement, and that a better approach could have been a dual-track one, imposing rules on critical benchmarks like Libor first, followed by a more flexible directive for other types of benchmarks. The EC is also opposed to reducing the scope of its initial proposal because it might leave loopholes, a person close to the Commission said. 

The main centre-right EPP party wanted a delay so that lessons from current concerns regarding the foreign exchange market could also be applied to the draft law. Once a new parliament is elected in May, the lawmaking process is not expected to resume until after a new set of Commissioners takes office, which could take several months after the current Commission steps down.

Some politicians blame the delay on lobbying by industry interests. "It's been buffeted and pushed off course by the fact there is massive lobbying", said Arlene McCarthy, a British centre-left EU lawmaker, although she did not give specific details on the lobbyists. Commodity traders have argued their business should be exempt from any Brussels oversight.

A spokeswoman for the EC said the benchmark proposal “remains a priority for the Commission and we hope that it can be agreed by the European Parliament and the Council by the end of this year”.

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