As Europe reforms its securities markets towards a single rulebook across member states, disputes are inevitable, but the end result will be a better market for all, according to Kay Swinburne, MEP.
Speaking at a panel discussion in London yesterday, Swinburne cited increased competition and efficiency, reduced risk and the creation of a level playing field for market participants as the key goals of upcoming European financial legislation, including MiFID II and the European market infrastructure regulation (EMIR).
“The process may feel like nasty medicine for some members, but it will get better,” she said. “Everyone will see the benefits from a fairer, more efficient market.”
The European Securities and Markets Authority (ESMA), which has been tasked with developing the technical standards for EMIR and MiFID II, would also offer Europe’s markets a useful service by issuing guidelines on existing legislation and clarifying the region’s rulebook, Swinburne added.
ESMA is currently working on the technical standards for EMIR, which seeks to reform Europe’s derivatives markets, transferring as large a proportion of OTC derivatives trading onto centrally-cleared platforms as possible. The intention of the European Commission is to reduce systemic risk, in line with member states’ G20 commitments. EMIR is due to be implemented by the end of this year.
Despite concerns over possible power struggles between national regulators and European authorities, Verena Ross, executive director at ESMA, explained that her organisation was working together with individual European securities authorities from different member states to inform the technical standards, providing an opportunity for members to influence the outcome.
“We are an independent organisation dedicated to consider the evidence and develop the best, most objective standards we can,” she said. “There will always be debates – we listen to all views and try to take them into account.”
The theme of collaboration was reinforced by Patrick Pearson, head of financial markets infrastructure for the European Commission. Pearson added that the Commission was working to ensure that Europe’s central counterparties have enough collateral, that the right incentives exist to move OTC derivatives onto central clearing, and that securities firms active in Europe would not be able to circumvent the rules by moving outside the EU.
“The industry has three chances to influence the rules,” said Pearson. “The first is during the drafting process at the Commission. The second is at the European Parliament. The third is via ESMA, during the drafting of the technical standards. If you are concerned about the rules, you can engage with the process.”