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EU to make banks pay to centralize markets supervision

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09/14/2017 | 06:00pm CET
A demonstrator waves a European Union flag in front of Nelson's column in London

The European Union wants to centralize market supervision and make banks pay for it, the bloc's financial services chief said, signaling how it will seek to regroup after Britain leaves.

A more integrated supervisory regime is needed to unify the EU's capital market, European Commission Vice President Valdis Dombrovskis said on Thursday.

Britain has long fended off attempts by Brussels to step up EU-level supervision of London, by far Europe's biggest financial center, but it will have no say over EU policy after Brexit in 2019.

"We think that national supervisors in the EU should follow the same supervisory priorities," Dombrovskis said in Estonia, where EU finance ministers meet on Friday.

"We can go further on the path toward supervisory convergence by empowering the European Securities and Markets Authority (ESMA) to directly supervise certain firms," Dombrovskis said, adding he will propose that banks help pay for their supervision by regulators like ESMA.

There would also be a "strong role" for ESMA and its banking and insurance counterparts in the fintech sector as it seeks to compete with rival centers in London and elsewhere.

"They should coordinate national technological innovation tools such as innovation hubs or regulatory sandboxes," he said.

The three regulators would also play a role in mobilizing and directing capital toward "sustainable and green finance".

TRANSATLANTIC

The U.S. Commodity Futures Trading Commission (CFTC) has warned the bloc not to upend an agreement between the United States and the EU on accepting each other's clearing houses for derivatives transactions.

CFTC Chair Christopher Giancarlo said on Tuesday that attempts by the EU to clamp down on clearing of euro-denominated derivatives in Britain after Brexit could damage this.

Dombrovskis sought to ease tensions by saying that Brussels was aiming to give the green light to a similar transatlantic deal on cash set aside to cover uncleared, off-exchange derivatives trades in coming weeks.

Work also continued on a similar deal for derivatives trading platforms, he added.

"I am strongly pushing for this, because the financial crisis illustrated the international nature of our financial system, and the importance of a common approach to financial regulation," Dombrovskis said.

But countries should also apply agreed global banking rules for trading books and liquidity, he said.

The United States Treasury has proposed delaying the application of both sets of rules. European banks have called on Dombrovskis to delay the trading book rules until it is clear what the United States will do.

"The Commission is standing by its proposals to introduce these standards in Europe, as we have introduced all other international standards," Dombrovskis said.

(Writing by Huw Jones; editing by Alexander Smith)

By Huw Jones

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