23 November 2007

CESR: A proposed evolution of EU securities supervision beyond 2007

CESR issued a document outlining possible future steps for the evolution of EU securities supervision contributing to the review of the Lamfalussy approach for the regulation of European Securities Markets.

CESR stresses among others that there is a gap between an informal (de facto) EU mandate given to CESR creating the expectation that rules will be applied in the same manner in the market, and the legal national accountability obligations of each CESR member that governs their daily activities.

Also, uniform supervisory behaviour should not be expected by market participants within the current framework as CESR members may have no alternative but to respect legitimate national discretions.

To enhance the pressure on the members to fully implement the agreed level 3 measures CESR proposes among others to include in the Charter a gradual set of enforcement instruments in case of non-compliance based on the association character of CESR.

Additionally, Level 3 measures would gain significant authority if the European Commission would more systematically welcome those measures by indicating that it will not ignore there existence when using its enforcement powers at Level 4.

Finally CESR believes that it is preferable to keep the consensus rule for the approval of Level 3 measures (unanimity minus one or two) as long as these are not legally binding in order not to create over expectations. For cases of non-implementation of the kind mentioned above, members will have to discuss the possible use of qualified majority voting (QMV).

CESR is not advocating for the creation of an EU single regulator embedded in the Treaty. The Committee notes that two main currents of opinion among members could be distinguished:

- The first one deems that the present arrangements have to be strengthened and deepened in accordance with the proposals under I and II, and that these arrangements have not yet delivered all the potential that can be derived from them.

- The other tendency is rather of the opinion that the limits of realising further convergence are soon to be reached, also taking into account the increasing number of CESR members, and that additional steps have henceforth to be prepared.

Full paper

© Graham Bishop