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Werner Langen and Kay Swinburne, two high-profile parliamentarians on financial services, are unhappy with some of the technical standards drawn up by regulators seeking to strengthen European derivatives markets in the wake of the financial crisis. Rejection of them will require a formal review by the European Securities and Markets Authority (ESMA), which would set back plans to introduce tighter rules on off-exchange trading.
Countries from the G20 have demanded that more over-the-counter derivatives trading be processed through clearing houses, to safeguard against global systemic risk. Europe’s response is contained in the European Market Infrastructure Regulation, for which ESMA is currently writing the rules.
Mr Langen and Ms Swinburne are concerned that some rules proposed by ESMA do not meet the aims set out by the European Union.
In particular they are concerned about the flexibility of the rules for non-financial companies such as manufacturers, airlines and power companies, which often use derivatives to hedge risks to their business. Ms Swinburne, a UK Conservative MEP and member of the Economic and Monetary Affairs Committee, said it was important the rules were tailored so their impact was proportionate to the risk businesses contributed to the financial system as a whole.
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