The EACT’s response to the EC consultation on derivatives

July 6, 2010

Consultation closes at the end of this week on the European Commission’s approach to regulation of derivatives.  The EACT submission will be released in the next couple of hours and will then be available on our website.  Our position is clearly summarised in the submission:

– we favour transparency and support the ‘information threshold’ provided certain simple and pragmatic conditions are met;

– we think the clearing threshold is not just unnecessary but also systemically dangerous.  Instead of preventing the next crisis its implementation could trigger such a crisis; and

– there is a real threat of regulatory divergence with the US if the EU goes ahead as it proposes.  This will be detrimental to employment and growth in Europe and the EACT is clearly opposed to tolerating regulatory arbitrage.

We want to help the European Commission – which I perceive as struggling – so we offer an alternative solution, involving national supervisors and ESMA; we believe this would be both efficient and workable.

The campaign is of course by no means over.  We will await with interest the conclusions of the Commission in Brussels; but in the meantime the EACT is playing a key role in trying to ensure there is a systematic initiative to brief key EU stakeholders on the issues – so that even if the Commission fails to recognise what is at risk (if you’ll forgive the pun) at least the wider EU governance process will be aware and we hope supportive in the end.

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