ECON votes on EMIR…..but…..

May 24, 2011

The Langen report on EMIR was adopted by ECON in the European Parliament this afternoon. Well, that is perhaps a piece of good news, but…. Other related aspects of what has happened today are sober reminders of the continuing huge complexity of the issues around the regulation of derivatives – and I make that comment purely from the perspective of what is at stake for non-financial end users. I am mightily relieved not to feel under pressure to master all the other aspects of the EMIR and Dodd-Frank issues.

I received two files today. The first is the list of amendments being considered by ECON. This document runs to 42 pages and over 13,000 words. Presumably the members of ECON felt on top of all this content and took a considered view of each amendment as it was voted on. The second file is an EMIR mark-up incorporating the amendments that were tabled (at least, I think that’s what it is – a clear head and a large virtual desktop is needed to confirm); this file has 83 pages and 32,000 words.

So one hopes that the members of ECON have been earning their keep over the last days and done their homework with review of these two files. Good news indeed if they have managed to be so diligent.

Werner Langen said today that he would not start to negotiate with the Council on an agreement at this stage, indicating that the Council ‘was not ready’; a setback perhaps for the Hungarian Presidency but it is difficult not to be sympathetic. Parliament will now vote on a first reading of EMIR in the week of 4 July. Two scenarios can now be considered:
– Council fully accepts Parliament’s view of EMIR (ie what ECON has endorsed and Parliament later votes on); given the gaps between Council and Parliament this looks unlikely; or
– Council confirms its own ‘Common Position’ on EMIR and eventually reaches agreement with Parliament after a second reading – which could be as late as the first half of 2012.

In the meantime I understand that Commissioner Barnier expressed in ECON the wish that trialogues (the compromise negotiation between Parliament, Council and the Commission) ‘begin soon’ and that legislation on EMIR is passed as quickly as possible.

Time is needed to consider the implications of all that has happened today but one immediate thought: it looks to me to be even more true that rule-making on Dodd-Frank will play an absolutely crucial role in setting the outcome for Europe on EMIR, so long as regulatory convergence sits high on the G20 agenda.

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