Tag Archives: financial regulation

European Parliament Positions on Financial Regulation and Agriculture

The European Parliament has outlined its policy preferences on two very important subjects – financial regulation reform and the Common agricultural Policy (CAP).

On financial regulation the EP wants a strengthening of the powers of the three European supervisory authorities (ESAs) – the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority. The Parliament wants for the ESAs to be able to issue decisions directly to a financial institution such as a bank, where the national supervisor has not been able to change some of its practices that are considered unsound. The ESAs would also have the power to settle disputes between national supervisors.

On the Common Agricultural Policy the European Parliament says that funding should be maintained “at least maintained during the next financial period” (2013-2020). MEPs call for more objective criteria, partly to reduce disparities in direct payments, considering the current “hectare basis” inappropriate, and partly to reflect regional diversity. The Parliament believes that geographical indications of origin need to be strengthened and enforced. The EP proposes strengthening producers’ bargaining power in the food supply chain vis-à-vis the retailers and other players and improving price transparency. This position aligns the Parliament with the position of Member States that oppose a radical reform of the CAP. The Commission and other Member States, however, believe that the funding for the CAP should be reduced, and used elsewhere for boosting the overall competitiveness of the EU.

Commission Initiatives on Financial Regulation

The Commission has put forward a number of initiatives on the regulation of the financial markets.

The Commission has proposed a more centralised system for supervision of Credit Rating Agencies at EU level. The European Securities and Markets Authority (ESMA) – would be entrusted with exclusive supervision powers over CRAs registered in the EU. ESMA would have powers to request information, to launch investigations, and to perform on-site inspections.

The Commission is also launching a public consultation on a Green Paper for improving corporate governance in financial institutions. The Green Paper details possible ways forward to deal with the following issues:

  • How to improve the functioning and the composition of boards of financial institutions in order to enhance their supervision of senior management;
  • How to establish a risk culture at all levels of a financial institution in order to ensure that long-term interests of the business are taken into account;
  • How to enhance the involvement of shareholders, financial supervisors and external auditors in corporate governance matters;
  • How to change remuneration policies in companies in order to discourage excessive risk taking.

In its Communication on Financial Services 2010-2011 the Commission has outlined the remaining financial reform proposals needed to implement fully our G20 Commitments:

  • proposals to improve the functioning of Derivatives markets;
  • measures on short selling and credit default swaps;
  • improvements on the Markets in Financial Instruments Directive (MiFID);
  • a revision of the Deposit Guarantee Schemes Directive and the Investor Compensation Schemes Directive;
  • legislative proposals on packaged retail investment products;
  • revisions of the Market Abuse Directive;
  • amendments to the Capital Requirements Directive (CRD IV) to improve the quality and quantity of capital held by banks, introduce capital buffers and ensure the buildup of capital in good times;
  • an action plan on crisis management leading to legislative proposals for the prevention and resolution of failing banks.