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Transatlantic regulatory convergence inches closer
Transatlatic regulatory convergence takes a step forwards at the EU-US Summit taking place in Washington DC today.
A new framework for the promotion of transatlantic economic integration will be unveiled today at an EU-US Summit in Washington DC.
The president of the European Commission, José Manuel Barroso, vice-presidents Günter Verheugen (enterprise and industry) and Jacques Barrot (transport) and commissioners Benita Ferrero-Waldner (external relations) and Peter Mandelson (trade) will represent the Commission at the summit, which is hosted by US President George W. Bush. German chancellor Angela Merkel will represent the EU presidency, assisted by secretary general/high representative Javier Solana.
The New Transatlantic Economic Partnership (NTEP) initiative launched by the German presidency will focus on increased regulatory co-ordination between the EU and the US. The move, fully supported by the European Banking Federation (EBF), points out that since the launch of the Financial Markets Regulatory Dialogue in 2002, dialogue between the two entities has improved but the EBF wants a broader and more intense co-operation within that framework, linked to more transparency and consultation. It hopes the FMRD can become a co-ordination tool for major financial services legislation and regulation.
“We really believe that more regulatory co-ordination between the world’s two largest single markets is crucial if we are to enhance the benefits for financial institutions, enterprises and consumers, on both sides of the Atlantic,” said Guido Ravoet, secretary general of the EBF.
The lack of convergence on financial regulatory issues between the EU and US is surprising considering the constant interaction between the two markets. One source, commenting on Regulation NMS and Mifid best execution requirements, said he was “shocked and appalled” that there was no discussion between the two powers when drawing up regulations that refer to the same issue. That said, the implementation of Mifid in Europe does clear a path for EU-US convergence, because so many US banks will need to become Mifid-compliant due to having such a large cross-border business, and with many divisions based in London.
That said, as highlighted by New York mayor Bloomberg’s report, London and New York are competing with each other and with major Asian cities, for the status of the leading global financial centre. The financial regulatory environment is increasingly being viewed as a competitive issue, even more so in the US, where recent research suggests that Sarbanes-Oxley Section 404 is causing companies to shun New York in favour of launching an IPO in London.
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