European Commission speech on EU/US regulatory dialogue

More EU/US coordination on regulation needed, says Holmquist

Jorgen Holmquist, director general of DG Markt at the European Commission, has given a speech identifying new challenges and ways forward in the EU/US regulatory dialogue.

In the speech, he highlights regulatory competitiveness as a real issue that stems from concern in the US about the competitiveness of its capital markets. Sarbanes-Oxley, class actions and complex regulatory structures are recurring themes, and the US treasury secretary has even said it might be beneficial to move to an EU-style principles-based regulatory approach.

He also comments on the dawning of a new financial markets architecture, formed by the merger between NYSE and Euronext. Although the entity emerging from the merger does not seem to create regulatory difficulties in its current shape, there are likely to be future developments: at some point a transatlantic pool of liquidity will arise. Differences remain between the US and EU authorities about how best to treat hedge funds. Many European countries – often those with few hedge funds – favour stronger regulation, while the Commission and the US President’s working group on private pools of capital believe the existing regulatory frameworks provide the right answers.

Holmquist suggests that in order to address these challenges, a multilateral, co-ordinated approach is needed, rather than a multitude of bilateral agreements between regulators. A climate of trust must continue to be built, based on day-to-day informal contacts. In addition, common objectives are necessary to avoid regulatory overkill and duplication. To achieve these objectives, there should be reliance on global standards, allowing recognition of equivalence of regulation and enforcement.

BaselAlert.com