Lamfalussy calls for securities “euro-regulator”

Date: 29/11/01

By Peter Chapman

THE architect of sweeping reforms for the EU's financial services sector has called for a "euro-regulator" to enforce the new rules for stock markets and finance houses.

Alexandre Lamfalussy, president of the Commission's committee of wise men on the regulation of securities markets, claimed a euro-regulator would be a natural progression from the Paris-based Committee of European Securities Market Regulators (CESR).

The CESR is one of the two committees set by Lamfalussy

to add the fine detail to draft Commission legislation covering the sector. The euro-regulator would police the new rules brought in by the CESR and the securities committee of member state treasury officials.

Lamfalussy's specialist law-making system is still untested because of delays caused by political squabbles over the right of MEPs to oversee the whole process. Controversy has also dogged the Commission's drafts on pan-EU rules for prospectuses and market abuse - the first two directives are still subject to fine-tuning from Lamfalussy.

Whether the law-making method turns out to be "a disaster or a success", Lamfalussy said a euro-regulator would be the most effective means of enforcing regulations.

National regulatory watchdogs, such as the UK's Financial Services Authority, are in charge of policing the fragmented system which is being replaced by pan-European laws.

Lamfalussy says that a euro-regulator could end up taking over some of their supervisory role: "If [the national regulators] work in a harmonious way and live together, they may say after three years why not get married?"

Earlier he had told a conference of European finance experts that he had considered adding an annex to the wise men's report on securities markets, spelling out the role of a future euro-regulator to oversee the blueprint.

But he said that would have "derailed the whole discussion" on the urgent task in hand - designing a framework to meet the end-of-2003 deadline for creating a single securities market and the 2005 deadline for completing the remainder of the financial services action plan.

Belgian Finance Minister Didier Reynders told the same conference he also saw scope for a broader European supervisory authority "perhaps in collaboration with the European Central Bank" without losing existing national systems. He said discussions were already under way with the ECB and national central banks on the need for "a more integrated supervision based on the European level".

The European Parliament is studying a deal with the Commission giving it a chance to influence the powerful securities committee of national officials, which has the final say on legislation tabled by the CESR.

Alexandre Lamfalussy, president of the Commission's committee of wise men on the regulation of securities markets, has called for a 'euro-regulator' to enforce the new rules for stock markets and finance houses.