Over-the-counter derivatives to be regulated/European Parliament votes on new EU Regulation
Derivates will soon be subject to EU regulation. The European Parliament adopted its position on the future EU legislation today. “We call for transparency and stability in particular with those derivatives that are dealt with from stock exchanges and can cause massive disruptions of financial markets. We, as a Parliament, are determined to have a piece of legislation with a minimum of exemptions for a maximum stabilising impact”, said Werner Langen MEP, Rapporteur on the Regulation on derivatives.
Members want to include all off-exchange (OTC) derivatives and make them subject to risk-oriented assessment and clearing. Such derivatives have hitherto been processed on a bilateral basis. “That black box worth trillions of Euros has to be made more transparent. We call for standard procedures, reporting requirements and the use of clearing devices at organised trade platforms”, said Mr Langen. National supervisory authorities and the European agency for Securities and Markets (ESMA) is to be in charge of the supervision.
All derivates will be subject to a notification requirement. “The volume of all transactions has to be transparent to have maximum stabilty of financial markets and to enable supervisory authorities to do their work properly. Risk management will not be possible otherwise”, he said.
Negotiations with Council are to begin after the summer break. “We have left the door open for a first-reading agreement and we could have a final deal by the autumn of this year. That would require, however, more determination on the part of the Member States for real market transparency and a minimising of risks associated with derivatives”, said the European Parliament Rapporteur.
