EU breaks impasse on derivatives regulation
(BRUSSELS) - European finance ministers broke an impasse Tuesday in regulation of the multi-trillion-euro trade in over-the-counter (OTC) financial derivatives.
"An important hurdle has been crossed," said European Union markets commissioner Michel Barnier after talks ended in Brussels, referring to new rules governing disputes at a European body that supervises national markets.
Britain wanted national supervisors to decide whether clearinghouses should have permission to operate, but agreed that the European Securities and Markets Authority (ESMA) could overrule them if it came up with a two-thirds majority among its voting members.
The deal, which paves the way for more negotiations with the European Parliament, keeps the EU on track to meet commitments on regulating the financial sector that EU officials made at G20 talks in November.
Barnier said regulation was essential because OTC derivatives trading was partly to blame for the scale of an economic downturn sparked by a worsening of the global financial crisis in 2008.
The City of London is home to three quarters of the European trade in these derivatives, and covers half of the global market.
In a statement, Oxfam expert Marc Olivier Herman said that food commodity derivatives "should be much more transparent and better controlled to stop any chance of them creating havoc in poor countries."