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Esma rushes short selling consultation

Tuesday 24 January 2012 – by [email protected]

Esma flag - photo by Esma
The European Securities and Markets Authority is giving firms less than a month to respond to draft technical requirements for short selling and credit default swaps regulation.

Setting out its proposed measures for the legislation on Tuesday, Esma admitted that the consultation process is “significantly compressed”, with comments needed by 13 February.

The supervisory authority must provide final requirements to the European Commission by 31 March. It stated that there are a number of differences in this consultation compared to normal consultations.

“The most important differences compared to normal practice will be the absence of a previous call for evidence (used normally to gather early views to help shape the legal proposals), the length of the consultation period (reduced to 3 weeks) and the absence of a cost-benefit analysis incorporated in the consultation.”

The technical standards set out new rules for agreements, arrangements and measures to ensure that sovereign debt will be available for settlement.

It also includes details of net short positions to be notified to national regulators and disclosed to the public, along with information that domestic supervisors must provide to Esma.

In November Esma chairman Steven Maijoor hit out at the huge workload that Esma has in trying to draft the technical standards for the short selling regulation.

Speaking in Brussels, Maijoor admitted that the authority needed at least 12 months to consult and write the technical standards to ensure that the “quality” of legislation is not harmed.

Esma has until the end of March to provide the EC with the finalised requirements which will come into force from November 2012.

Set up in 2011, Esma is required to keep a pan-European watch over securities markets, while also being required to write the technical measures for new securities legislation. However, it is only projected to have 100 employees by the end of 2012, compared to around 4,000 staff at the UK’s Financial Services Authority.

Earlier this month, a letter from eight trade associations in the industry called for EU regulation to be delayed to ensure that Esma would be able to conduct more thorough consultations.

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