EU
lawmakers eye compromise for U.S. on benchmarks
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[January 08, 2015]
By Huw Jones
LONDON (Reuters) - European Union lawmakers
look set to ease the international impact of rules to stop market
benchmarks being rigged, addressing U.S. concerns that global investors
could lose out.
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The bloc is approving a law to directly regulate benchmarks such as
those based on interest rates and currencies that banks have been
fined billions of dollars for attempting to manipulate.
The measure as drafted by the European Commission raised hackles in
Washington because it would bar European investors from using many
U.S.-based benchmarks.
Benchmarks from outside the EU could be used only if they were
compiled under rules that are as strict as Europe's safeguards, but
the United States won't adopt equivalent rules.
Cora van Nieuwenhuizen, a Dutch lawmaker steering the draft law
through the European Parliament, said the focus should be on
strengthening the international competitiveness of the EU's
financial sector by maintaining a broad supply of benchmarks,
including those from outside the bloc.
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"The Commission proposal on this point was insufficient and would
see a large number of benchmarks rendered ineligible," van
Nieuwenhuizen told parliament's economic affairs committee on
Thursday.
She proposed that compilers of benchmarks from outside the EU apply
for authorization to be used in Europe.
"In this way, non-EU administrators can continue to provide their
benchmarks in the EU even when their home country regulations are
not equivalent," van Nieuwenhuizen said.
The EU has little choice but to compromise. Last month Randall De
Valk, a U.S. Treasury official, told a U.S. lawmaker that the United
States "does not plan to adopt direct supervision of benchmarks".
Unchanged, the draft EU law is "prescriptive" and goes well beyond
new globally-agreed supervisory principles the United States
applies, De Valk said in a letter seen by Reuters.
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Lawmakers from parliament's two biggest parties, Ludek Niedermayer
from the center right and Jonas Fernandez-Alvarez from the center
left, called van Nieuwenhuizen's proposals a "very reasonable
solution" that dealt with non-EU countries in a "pragmatic way."
Such support signals the compromise could well be voted through in
committee on March 5. EU states have joint say on the draft law.
British center-right lawmaker Kay Swinburne called for commodity
benchmarks to be removed from the new rules and put under a separate
draft law the commission should propose.
Britain, where much of the rigging of interest rate and currency
benchmarks took place, had already tightened up supervision of the
sector.
(Reporting by Huw Jones; Editing by Ruth Pitchford)
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