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New European Rules to Regulate Financial Derivatives

New European Rules Will Increase Transparency and Safety in Derivatives Trading

Statement by Commissioner Michel Barnier, following the agreement in trilogue of new European rules to regulate financial derivatives.

“I congratulate the European Parliament and the Council on reaching today an important agreement on a regulation for more stability, transparency and efficiency in derivatives markets. It is a key step in our effort to establish a safer and sounder regulatory framework for European financial markets. This matters because we need to restore trust in the financial sector, and because we need the financial sector to operate on a sound footing to ensure a return to sustainable growth of the real economy.

The regulation ensures that information on all European derivative transactions will be reported to trade repositories and be accessible to supervisory authorities, including the European Securities and Markets Authority (ESMA), to give policy makers and supervisors a clear overview of what is going on in the markets. The era of opacity and shady deals is over.

The regulation also requires standard derivative contracts to be cleared through central counterparties (CCPs) and establishes stringent organisational, business conduct and prudential requirements for these CCPs. This will considerably increase financial stability and safety in the EU by preventing the situation where a collapse of one financial firm can cause the collapse of other financial firms. We are clearly learning the lessons of the 2008 crisis.

Negotiations in the European Parliament and the Council have not always been easy but we have reached a very good result. And I trust it will be confirmed shortly by both the European Parliament in its plenary session. I would like to thank all parties involved, and in particular the rapporteur Mr Langen, as well as the Danish and Polish Presidencies, for their willingness to finalise adoption in first reading and their readiness to reach a compromise.

With this agreement, we are making a big step for financial stability. And we are substantially reducing the risk of a future financial crisis, with all its consequences on the real economy, growth, jobs and public budgets. The EU has now also fulfilled its G20 commitments in this field, and on time. I call on all other jurisdictions around the globe, which have not yet done so, to take the appropriate steps to meet our shared G20 commitments.

I also call on the co-legislators to now focus on complementary European rules that we need to agree on quickly to continue strengthening financial markets; in particular we need a swift revision of MIFID (rules on markets in financial instruments)”.

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