The European Commission has published a speech given by Michel Barnier (Member of the European Commission responsible for Internal Market and Services) entitled Acting without delay to clean up financial markets.
In his speech Barnier discusses the financial crisis and the response to it. Key points include:
- An immediate priority for the Commission is concluding unfinished business and equipping Europe with an effective supervisory system and effective regulation of alternative investment funds.
- The Commission needs to close regulatory loop holes so that no market, no territory and no institution can escape supervision. In particular the Commission intends to promote the standardisation of derivatives and to develop central clearing parties for these products. Barnier also states that there is a need to revise the Markets in Financial Instruments Directive with the aim of strengthening transparency on financial markets, in particular for alternative platforms.
- Common rules need to be established at an international level which guarantee the solidity of the financial sector and do not worsen pro-cyclicality.
- Improvements need to be made to risk management and the internal control of financial institutions, including remuneration. Barnier states that thought needs to be given about targeted measures to strengthen the responsibility and the independence of management boards. The role of shareholders and external audit also needs to be looked at. Furthermore Barnier states that he is convinced that binding rules on remuneration across the financial sector would also be an incentive for taking less risk.
- Preventing and managing future crisis. Barnier states that there are three different issues to think about: (1) having tools for early intervention; (2) tools which allow for the restructuring of banks in the case of insolvency; or (3) harmonising insolvency procedures.
View Acting without delay to clean up financial markets, 16 February 2010