The EU has big plans for the world of financial services over the next year.
While several Directives are underway (including the never-ending Alternative Investment Fund Managers saga) regulations are in the pipeline (work on Capital Requirements Directive IV has already begun in the midst of the Capital Requirements Directive III), and measures are planned for the near future (regulating derivatives markets and credit default swaps).
What’s more, still more ideas, such as a proposal for an international bank levy, are being shoveled onto the table.
Is it feasible to imagine that this tsunami of regulation could possibly remain on schedule?
Not only is there physically too much on the table to remain on time with these proposals, but financial services also remain a very sensitive issue.
If the AIFM Directive is any indication of the difficulty we are facing in reaching an agreement that will suit all stakeholders, then the outlook isn’t pretty. And of course, there is the current domestic crisis in Belgium, which will most likely prevent the Belgian Presidency from keeping up with all these proposals.
AIFM is a perfect example of the complexity of the discussions. Whilst the US is upset about protectionism in the third country clause, the severity of the UK’s opposition to the text is evidenced by Gordon Brown’s phone call to Zapatero in the wee hours of the morning, removing it from the ECOFIN Council agenda in March.
France sees the Directive as imperative to protecting the internal market, and the European Venture Capital Association is incensed by clauses on depositaries, capital and audit requirements, and reporting.
It is likely that the EU will push forward and continue to try to pass these reforms, but given the sensitivity of the subject, the inability of stakeholders to agree, and the political climate, it will be an interesting next few months to see how the negotiations will play out.