MNI EXCLUSIVE: EU States To Clash on Financ'l Supervision Plan

--Ecofin Council To hold First Discussion on ESA Review 

--Ireland and Luxembourg Push Against Extension of ESMA powers

by Jean Comte

     BRUSSELS (MNI) - European Union finance ministers will Tuesday hold a first

debate on the controversial review of the European system of financial

supervision. The proposal, which was unveiled by MNI in September, extends the

power of the three European supervisory authorities: the European Banking

Authority (EBA), the European Securities and Markets Authority (ESMA) and the

European Insurance and Occupational Pensions Authority (EIOPA).

     ESMA will likely be the main beneficiary of the proposal, as it will gain

supervision capacity over FinTech and green finance, would receive transaction

data directly from market participants, whilst also overseeing financial

benchmarks.

     Luxembourg, which hosts many financial services providers and assets

managers, is the most vocal in opposition to the text. But other countries, like

Ireland, believe that the proposal goes too far. "Most countries were only

expecting a set of technical amendments on the ESA review - they was some

suprise when they realized that it was so far-reaching," summed up a source

following the talks. Opponents point to the alleged lack of technical analysis

supporting the extension of the powers of the three authorities.

     The plan might also be opposed by member States, as it directly foresees a

decrease in the staff of national financial watchdogs, against an increase in

the staff of the 3 ESAs. According to the EU Commission, the EBA, EIOPA and ESMA

will respectively require 29, 35 and 156 additional full-time employees.

     In opposition, France strongly supports the draft text, saying that a

stronger supervision of financial markets is necessary to create an "union" of

the 28 national capital markets. But opponents notice that Paris is currently

trying to take advantage of the Brexit to reinforce its position as a financial

centre -- hoping to attract banks and assets managers leaving the UK.

     Finally, the file could be mixed in with other draft proposals -- such as

the proposed pan-European Personal Pension Product (PEPP), which is supposed to

be directly supervised by EIOPA. According to documents obtained by MNI, several

countries -- including The Netherlands and Belgium -- said that was not

possible, unless the ESAs regulatory position is reviewed

     Estonia, which currently chairs Ecofin debates, has already said that it is

not planning to reach an agreement on this file before the end of 2017.

     The draft file also needs scrutinizing and amending by the European

Parliament, which has not begun its work yet. According to one Parliament

source, the file will be dealt by two rapporteurs -- the French left-leaning MEP

Pervenche Beres and the German right-leaning MEP Burkhard Balz.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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