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The World Federation of Exchanges (WFE), which represents more than 200 market infrastructure providers including exchanges and CCPs, has responded to the European Commission’s Public Consultation on The Operations of the European Supervisory Authorities (ESAs).
While the consultation has an EU focus, there are some items that are relevant to the WFE’s international membership, therefore its response focuses on three key areas:
- The international aspects of the ESA’s work: Whilst important for the ESAs to remain comfortable that third countries continue to satisfy standards of equivalence on an ongoing basis, this should be in the context of deference or mutual recognition principles underpinned by strong communication and information sharing arrangements. Extending the ESA’s powers in the way described would encourage the use of those powers in a way that may be extra-territorial in nature, adding complexity and ambiguity for market stakeholders, undermine the principles of deference and trust between regulators, and risk fragmenting markets.
- Access to data: Given there already exist practices set out in international guidance, and/or specific cooperation arrangements between jurisdictions to facilitate the exchange of relevant information, we consider Authorities should consider carefully whether duplication of such requirements would be proportionate to the costs to the market of doing so.
- Direct supervisory powers in post-trading infrastructure: The WFE and its members do not support extending ESMA’s powers to non-EU post-trading market infrastructures, and contend this would introduce risk and remove the benefits of close local supervision. We continue to support mutual recognition arrangements between jurisdictions. These should be based on common standards, use an outcomes-based approach to recognising the framework in foreign jurisdictions, and rely on regulatory deference thereafter.
Nandini Sukumar, Chief Executive Officer, WFE said:
The WFE welcomes the opportunity to provide its perspectives on this EC consultation document. We are particularly keen to emphasise that the WFE and its members support a system based on global standards and principles, which is implemented and overseen by national authorities. National authorities are best placed to understand and take swift action on issues that are particular to the local market, environment and market structure. Failure to do so could be to the potential detriment of the wider overriding goals of financial stability and fair, efficient and orderly markets.
The complete response can be seen here (PDF file).