As his tenure as E.U. Financial Services Commissioner winds down, Commissioner Michel Barnier called on his prospective successor, Lord Hill, to continue the effort to have mandated cross-border financial regulatory convergence included in the trade talks with the United States and convince U.S. regulatory partners that this approach will not lower standards but will achieve greater financial stability. In remarks at the Eurofi Financial Forum, he noted that the objectives of global convergence and deference to other jurisdictions are broadly shared. This is the only sensible way forward, he emphasized, as the key to efficient financial markets is for global financial regulators to cooperate, trust and rely on each other.
Regarding derivatives, Commissioner Barnier said that the Path Forward with the CFTC, agreed in July 2013, sets the foundations, both for the EMiR and the MiFID rules. His office is now in near daily discussions with the CFTC and its Chair Tim Massad on the details. The E.U. wants to find practical solutions in the coming weeks, he said, but noted that it takes two to tango. The American side must also deliver, he explained.
He called for a similar cooperative Framework for cross-border resolution of failed financial firms. The U.S. has Title II of Dodd-Frank and the E.U. has the Recovery and Resolution Directive. The objective of the Framework must be deference to each other's rules, he said, not making foreign financial institutions subject to double requirements.
On international financial reporting standards, IFRS, he is much more pessimistic. The prospect that these standards will be used by all major jurisdictions is even dimmer today than in past years, despite E.U. efforts and the time he has spent in IASB meetings. This remains an issue of major concern.