Improvements To European Financial Regulation Proposed

by Ulrika Lomas, for LawAndTax-News.com, Brussels

31 January 2007

It emerged on Tuesday that the Inter-institutional Monitoring Group (IIMG) has published its second interim report on the "Lamfalussy process", a four-level regulatory approach to the development of financial services regulation which aims to allow the EU to respond rapidly and flexibly to developments in financial markets to achieve greater market integration and improved competitiveness.

Based on the analysis in its first interim report and on evidence given by stakeholders, the Group's second interim report provides some preliminary recommendations to improve what has been, overall, a successful process.

The second interim report is open for public consultation until 26 March 2007.

In this second interim report, the Group calls for "regulatory self-restraint" at all levels of the process and suggests that Levels 1 and 2 work – to a certain extent – in parallel.

It stated that:

"The Group believes that the choice between Directives and Regulations is not straightforward and suggests some guiding principles to choose between the two instruments. The Group supports consultation at all levels, but warns against overlaps. There is also strong support for impact assessment at all levels. The Group believes further efforts are needed to improve cooperation between supervisors. This issue will receive particular attention in the Group's final report."

The report continued:

"The Group now invites all interested parties to comment on the progress made on the implementation of the Lamfalussy process and on the Group's preliminary views set out in its second interim report. The comments will be taken into account for the determination of the Group's final recommendations and conclusions, which will be presented in the form of a final report in autumn 2007."

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