EU Policy Making and Better Regulation BIICL Conference on EU Balance of Competences: Financial Services and Free Movement of Capital December

Transcription

1 EU Policy Making and Better Regulation BIICL Conference on EU Balance of Competences: Financial Services and Free Movement of Capital December Niamh Moloney London School of Economics and Political Science

2 Lessons from the Crisis The importance of effective policy/rule-making Systemic risks with respect to quality of outcomes Heavy lifting required of processes, given polycentric nature of EU law-making The shift from the location of policy/rulemaking to the quality of policy/rule-making How far has the policy/rule-making process come?

3 Lessons from the Crisis Level 1 - enhancements Impact Assessment practices The Impact Assessment Board Consultation practices Leaking of articulated Commission texts Ex: the MiFID II/MiFIR process Ex: the Parliament and data-gathering Ex: the ESAs and data sources

4 Lessons from the Crisis Level 1 countervailing factors Complex institutional environment and nuanced institutional interactions The ESA/Commission dynamic and implications for policy-making controlling the pen The impact of the ESRB and its power to recommend that legislative action is taken Impact assessment at Council and Parliament Parliament weight of amendments and political risks Council special cases problem Inappropriate and untested detail at level 1 Ex: MiFIR

5 Lessons from the Crisis Level 2 - enhancements Impact assessment and the ESAs Level 2 countervailing factors Technical capacity? Scale of rule-book agenda and time pressures the impact of vacuum-sealing level 1 from level 2 actors The limited data-set available Ex: EMIR; MiFIR and extending transparency requirements beyond equity Complex institutional dynamics The Commission and the ESAs the emerging evidence

6 Lessons from Crisis Overall? A process which is strengthening and being refined Momentum to EU institutional design Prone to political risks But some ability to self-correct Review clauses Importance of the level 2 process to ensuring technically robust rules Scale of delegations increasing as each measure is proposed Tendency to allocated delegated rules to the BTS process, thereby increasing the power of the ESAs Ex: MiFID II/MiFIR

7 The Retail Market Example Why is the formation of optimal policy decision so problematic in the retail sector? Role of EU not clear A highly fragmented market Longstanding and intractable problems Very limited countering benefits to costs and risks of intervention given limited cross-border activity But: the crisis and an intensification of the retail agenda Spill-over effects Crisis impact: precautionary; interventionist; beyond disclosure; suspicion of innovation Ambitious and interventionist Trending towards maximum harmonization

8 The Retail Market Example The agenda MiFID II Proposal (distribution) IMD II Proposal (distribution) MiFIR/MiFID II (product governance/intervention) PRIPs Proposal (packaged retail investment products - disclosure) UCITS V Proposal (UCITS depositary)

9 The Retail Market Example A robust policy/rule-making process? Evidence gathering commitment strong The DG SANCO effect 2010 and 2011 large-scale retail market studies The ESA effect ESMA: Trends Risks and Vulnerabilities EBA/EIOPA: monitoring consumer trends ESA Regulation, Art 9 and data gathering Reliable pan-eu intelligence Capacity for supporting and sharing innovation ESA Joint Committee Ex: Product Governance

10 The Retail Market Example Testing of outcomes UCITS KIID (Key Investor Information Document) But a fragile development? Policy innovation Wide set of tools (product intervention/governance) More imaginative and riskier (?) policies The 2013 Proposal for a Long Term Investment Fund with retail access Accepting illiquidity given the premium available What are the drivers of this policy approach and how can it be supported?

11 The Retail Markets Example But strong countervailing factors Evidence not feeding into policy/rule-making Ex: MiFID II and the removal of commission risk from independent advice channels only The de-stabilizing impact of the legislative process The sorry PRIPs saga Purpose of the PRIPs Proposal mainstay of the crisis-era retail agenda Gestation example of enhanced policy development after FSAP 2007 Call for Evidence and Feedback; 2008 Industry Workshop and Open Hearing; 2009 Communication; 2012 Proposal and IA

12 The Retail Markets Example The effect of the legislative process The European Parliament amendments Changing the purpose of the measure Difficulties with alignment with distribution texts (MiFID II; IMD II) No impact assessment The Council text The difficulties for the trilogue

13 The Retail Markets Example Overall Need to maintain a delicate balance between EU and its MS on retail policy Potential for significant improvement in EU policy formation clear - but political risks Availability of opt-outs and calibrations MiFID II and distribution Economies of scale benefits from EU-led regulation Need for data-sharing, engagement, and coordination

14 The Third Country Access Example The crisis-era and fortress Europe Striking crisis-era development The effect of the equivalence assessment and related requirements Central to a series of measures Exs: AIFMD, EMIR, Rating Agency regime Different approaches and drivers to third country access across these measures But becoming a recurring feature Ex: 2013 Benchmark Regulation Proposal Capacity of ESAs to provide equivalence assessment

15 The Third Country Access Example Costs follow aggressive third country access policies Political costs; market costs Policy process problems A lack of coherence The approach to prospectuses/capital-raising and IFRS The crisis-era approach to AIFMD The MiFID II/MiFIR example The Commission Proposal: removing MS discretion The ECOFIN response