The 2011 Horizon
It is well documented that over the past two years the European and US Authorties have made numerous efforts to strengthen the regulatory and supervisory framework that apply to financial activities. This has been deemed necessary in order to restore confidence in the financial markets and to prevent the occurrence of a new crisis.
European institutions have also decided to foster greater harmonisation of national laws to improve the integration of financial markets and the consolidation of market infrastructures. Once this has been achieved, the financial landscape will have changed considerably.
The new Internal Market Commissioner, Michel Barnier, has decided to legislate in all its areas of intervention. The post-trading arena, neglected under his predecessor, is now being addressed progressively, as demonstrated by the number of initiatives launched during the past few months. Few of these regulatory initiatives, however, are at the same stage of development. The occasional snapshot of the progress made to date can prove very helpful. The texts relating to UCITS IV (Undertakings for Collective Investment in Transferable Securities) and FCD (Financial Collateral Directive) have already been adopted at European level and are now being transposed into national laws.
By contrast, Level 2 measures are still under discussion for the AIFMD (Alternative Investment Fund Managers Directive). Also still under discussion among European Authorities are EMIR (European Market Infrastructure Regulations) and the Short Selling regulation. CSD (Central Securities Depository) regulation, UCITS V, ICSD (Investor Compensation Scheme Directive), MiFID 2 (Markets in Financial Instruments 2) and SLD (Securities Law Directive) are also in preparation. The European Commission intends to finalise the adoption of most of the texts during 2011 and target their transposition and entry into force in 2011 (SFD, FCD, UCITS IV), 2012 (Short Selling regulation, ICSD) or 2013 (Solvency 2, SLD, AIFMD). As far as European Central Bank initiatives are concerned, CCBM2 (Correspondent Central Banking Model 2) is currently forecast for mid-2013 while migration to T2S (Target 2 Securities) should begin by September 2015.
The goals of the different initiatives vary but they are largely complementary.They all target the same final objectives: soundness, effectiveness, transparency, and safety for markets, intermediaries and investors. A further overarching objective is the achievement of a level playing field for all market professionals, even if in the interim it can sometimes feel as if the goalposts are being moved regularly