, Executive Director of the European Securities and Markets Authority, says that the EU will lead by example in the harmonization and convergence of regulation of OTC derivatives. With the plan for the EU regulation of OTC derivatives, central counterparties, and trade repositories (EMIR
) now having been agreed upon by the European Parliament and the Council, ESMA is due to deliver draft regulatory and implementing technical standards under EMIR in June. Ross believes that if the EU is able to harmonize regulation and integrate supervision in Europe, the same convergence is possible, and necessary, globally.
In 2009, the heads of EU Member States and governments called for harmonised regulation and integrated supervision to ensure a true level playing field for all actors at EU level. With the establishment, and good start, of the ESAs and the ESRB, I think we are making good progress in this direction. However, the financial market is global both for participants and investors. It goes beyond Europe, and therefore the greater harmonisation within the EU needs to be complemented with international convergence and cooperation. I strongly believe that Europe can lead by example here, to show how convergence and good cooperation between different national member states and their regulators provide more effective and efficient regulation of cross-border entities and markets.
Because regulators all over the world are wrestling with the same difficulties in regulation OTC derivatives, Ms. Ross sees this as a golden opportunity for cooperation and convergence. Ross feels that international cooperation is urgently needed to provide a level playing field in all markets, and consistently strong investor protections globally. Inconsistent regulation and regulatory competition, Ross believes, creates a dangerous risk contagion.
The world is strongly linked and any one financial market may be damaged by another market which is not sufficiently regulated. Indeed, such regulatory competition also does not allow investors to benefit from appropriate protection which cannot be in the interest of any regulator or society as a whole.
Ms. Ross sees the ESMA as the body best suited to ensure that Europe speaks with "one voice" in the global coordination of OTC derivatives regulation. A number of international bodies have been set up to tackle the issue, and Ross has vowed that ESMA will lead by example and play a full role in this global dialogue.