Exception for Deutsche Börse puts EU supervision deal at risk — Politico Europe
In Luxembourg, Germany’s demand to exempt exchange group Deutsche Börse from future centralized EU supervision could jeopardize finance ministers’ agreement on a package of legislative proposals on financial market integration and supervision. The most contentious provisions will be discussed at a ministers’ meeting on Thursday, while a compromise prepared by Ireland as the holder of the EU Council presidency is hoped to be approved at the Ecofin meeting on Friday.
Dispute over Deutsche Börse
As Politico Europe reports, Berlin refuses to support the package without an exception for Deutsche Börse. Germany seeks to retain supervision of the exchange group at the local level, although transferring control over the largest exchanges and other financial infrastructure is one of the key elements of the MISP package.
The current compromise between EU states provides for an exception that will also cover Spain’s main stock exchange and the German trading platform Tradegate. The exemption criteria are based on trading thresholds and the companies’ geographical reach.
The authorities of the German state of Hesse, which currently supervise Deutsche Börse, oppose transferring these powers to the European Securities and Markets Authority, ESMA. They fear job losses and reduced influence if supervision is transferred to a pan-European body.
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Objections from smaller countries
Smaller EU states oppose the exception, believing that it disproportionately benefits large countries. One diplomat said that this exception harms the entire discussion and is a significant concession to Germany, while other countries receive nothing in return for their support. An EU official said before the meeting that no agreement is better than an unfavorable deal.
Six diplomats familiar with the negotiations assess the chances of an agreement this week differently. According to one of them, between eight and 17 countries could join forces to block the deal. At the same time, opponents of the exception do not have a unified position on all components of the package.
Belgium is particularly dissatisfied with the plan because its depository group Euroclear is to come under ESMA supervision. According to two diplomats, Belgian Prime Minister Bart De Wever may raise the issue at the European Council meeting at the end of the month if a majority of ministers support the exception.
According to the publication, ESMA will still supervise large companies, including exchange group Euronext and Nasdaq’s European division. However, without supervision of Deutsche Börse, the regulator will have fewer staff and less funding and will be less influential.
