On July 4th, European lawmakers moved to delay a final vote on the European Market Infrastructure Regulation (“EMIR”) until September. EMIR is the European Commission’s answer to the G-20 mandate to reform the over-the-counter derivatives market, and addresses many of the same issues as the Dodd-Frank Act in the United States.
The delay was announced by German MEP Werner Langen, a member of the Economic and Monetary Affairs Committee (“ECON”) and EMIR’s “rapporteur” (European Parliament parlance for the MEP responsible for preparing a report on the bill). This is a change in position for Langen, who previously advocated for a vote on derivatives before negotiations with the European Council were finished.
His change of heart came as he saw the Hungarian EU Presidency draw to a close without a final agreement between the Parliament and the Council. “We weren’t able to get unanimous agreement with the Council, and that is why the issue has had to be handed over to the Polish presidency but I am optimistic that after the summer break we will be able to get agreement with the new presidency fairly quickly,” he added.
Michael Barnier, the European Commission’s point man on the issue, sees the delay as an opportunity to address some of the contentious divisions between the two rival factions over supervision, scope, and extraterritoriality. But these thorny issues may not be smoothed out by the September target. Langen has stated that at minimum he would like to hit the original G-20 taget—central clearing for OTC derivatives—and let the rest follow when it would.
American lawmakers are facing similar delays in their derivatives regulation efforts. The Dodd-Frank Act is days away from its first anniversary, and the CFTC and SEC have fallen behind on rulemaking and implementation. Both swap regulators have extended the effective date of many otherwise self-effective rules until December, and reminded the public that provisions require a rulemaking will not make any change to the regulatory landscape until those rules are finalized.
Lawmakers and industry members both hope that this delay could provide breathing space for harried regulators to step back and consider the larger picture. Though the G-20 mandate calls for harmonization of reforms, the United States and Europe are not marching lock-step towards a synchronized regulatory future. But if regulators are already hard-pressed to meet their deadlines, there may be little time left over for trans-Atlantic conferencing.