INTERNATIONAL: US and EU Financial Markets Regulatory Dialogue (FMRD) Biannual Meeting

Tuesday February 16 2016

U.S. and EU participants in the Financial Markets Regulatory Dialogue (FMRD) met on February 3, 2016 in Washington, D.C. to exchange views on financial regulatory developments as part of their ongoing dialogue.

The FMRD, along with ongoing bilateral discussions and engagement in multilateral fora such as the G-20, the Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO), the Committee on Payments and Market Infrastructures (CPMI), and the Basel Committee on Banking Supervision, provides an effective platform for dialogue to help overcome financial regulatory challenges. By remaining in close contact and holding twiceyearly dialogues, U.S. and EU senior technical staff are able to identify and address potential challenges to improve the cross-border functioning of the respective regions’ regimes. Fourteen years after the FMRD was initiated, both sides continue to identify areas for further engagement.

Recent achievements have included:

• Facilitating the EU equivalence determination processes in different sectors;
• Launching the U.S.-EU insurance covered agreement negotiations process to address U.S. reinsurance collateral rules and Solvency II issues; and
• Improving audit oversight for firms performing cross-border work.

At the February 3 meeting, participants held productive discussions and exchanged views on bank capital and liquidity measures, approaches to cross-border bank supervision, bank structural reform, recent developments in bank resolution, central counterparty (CCP) resolution, over-the-counter (OTC) derivatives reforms, alternative investment fund managers, benchmarks, insurance, cooperation on audit oversight, and information sharing for supervisory and enforcement purposes.

Looking forward, the participants committed to review the functioning of the dialogue with a view to improving U.S.-EU cooperation on financial regulation.

Furthermore, the following was considered:

Banking

Participants took stock of capital issues, including implementation of countercyclical capital buffers and the leverage ratio. They reflected on cross-border bank supervision, with participants from the OCC and the ECB/SSM sharing their perspectives. European Commission participants provided an update on the EU’s bank structural reform proposal.

CCP Resolution

Participants emphasized the importance of clear, credible, and well-designed recovery and resolution frameworks for CCPs in line with internationally recognized standards. Participants welcomed the ongoing work by CPMI-IOSCO, as well as the work by the FSB, which has been accelerated. Both groups’ work will be reported to this year’s G-20 Leaders’ summit. Participants discussed the evolving EU and U.S. approaches, as well as cross-border cooperation.

Fund issues

EU participants reported that the European Securities and Markets Authority (ESMA) is presently examining factors to inform the issuance of its advice by summer to the European Commission regarding the extension of the EU passport to U.S. fund managers. Participants noted recent useful exchanges to help clarify the effect of the Volcker Rule on foreign funds, and committed to continue discussions to review outstanding concerns, with a view to finding solutions.

The next FMRD meeting will take place in Brussels in July 2016.

Click on the link above for further details.