[12860]
November 16, 2000
TO: INTERNATIONAL COMMITTEE No. 41-00
RE: EUROPEAN COMMITTEE OF WISE MEN PUBLISHES INTERIM REPORT
On November 9, 2000, following a public comment period, the Committee of Wise Men
on the Regulation of Securities Markets published an interim report reviewing the current
regulatory conditions and proposing methods to enhance a single financial services market in
the European Union. The Institute had submitted comments to the Committee of Wise Men
during the comment period on a number of issues relating to an integrated European securities
market.1 The Committee of Wise Men plans to publish its final report in mid-February 2001 in
advance of the Stockholm European Council meeting in March 2001.
The Committee’s interim report describes the benefits of European financial integration,
the trends in the European financial markets, and the shortcomings of the current European
regulatory framework. The Committee agreed with commentators, including the Institute, that
the current regulatory system is too slow and rigid, contains too much ambiguity resulting in
inconsistent implementation, and relies overly on European legislation to provide detailed
rules. The interim report provides the Committee’s preliminary views on a number of issues.
With respect to European regulation, the Committee suggests that one possible solution
would be to introduce a four-level approach to regulation. The first level would be to enact an
EU securities legislation that provides a framework of broad principles on various issues. The
second level would be an EU Securities Committee that would be responsible for the
implementation of the broader EU legislation. The EU Securities Committee would be formed
from the members of the European Commission and representatives of the Member States. The
EU Securities Committee also would be advised by a committee composed of EU regulators on
the implementing details of the framework principles. Moreover, there would be a mechanism
created that would permit the industry to provide regular and systematic input to the
committee of EU regulators and to the European Commission.
At the third level, the Member States would have responsibility for implementing the
Community law in the context of enhanced and strengthened cooperation among the
regulators. The Committee envisions the national regulators agreeing to joint protocols on
interpretations and to peer review to ensure consistent enforcement practices in the EU
1 See Memorandum to International Committee No. 33–00 (September 29, 2000).
2regulators committee. Finally, at the fourth level, there would be strengthened enforcement of
Community rules through more vigorous action by the Commission and enhanced cooperation
between the Member States and their regulators.
In the report, the Committee does not recommend a single EU regulator. First, the
Committee does not believe that the basic harmonized rules that are necessary for the proper
functioning of an integrated market are yet in place. Second, the Committee believes that the
creation of a single regulator would require a change in the EU Treaty, causing further delays,
and that reforms in the regulatory process must be adopted immediately. Third, the Committee
hopes to provide an opportunity to determine whether its proposed approach could achieve an
effective integrated market before recommending a single EU regulator.
The Institute is considering whether to comment further on the Committee’s initial
conclusions and recommendations. Please forward your comments to me by phone at (202)
326-5810, by fax at (202) 326-5841, or by e-mail at jchoi@ici.org by December 15, 2000.
Jennifer S. Choi
Assistant Counsel
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