Cablegate: Cesr Changes Operational Tasks
VZCZCXYZ0008
RR RUEHWEB
DE RUEHFR #7209 3071604
ZNR UUUUU ZZH
R 031604Z NOV 06
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 2836
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
UNCLAS PARIS 007209
SIPDIS
SENSITIVE
SIPDIS
PASS FEDERAL RESERVE
PASS CEA
STATE FOR EB and EUR/WE
TREASURY FOR DO/IM
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER
USDOC FOR 4212/MAC/EUR/OEURA
E.O. 12958: N/A
TAGS: EFIN ECON PGOV FR
SUBJECT: CESR CHANGES OPERATIONAL TASKS
1. (SBU) SUMMARY: The Committee of European Securities Regulators
(CESR) has amended its charter in response to a report issued by the
EU Council of Ministers earlier this year. The move is part of a
broader effort to promote regulatory convergence and improve
supervision of the financial markets. Changes include a more
straightforward decision-making process, a mediation mechanism,
integration of a Review Panel into the charter, a commitment to
follow data protection rules, and a legal certainty of
confidentiality. Although the Secretary General of the Paris-based
SIPDIS
CESR Secretariat, Fabrice Demarigny, told visiting SEC Commissioner
Atkins recently that CESR's consensus-based decision-making
tradition meant the mediation mechanism might see little use, over
the medium term the mechanism could help build pressure for
convergence of standards within the EU. END SUMMARY.
2. (U) The Committee of European Securities Regulators (CESR)
announced in August a major overhaul of its operating procedures.
CESR's goals include promoting deeper financial integration across
the European Union, and ensure its functioning as a cohesive network
of supervisors.
Mediation Mechanism Protocol
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3. (U) CESR put into place a Mediation Mechanism to solve disputes
between supervisory authorities, to enhance day-to-day cooperation
between supervisors, and to strengthen convergence among
supervisors. Normally, mediation shall be requested by, and
addressed to, only one party. The Gatekeeper, who is one of the
CESR Chairs, will organize and supervise the mediation and select a
group of panelists to decide on each case. Though mediation outcomes
are not legally binding or enforceable, if a party decides not to
follow the recommendations it must submit a written explanation to
CESR. Strict confidentiality of all documents, findings,
discussions, and results is enforced.
Econet
------
4. (U) The Financial Economists Network has met on a regular basis
for many years. In conjunction with the charter amendments, CESR
created a more structured group which will be titled "Econet". This
group's main objectives will be to enhance CESR's analysis of market
trends and risks. It will also explore the benefits of impact
analysis and, when appropriate, evaluate the feasibility of
developing a new methodology for CESR. Finally, Econet will
establish contacts within research departments of EU institutions,
think tanks and universities. When possible, Econet will organize
seminars with the abovementioned contacts.
CESR-Tech
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5. (U) CESR-Tech was established to deal with pan-EU information
technology (IT) projects efficiently and effectively. A flexible
structure is necessary due to the wide variety of potential issues.
CESR-Tech will help members of CESR make technological choices that
will facilitate an easier exchange of transaction reports.
SEC/CESR Work Plan
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6. (U) A formal work plan has been created to aid the dialogue and
working relations between the SEC and CESR. The three key issues
that the work plan focuses on are the modernization of financial
disclosure and reporting, the regulation of risk management
practices, and the implementation of IFRS and US GAAP by
internationally active issuers. The work plan is intended to
facilitate transatlantic financial activity within a clear and safe
framework.
COMMENT
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7. (SBU) CESR's Secretary General, Fabrice Demarigny, told visiting
SEC Commissioner Atkins in September that the new mediation
mechanism is not likely to be used, since CESR has traditionally
always reached consensus. In the medium-term, however, Secretary
Demarigny recognizes that the mechanism could help to generate
pressure within the EU for greater convergence. Moreover, the mere
threat of using mediation could help to resolve problems. CESR's
re-organization should be watched carefully in light of proposed
transatlantic mergers, which may give rise to transatlantic
regulatory challenges.
STAPLETON#