LONDON (Reuters) - European Union lawmakers look set to ease the international impact of rules to stop market benchmarks being rigged, addressing U.S. concerns that global investors could lose out.
The bloc is approving a law to directly regulate benchmarks such as those based on interest rates and currencies that banks have been fined billions of dollars for attempting to manipulate.
The measure as drafted by the European Commission raised hackles in Washington because it would bar European investors from using many U.S.-based benchmarks.
Benchmarks from outside the EU could be used only if they were compiled under rules that are as strict as Europe’s safeguards, but the United States won’t adopt equivalent rules.
Cora van Nieuwenhuizen, a Dutch lawmaker steering the draft law through the European Parliament, said the focus should be on strengthening the international competitiveness of the EU’s financial sector by maintaining a broad supply of benchmarks, including those from outside the bloc.
“The Commission proposal on this point was insufficient and would see a large number of benchmarks rendered ineligible,” van Nieuwenhuizen told parliament’s economic affairs committee on Thursday.
She proposed that compilers of benchmarks from outside the EU apply for authorization to be used in Europe.
“In this way, non-EU administrators can continue to provide their benchmarks in the EU even when their home country regulations are not equivalent,” van Nieuwenhuizen said.
The EU has little choice but to compromise. Last month Randall De Valk, a U.S. Treasury official, told a U.S. lawmaker that the United States “does not plan to adopt direct supervision of benchmarks”.
Unchanged, the draft EU law is “prescriptive” and goes well beyond new globally-agreed supervisory principles the United States applies, De Valk said in a letter seen by Reuters.
Lawmakers from parliament’s two biggest parties, Ludek Niedermayer from the center right and Jonas Fernandez-Alvarez from the center left, called van Nieuwenhuizen’s proposals a “very reasonable solution” that dealt with non-EU countries in a “pragmatic way.”
Such support signals the compromise could well be voted through in committee on March 5. EU states have joint say on the draft law.
British center-right lawmaker Kay Swinburne called for commodity benchmarks to be removed from the new rules and put under a separate draft law the commission should propose.
Britain, where much of the rigging of interest rate and currency benchmarks took place, had already tightened up supervision of the sector.
Reporting by Huw Jones; Editing by Ruth Pitchford