Response to the Commission Staff Working Document on the Application of the Lamfalussy Process to EU Securities Markets Legislation
The London Stock Exchange has responded to the Commission Staff Working Document on the application of the Lamfalussy Process to EU Securities Markets Legislation.
We believe that in many respects the Lamfalussy process has worked extremely well. It has helped to make Community legislation on securities markets more flexible and the quality of legislation has been improved by the involvement of regulators and external stakeholders. However, as the document itself acknowledges, there is scope for the process to be further improved.
On timetables, there must be a proper balance between speed and quality. Quality must not be compromised. Undue emphasis on the speed of the passage of legislation can make timetables too tight for sufficient consultation. We fully support the changes to the MiFiD timetable proposed by Commissioner McCreevy on 24 January 2005.
It is essential that Level 1 legislation avoids excessive detail and is genuinely drafted as framework legislation based on principles. As experience has shown that CESR adopts a strict interpretation of Mandates, we would urge the Commission and other institutions to consider carefully the terms of the advice sought of CESR and to consider granting CESR greater flexibility in the interpretation of Mandates.
We would caution against ambitious plans for regulatory convergence and codification. We do not believe that a “top-down” codification is necessary. The designation of competent authorities and the grant of powers to those bodies in existing directives should in effect facilitate convergence. Codification would entail significant complexities which should be fully assessed, understood and communicated. It would not provide a single legal regime and arguably would achieve little more than the combined effect of properly implemented and enforced FSAP legislation.
In the medium term, the emphasis should be on implementation, enforcement and the correction of poor legislation. Enforcement will be critical to the success of the FSAP and we urge the Commission to devote sufficient resources to ensuring compliance.
The original consultation paper can be found at: http://www.europa.eu.int/comm/internal_market/securities/docs/lamfalussy/sec-2004-1459_en.pdf