ABBL

At this time of the year, it is customary to look back on what has been going on and think a bit about the next few months and what may lie in store for us. 2011 was a year full of events, big and small, nearly from day 1. I will not recall here the Arab spring that started already well in winter neither the Japanese Tsunami nor the death of Osama Bin Laden or the turmoil surrounding the Euro area countries that saw our European hearts palpitate at each apparently final and last EU summit. Interestingly, the country using the other major European currency is also in pretty bad shape, but has not had to suffer the dire fate of our, mostly Southern, friends.

No, I will just take this opportunity to look back on financial regulation, where the year 2011 reminds me of a half-empty bottle. The year started strongly with a major consultation on MiFID and some ideas on PRIPs (Packaged Retail Investment Products). After that, to be honest, the year stalled a bit. It was in the end a race until the publication of EU Commission draft proposals, in the last 3 months of the year, on nearly every financial regulation that it has produced in the past 5 years. On the surface, nothing concrete thus happened in 2011, hence the ambivalent image of the half empty bottle. Even the nearly finalised European Market Infrastructure Regulation (EMIR) (in June), with its regulation of Central Counterparties and derivatives, is not yet finished.

It seems that each and every EU regulator is already over-burdened by the regulatory tsunami that they have written or should have been writing. It was only at the end of the year that most texts were rushed through the door, or more precisely through the EU Commission web site in order to trigger as many small battles as texts in the European Parliament and EU Council. In the current climate, proponents of the financial sector will have a hard time putting across efficiency arguments to regulators. So facing the many pages of draft regulations already produced and the many more to come (just think of UCITS V, CSD regulation or Securities law), I am confidently, although admittedly a little bit anxiously, preparing 2012, where I expect that the other half of the bottle will be filled with new rules and regulations for the next 5 to 10 years. One thing is certain, next year will be a very busy year for anyone dealing with financial regulation. I wish you a happy new year.

Benoît Sauvage, Adviser, Financial Markets Regulation (ABBL)