Paris and Berlin are returning to the load

Paris and Berlin are returning to the load. After two first letters sent on 10 March and on 6 may, Angela Merkel and Nicolas Sarkozy have again sent Tuesday to the President of the Commission on European, José Manuel Barroso, a letter published yesterday to ask him to strengthen the regulation of all derivatives markets by prohibiting certain financial practices judged purely speculative. In particular, sales in the open Strip (in English "selling naked"), with which market participants can build on the default of one of the countries of the Union... without even holding the underlying State obligations.

This time, the President of the Republic and the Chancellor are most pressing. Noting the return of high volatility on the markets, they call on the Commission "to accelerate and to intensify its work" to "present before the Ecofin Council of July, all of the possible avenues for action." They are also more accurate. "The work of the Commission should include the possibility of a ban at European level of short selling of all or certain shares and bonds, and some"credit default swaps"(CDS) strip on sovereign securities", they write. Attracting the attention of Brussels on the particular case of specialists in Treasury securities, which will require to make an exception. "It should not prohibit them from short selling strip that they carry out on behalf of the States, in their function of moderator of the sovereign debt market," said a diplomat.

Paris and Berlin suggest even tracks in Brussels. Thus the two leaders advise "harmonize regulation-delivery of titles" in Europe. A way of limiting de facto the "selling naked" in countries where, as in the United Kingdom, the time between the regulation and the delivery of the securities is much longer than elsewhere. As well the reluctance of the United Kingdom reform referred to in the mail, in any case seen in Paris.

Concrete proposals

Yesterday, the National Assembly Finance Committee adopted an amendment of the Socialist Jérôme Cahuzac, prohibiting such sales open Strip on securities of sovereign State including the value of Treasury specialists. However, amendment, reviewed the project of the Banking Regulation Act, is not certain to be adopted at the meeting today.

In Brussels, the letter as a manifestation of support and as a sign of better understanding Franco on a folder that caused irritation in Paris when Berlin had decided unilaterally, May 19, to prohibit certain short sales Strip - on State of the euro area bonds, the actions of the ten major German banks, and CDS related to sovereign debt has allowed European. "We hope that the political dynamic in this letter will result in a full support to the adoption of our proposals," indicated the Commission yesterday. While promising "concrete proposals during the summer." In the next few days, Brussels will submit to a month of consultation two legislative proposals which should be ready in September: the first aims to improve the transparency of derivatives through increased standardization of products and their treatment by clearing houses centralized; the second, for a little less successful now, focuses specifically on short sales.

Twenty-seven Union leaders, which are found for a Summit in Brussels on 17 June, should pronounce on the work schedule that the Commission has submitted, as early as Tuesday to Luxembourg, their finance ministers. On this occasion, the France and the Germany could put pressure on the new British Government that it does not attempt to delay the deadline to defend the interests of the City. They particularly remembered that most of the decisions in this area can be taken by a qualified majority, even though it is difficult to move forward without taking into account requests for London, main European financial market.

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