With European elections on the horizon, political pressure has heightened over the past few months to finalize major financial regulatory initiatives. This legislative momentum is shaping the EU regulatory outlook for the rest of the year.
In particular, agreements were recently reached on two pillars of the Eurozone banking union, the single supervisory mechanism and the single resolution mechanism. These were finalized in October and December 2013 respectively, setting up several key events in 2014 (including a new supervisory regime by the European Central Bank).
In addition, political agreement was finally reached this month on revising the wide-reaching Markets in Financial Instruments Directive with an effective date likely for this year. And with a final draft regulation of the EU banker bonus cap expansion (beyond senior managers) issued in December, expect the expanded cap to also take effect in 2014.
Finally, we expect some long-awaited major legislative initiatives to make significant progress in the coming days and months. The legislative proposal on bank structure and proprietary trading is likely to be released by the European Commission this week, while it seems reasonable to expect a new version of the financial transaction tax later this year.
This Financial Services Regulatory Brief provides our view of these and other upcoming EU regulatory developments, and delineates upcoming key dates in the Appendix.