VZCZCXYZ0008
RR RUEHWEB

DE RUEHFR #7209 3071604
ZNR UUUUU ZZH
R 031604Z NOV 06
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 2836
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS PARIS 007209 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS CEA 
STATE FOR EB and EUR/WE 
TREASURY FOR DO/IM 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
USDOC FOR 4212/MAC/EUR/OEURA 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV FR
SUBJECT: CESR CHANGES OPERATIONAL TASKS 
 
 
¶1. (SBU) SUMMARY:  The Committee of European Securities Regulators 
(CESR) has amended its charter in response to a report issued by the 
EU Council of Ministers earlier this year. The move is part of a 
broader effort to promote regulatory convergence and improve 
supervision of the financial markets. Changes include a more 
straightforward decision-making process, a mediation mechanism, 
integration of a Review Panel into the charter, a commitment to 
follow data protection rules, and a legal certainty of 
confidentiality.  Although the Secretary General of the Paris-based 
 
SIPDIS 
CESR Secretariat, Fabrice Demarigny, told visiting SEC Commissioner 
Atkins recently that CESR's consensus-based decision-making 
tradition meant the mediation mechanism might see little use, over 
the medium term the mechanism could help build pressure for 
convergence of standards within the EU.  END SUMMARY. 
 
¶2. (U) The Committee of European Securities Regulators (CESR) 
announced in August a major overhaul of its operating procedures. 
CESR's goals include promoting deeper financial integration across 
the European Union, and ensure its functioning as a cohesive network 
of supervisors. 
 
Mediation Mechanism Protocol 
---------------------------- 
¶3. (U) CESR put into place a Mediation Mechanism to solve disputes 
between supervisory authorities, to enhance day-to-day cooperation 
between supervisors, and to strengthen convergence among 
supervisors.  Normally, mediation shall be requested by, and 
addressed to, only one party.  The Gatekeeper, who is one of the 
CESR Chairs, will organize and supervise the mediation and select a 
group of panelists to decide on each case. Though mediation outcomes 
are not legally binding or enforceable, if a party decides not to 
follow the recommendations it must submit a written explanation to 
CESR.  Strict confidentiality of all documents, findings, 
discussions, and results is enforced. 
 
Econet 
------ 
¶4. (U) The Financial Economists Network has met on a regular basis 
for many years.  In conjunction with the charter amendments, CESR 
created a more structured group which will be titled "Econet".  This 
group's main objectives will be to enhance CESR's analysis of market 
trends and risks.  It will also explore the benefits of impact 
analysis and, when appropriate, evaluate the feasibility of 
developing a new methodology for CESR.  Finally, Econet will 
establish contacts within research departments of EU institutions, 
think tanks and universities.  When possible, Econet will organize 
seminars with the abovementioned contacts. 
 
CESR-Tech 
--------- 
¶5. (U) CESR-Tech was established to deal with pan-EU information 
technology (IT) projects efficiently and effectively.  A flexible 
structure is necessary due to the wide variety of potential issues. 
CESR-Tech will help members of CESR make technological choices that 
will facilitate an easier exchange of transaction reports. 
 
SEC/CESR Work Plan 
------------------ 
¶6. (U) A formal work plan has been created to aid the dialogue and 
working relations between the SEC and CESR.  The three key issues 
that the work plan focuses on are the modernization of financial 
disclosure and reporting, the regulation of risk management 
practices, and the implementation of IFRS and US GAAP by 
internationally active issuers.  The work plan is intended to 
facilitate transatlantic financial activity within a clear and safe 
framework. 
 
COMMENT 
------- 
¶7. (SBU) CESR's Secretary General, Fabrice Demarigny, told visiting 
SEC Commissioner Atkins in September that the new mediation 
mechanism is not likely to be used, since CESR has traditionally 
always reached consensus.  In the medium-term, however, Secretary 
Demarigny recognizes that the mechanism could help to generate 
pressure within the EU for greater convergence.  Moreover, the mere 
threat of using mediation could help to resolve problems.  CESR's 
re-organization should be watched carefully in light of proposed 
transatlantic mergers, which may give rise to transatlantic 
regulatory challenges. 
 
STAPLETON#