* EU watchdog to consider curbs on national regulators
* New "mechanism" to monitor national licensing
By Huw Jones
LONDON, April 11 The European Union's markets
watchdog will issue guidance and possible curbs for national
regulators in coming weeks to stop a "race to the bottom" to
attract UK-based financial firms after Brexit, it said on
Steven Maijoor, chairman of the European Securities and
Markets Authority (ESMA), outlined how the watchdog will keep
national regulators toeing the EU line on authorising firms,
confirming a Reuters article last month.
"This work is aimed at avoiding competition on regulatory
and supervisory practices between member states, and a possible
race to the bottom, which might be detrimental to the capital
markets union," Maijoor said in a speech in Brussels.
ESMA will publish four "opinions" or formal guidance to the
bloc's national securities regulators before the summer,
covering general issues and three market sectors.
The general opinion will consider how national regulators
should handle day-to-day supervision of relocated operations, in
particular when certain functions are subject to outsourcing and
"Potential limitations to outsourcing and delegation are
also being discussed," Maijoor said.
Outsourcing and delegation is common in fund management and
in broking, whereby the processing of transactions or other
activities across several EU states are centralised in one
The broker-dealer trading arms of banks in Britain have
asked EU regulators whether their entities in the remaining 27
EU states will still be allowed to outsource operations to
London after Britain leaves the bloc in 2019.
Maijoor said it was essential that national regulators do
not compete on regulatory and supervisory treatment of UK firms
wanting to relocate operations.
"Some practical examples where this may be a risk include
such issues as UK firms seeking authorisation from one of the
EU27 financial markets regulators and subsequently outsourcing
and delegating some of the activities back to the UK entity," he
Separately, the European Central Bank reiterated on Tuesday
it would not allow banks from Britain to have a euro zone
licence if they wanted an unlimited ability to outsource
operations back to London.
Maijoor said ESMA's remaining three opinions would address
in more detail the areas of asset management, investment firms
and secondary markets.
The EU watchdog is also working to set up a "mechanism" for
national regulators to share live cases at EU level regarding UK
firms seeking authorisation in an EU of 27 states.
"This will allow ESMA to coordinate the consideration of key
issues in the authorisation procedures for these entities in
order to reach common views on significant relocation files,"
(Reporting by Huw Jones; Editing by Mark Potter)