Danish  comments  to  the  CESR  report:  "Which  Supervisory  Tools for the EU securities Markets?" We  would  like  to  thank  CESR  for  its  consultative  report  which  gives  a good   basis   for   an   important   discussion   on   how   to   ensure   full   and consistent implementation as well as effective enforcement of the FSAP (and the follow-up to the FSAP). In  the  Nordic  countries  we  have  experienced  a  major  integration  in  the securities,  banking  and  insurance  markets.  The  consumer's  use  of  cross border  financial  services  are  however  still  quite  limited.  This  might change  for  securities  in  the  near  future  mainly  due  to  the  easy  use  of internet based services. In  order  to  prepare  this  Danish  answer  we  organised  a  conference  with participants  from  all  interested  parties  in  Denmark.  This  included  not only the securities industry but also the banking and insurance industry as well  as  consumer  organisations  and  other  organisations,  which  in  the long or short run could be affected by the ideas in the report from CESR. On this background we can fully support those ideas which are necessary to  ensure  full  and  consistent  implementation  and  enforcement  of  EU- regulation and common supervisory practices. A   number   of   Danish   financial   companies    have    experienced   how differences  in  supervisory  practices  can  be  very  time  consuming  and costly. Different supervisory practises add to the costs of the companies and at the same time have negative consequences for the consumers and competition. Therefore we think that we are only going to fulfil the goal of the Lisbon Strategy if we find good solutions in these areas. We need to have focused and ambitious EU cooperation and work with areas like this where  it is possible to make the financial markets in EU more cost- efficient  and  to  underpin  a  level  playing  field  in  the  regulatory  and supervisory frameworks. 31 March 2005 Ref.  TWG/SJD J.no. DANISH FINANCIAL SUPERVISORY AUTHORITY Gl. Kongevej 74 A DK-1850 Frederiksberg C Tel +45 33 55 82 82 Fax +45 33 55 82 00 [email protected] www.dfsa.dk MINISTRY OF ECONOMIC AND BUSINESS AFFAIRS

2 The  supervisory  practices  and  the  interpretation  of  the  regulation  in  EU should be more common. It is necessary that the same financial products should  be  treated  the  same  way  by  the  supervisory  authorities.  At  the same time it is important that there is still room for competition between different  financial  services  and  that  we  do  not  limit  the  diversity  of  the financial    products    or    make    hindrances    for    development    of    new supervisory practices. We  find  that  the  solutions  which  are  decided  for  CESR  due  to  the discussion of the report should also be applied by CEBS and CEIOPS as well.   The   timing   does   however   not   have   to   be   the   same   and   also resources   should   be   taken   into   consideration.   At   this   time   of   the discussion it can of course not be excluded that we end up with models which  differ  a  little  but  this  should  only  be  due  to  clear  differences  in working areas for the level 3 committees. Finally  we  find  it  important  that  the  level  3  committees  also  act  as  the places   where   knowledge   about   best   supervisory   practices   etc.   are discussed and developed. New tasks for CESR We support that the competences of the level 3 committees are developed within the Lamfalussy- approach and in such a manner that it is possible to achieve the goals of Lisbon Strategy also in the financial field. CESR    should    have    the    competence    to    supervise    the    supervisory authorities  but  should  not  be  granted  regulatory  powers.  Most  countries have    already    experienced    being    supervised    by    an    extraterritorial organisation   in   accepting   visits   from   the   IMF   looking   into   their supervisory practices. We have already in the Commission's mandates to CEIOPS seen that the peer reviews play an important role. Other possible tasks like the idea of a mediation mechanism need some further consideration. We are not sure that  it  can  work  in  practice.  For  instance  how  would  it  be  possible  to make  an  appeal  and  how  can  it  go  along  with  the  competences  of  the Commission and the courts? Accountability CESR has to be accountable to the European institutions when it makes recommendations/standards   due   to   the   fact   that   even   though   such recommendations/standards are not legally binding, they have important consequences for companies and markets.

3 FSC is going to have a yearly report from the level 3 committees. This is a good idea but it can not stand alone. The directives at level 1 should in the future focus not only at the work which has to be done at level 2 but also at level 3. In order to do that this discussion has to be an integrated part of the negotiations at level 1. At the same time this could secure that the  recommendations  from  level  3  are  wanted  politically.  Finally  the advisory  bodies  at  level  3  which  have  representatives  from  e.g.  the industry could have a more formal role to play in the level 3 committees than today. They might have the possibility to make their own comments in the reports to FSC. Finally it could be considered also to give the Inter Institutional Monitoring Group a clearer role to play towards the level 3 committees. Equivalent powers We are glad that the report talks about equivalent powers. This makes it clear  that  the  purpose  of  the  report  is  not  to  say  that  there  is  only  one organisational model for the conduct of supervisory and regulatory work in  the  member  states.  Some  of  the  functions  mentioned  in  the  financial directives  are  in  Denmark  handled  by  the  police.  This  works  very  well and  we  therefore  see  no  purpose  in  changing  our  organisation  of  this work. Consumers A  major  problem  for  the  regulation  in  the  financial  field  is  the  almost missing   contributions   to   the   discussions   from   the   consumers.   It   is obvious   that   when   even   authorities   and   big   financial   organisations sometimes  have  problems  in  order  to  keep  up  with  the  development  in the  financial  regulation  it  is  even  more  difficult  for  the  normally  very small consumer organisations in EU. If the trust of the consumers is not enhanced  in  the  same  speed  as  the  harmonisation  of  EU-regulation  we risk missing the positive effects of the integration. At the same time we can not expect further integration of the retail-markets in EU without this trust. The consumers expect rightly that their interests are taken care of in the EU legislation process. We think that it might be necessary to find new and  creative  ways  in  order  to  be  able  to  have  contributions  from  the consumers.  At  the  same  time  the  maximum  level  of  transparency  is necessary at all levels of the Lamfallusy-procedure. Yours sincerely Torben Weiss Garne