VideoThe committee nominates its own chair and vice-chair, who are elected by secret ballot every two years. Docters van Leeuwen was re-elected for a second term last autumn. A self-confessed "jack of all trades," the jovial 58-year-old Dutchman has divided his career into roughly seven-year stretches, including spells as attorney general of the Netherlands and head of the Dutch secret service (he was in the latter job during the fall of the Berlin wall). In 1999 he took up his current day job, the executive chairmanship of the Authority for Financial Markets in the Netherlands.
The committee he chairs is made up of delegates from each EU member state. There's also a seat at the table for Alexander Schaub, director general of the Internal Market Directorate-General at the commission, and chairman of the European Securities Committee (ESC), an influential forum of representatives of EU economic and finance ministries based in Brussels. The full committee met five times in 2003, while sub-groups on individual directives got together more frequently.
Against this backdrop, CESR officials have every reason to be upbeat about what they've achieved to date, says Norbert Walter, chief economist at Deutsche Bank and a member of the Inter-Institutional Monitoring Group, a body set up by the EU to watch over the progress of Lamfalussy's project. According to Walter, CESR hasn't fallen victim to the infighting or horse-trading that characterises many EU-led initiatives. "There's really been a strong will of the people sitting in CESR to get on with the job, and to search for ever- better methods to get different views understood."
The chairman receives such plaudits graciously, with a wave of the hand. He notes that most of the member state regulators already had regular contact with each other before CESR. Once the new body was launched, the members "didn't waste too much time haggling about our physical location, the chairman or the budget," he says. Low-profile it may be, but "the machine is working."
Crossing the Rubicon
But is this a machine equipped to serve as Europe's counterpart to the SEC? The question is especially pertinent now because CESR is at a critical juncture. Having completed the bulk of the advice on primary legislation, CESR's focus is about to shift to implementation and enforcement, working with member states to ensure a consistent interpretation of the directives it helped to craft.
This will be the acid test. As Kaarlo Jännäri, director general of the Finnish Financial Supervision Authority and CESR's vice-chairman, observes, ultimately, CESR's success will be measured not by acting as the consulting arm of the commission but "by concrete results in terms of increased cross-border business. We must move beyond paper and words and see real and effective implementation."
But some observers see trouble ahead. According to Tom Troubridge, head of the capital markets group at PricewaterhouseCoopers in London, there's a conflict of expectations brewing between CESR and politicians in member states. Troubridge notes that in the UK, for example, a number of witnesses to a House of Lords Select Committee on the EU convened in November last year—including ministers from the UK and France—expressed the hope that legislation produced under the FSAP would allow member states some flexibility in interpretation. That puts them on a collision course with CESR, "which is looking for maximum harmonisation and will face a real problem in seeking uniformity across 25 member states," says Troubridge.
And looking further ahead to the enforcement phase of CESR's mandate, others predict more tension. One such doom-merchant is Ruben Lee, adjunct professor at the University of Reading's Business School for Financial Markets. CESR has been "a major political success" until now, he says, noting that it has been consulting effectively and treading a fine path "through the Byzantine complex of power politics between the Council of Ministers, the European Commission, the European Parliament, member state governments and national securities regulators." But its useful days will soon be over: as a loose affiliation of regulators, CESR is simply not capable of providing effective pan-European enforcement, he asserts.
Lee reckons CESR will gradually accrue powers, bringing it closer to the SEC model over time. Although it would stop short of sanctioning offenders like the SEC—because of Europe's multiple civil, administrative and criminal law jurisdictions—this "ESEC" would be allowed to investigate possible infringements and make its findings and recommendations public. Such so-called soft enforcement "will provide incentives for member states to undertake corrective action," Lee predicts.
While not everyone shares Lee's vision, many sense that CESR will have to bulk up in the near future in order to cope with the added burden of implementation and enforcement. David Devlin, president of the Brussels-based Federation of European Accountants, says there's need for more hands both at CESR and at DG Internal Market (where there are just ten members of staff under Schaub). "It's all very well, post-Parmalat, talking about more regulations, but what we need to make sure is that they are effectively applied, and that sufficient resources are given to it to ensure very strong co-ordination and co-operation," he notes.
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