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Thursday, the Commission held the High Level Conference “Towards a new supervisory architecture in Europe”, allowing stakeholders, supervisors and other interested parties to discuss and comment on the suggested approach from the Commission, based on the recommendations from the de Larosière High Level Group.

Among the speakers at the conference was head of UNI Finance, Oliver Röthig, bringing forward the key messages for the reform processes: “at the core of the a functioning financial system are the employees – their voice must be listened to!”, he said. “The de Larosière report is a good base for the reform, but it does not take sufficiently into account the central role of employees in companies”.

Röthig stressed the message that finance unions must be on board in discussions on financial market reform and in the development of a new supervisory structure in Europe. He argued, that formal dialogue structures must be established in the new system between unions, financial supervisors and a company’s risk management.

“Employees are best acquainted with the impact of business practices on the broader risk situation in a company and the sector as a whole. We need a complementary bottom-up approach where employees feed into risk-management and financial supervision with their experiences”, he said. The entire speech is available in related article.

Reactions to the proposals from UNI-Europa Finance were very positive. “I was very much impressed by what was said earlier”, said Prada, moderator of one the panels in the conference, with reference to the UNI-Europa Finance approach. Prada is Chairman of the Board of trustees of the International Valuation Standards Council.

In his wrap-up of the conference, Deputy Director General of DG MARKT, David Wright, said he was struck by what the consumers and trade unions had said and by the need to get representation of trade unions and consumers in the new bodies. “We will have to think of that”, he said.

The conference in general revealed a broad consensus on the suggested approach and a clear message from all parties that it is now time to act.

“What we have with de Larosière is a good base. Some parts could have been more ambitious, but it is not bad at all. We must take action now. It is not time to reopen the debate”, said Berès, chairwoman of the ECON committee in the European Parliament and from the socialist group. “The supervisory structure must correspond to the market structure, and an integrated European structure must therefore be in place”, she said. She furthermore stressed the importance of involving the European Parliament in the development of the structures.

The European Banking Federation shared the view of the need of an integrated supervisory structure and equally supported the outline from de Larosière. “The fragmented supervisory system is an obstacle to integration of financial markets. We will support the Commission in their work to develop the new structures”, said Obolensky, chairwoman of EBF’s Executive Committee.

Two panels at the conference discussed the two main elements in the de Larosière report: “Ensuring adequate macro-prudential supervision in the EU” and “Strengthening the European framework for micro-prudential supervision”.

There was general support to the de Larosière proposal to establish a European Systemic Risk Council, ESRC, to oversee the stability of the finance sector as a whole (macro-level), and to set up a European System of Financial Supervisors (ESFS) to enhance cooperation between national supervisors, which also includes establishing and developing colleges of supervisors for all major financial institutions to ensure adequate exchange of information within a company that operates in several countries (micro-level).

A main topic in the debate was how to link the two levels and how to strike the right balance between the levels. Some of the challenges discussed was how to ensure a system of checks and balances, a level playing field, a system that is not overruling small players in the field – companies as well as national supervisors – how to cope with inherent conflicts of interests in the system, not least between national supervisors. It was also stressed that the authorities in the systemic risk council at European level must be appointed in a democratic process.

On 27 May, the European Commission will publish a communication outlining the principles in the forthcoming legislative proposals, which are due in autumn this year. The new supervisory structure is expected to be in place by the end of 2010.

See also other article on this topic, including Oliver Roethig's speech, in related articles.