* Vote on EU benchmark rules scheduled for February
* EU court ruling strengthens role of ESMA over UK
* Battle over exemptions for commodities benchmarks
* New rules unlikely to be approved for many months
By Huw Jones
LONDON, Jan 23 Britain's defeat in the European
Union's top court over short-selling rules strengthens the case
for EU-level supervision of market benchmarks like Libor,
lawmakers said on Thursday.
The European Court of Justice ruled on Wednesday that an EU
body, the European Securities and Markets Authority (ESMA), does
have the power in emergencies to ban short-selling or bets on
falling share prices.
It was a blow to UK attempts to stop further centralisation
of regulatory power at the expense of member states.
In a debate on Thursday in the European Parliament's
economic affairs committee on a draft law to regulate
benchmarks, lawmakers said the court ruling should help
determine ESMA's role in supervising top benchmarks like the
London Interbank Offered Rate or Libor.
Britain wants to keep supervising Libor but some EU
lawmakers said the court ruling should be taken on board when it
comes to determining ESMA's role in benchmark supervision.
"The court has just given us some major support... and it's
very appropriate in this dossier," Sylvie Goulard, a French
Liberal member, told the committee.
Several banks, including Barclays and Royal Bank of
Scotland have been fined for rigging Libor, prompting
the EU to propose the law. Probes into possible manipulation of
foreign exchange benchmarks have added urgency.
"We have not yet seen the worst of it. When we come to
discover how big the scandal is around forex, then Libor may
seem to have been just an amusement," Philippe Lamberts, a
Belgian Green Party committee member said.
An official from the European Commission, which writes the
first draft of EU financial rules, said the ruling will allow it
to propose new roles for ESMA that are legally well founded.
Thursday's debate highlighted splits among the parties over
ESMA's role and over the scope of the new law, in particular
whether commodity benchmarks like oil should be excluded.
"We should be looking for as wide a scope as practical,"
said Emilie Turunen, a Danish centre-left member, adding that
her party wants a strong role for ESMA so that it can intervene
in top benchmarks.
In written comments to the committee, British Conservative
lawmaker Syed Kamall said, "We should not be regulating a
benchmark simply for the sake of it. The supervision of Libor
should remain in the UK."
The committee's chairman, UK Liberal Democrat Sharon Bowles,
proposed that ESMA could have responsibility for top benchmarks
with day-to-day supervision delegated to a country.
The committee aims to vote on the rules on February 17.
EU states have joint say on the draft law and have yet to
begin scrutiny. European Parliament elections in May will also
delay a final deal on the rules until at least later this year.