* Commission hopes for agreement on law around year-end
* Member states want detail on definitions, which benchmarks
* EU ministers sign off on market abuse law on Monday
BRUSSELS, April 14 Draft EU law to regulate
financial instruments could undermine major market benchmarks
such as Brent crude unless the same rules apply to non-EU
countries, Britain and four other EU nations warned.
The Commission, the EU executive, published a draft proposal
last year on rules to prevent the rigging of financial
Five member states - Britain, Bulgaria, Denmark, the
Netherlands and Poland - have submitted a list of questions to
the Commission on the draft law, according to a document seen by
"The regulation ... has the potential, if positive
equivalence decisions are not adopted in respect of third
countries, to jeopardise the use of a number of important
benchmarks to the EU," the document says.
The countries want to know which conversations the
Commission has had with authorities in non-EU nations.
Neighbouring Switzerland, for instance, is home to the offices
of commodity trading houses such as Gunvor and Vitol
The other questions include how many benchmarks the
Commission expects to be affected; how many benchmark
administrators would be involved; and how the Commission defines
The original proposal from the executive EU Commission said
a critical benchmark should be used to reference financial
instruments or contracts with a value of more than 500 billion
euros ($694.4 billion).
Under that rule, major commodities such as Brent
would be included and be subject to closer scrutiny than lesser
The concerns of the five member states mirror those raised
by some in the European Parliament over the scope of the law and
whether national regulators or the EU-wide European Securities
and Markets Authority should supervise the critical markers.
The economic and financial crisis has increased the pressure
for tougher market regulation.
But the draft proposal faces a long wait to become law.
The European Parliament has said it will not vote on the
issue before elections in May, which means it is
stalled until new members of parliament and a new set of
Commissioners take office.
Commission spokeswoman Chantal Hughes said the Commission
still believed a final agreement by the end of this year or
early next year was possible.
While the stalled draft proposal seeks to prevent market
manipulation in the first place, EU ministers meeting in
Luxembourg on Monday gave their final approval to an EU law that
means anyone caught rigging benchmarks faces jail time.
Members of the European Parliament are expected to add their
backing this week, pending official publication of the new law
later this year.
($1 = 0.7201 Euros)
(Reporting by Barbara Lewis; additional reporting by Huw Jones
in London; editing by Jane Baird)