Deregulation of the derivatives market

28.6.2017

Question for written answer E-004323-17
to the Commission
Rule 130
Dubravka Šuica (PPE)

The value of the derivatives market is often estimated to be more than 10 times higher than total worldwide gross domestic product.

The value of this market, whose size no-one knows, varies between EUR 600 billion and EUR 1.2 trillion — a concept which is difficult to understand and shocking for ordinary citizens. The European Union has proposed relaxing the laws on derivatives in order to save millions of euros for companies and pension funds, as it is seeking to encourage market growth.

The objective is to simplify the rules and to eliminate disproportionate costs and burdens for small companies in the financial sector, corporations and pension funds, so that only one party to a contract is required to inform the public and the competent authorities.

The Commission argues that this move will lead to savings of EUR 10 billion for various energy and manufacturing companies in Europe. Deregulating the market which caused the 2008 crisis and which is highly interwoven with the economy does not seem to be a smart move, nor is it clear how it would achieve the stated savings.

Why is the Commission insisting on the deregulation of derivatives? Will the deregulation of this market conversely encourage greater regulation of European pension funds in order to protect their exposure to this often-risky market?