Germany is seeking an exemption for one of Europe's largest stock exchanges, Deutsche Börse, from central EU oversight, which may jeopardize the finance ministers' agreement to integrate the financial markets of this bloc. In the coming days, finance ministers will discuss the controversial aspects of their countries' positions on the European Market Surveillance and Integration Package (MISP).
Review of Financial Agreements in Luxembourg
The negotiations will begin with a working dinner on Thursday in Luxembourg, and it is hoped that the ministers can reach an agreement mediated by Ireland, which holds the rotating presidency of the EU, at the Ecofin meeting on Friday. This agreement could be a significant step towards creating a U.S.-style capital market in the EU.
However, Germany's effort to exempt Deutsche Börse from central oversight may lead to a deadlock in negotiations. Berlin is unwilling to relinquish local oversight of this exchange due to concerns about job losses and loss of regulatory power, while central oversight is one of the key principles of the MISP package.
Objections from Smaller Countries
This exemption has sparked protests from smaller countries that feel the agreement will favor their larger neighbors and may jeopardize the entire agreement. One diplomat said, "This exemption undermines the entire discussion and gives Germany a huge gift while other countries receive nothing in return for their support."
The agreement on MISP this year is central to the "One Europe, One Market" initiative that three EU political leaders agreed upon in Brussels in April. EU governments have invested significant political capital in this plan to turn the bloc into an investment hub.
However, six diplomats close to the negotiations have conflicting views on the possibility of an agreement this week. According to one of them, between eight and 17 countries may act to block the agreement. Diplomats also acknowledged that the countries opposing the exemption are not united in their stance.
Currently, the German state of Hesse, which oversees Deutsche Börse, is strongly opposed to relinquishing this role and is concerned about job losses and its influence. The exemption based on trading thresholds and geographical volume would also benefit Spain's main stock exchange and another German trading platform, Tradegate.
