Opinion & Analysis

TTIP and regulation of financial markets: Regulatory autonomy versus fragmentation

Financial services trade is currently one of the most controversial service chapters in the Transatlantic Trade and Investment Partnership negotiations. One of the main concerns is how the trade agreement may affect the ongoing reform of domestic financial regulations. Trade agreements ensure regulatory independence in the field. However, regulatory independence has also led to substantial divergence in regulatory requirements. Regulatory fragmentation and the extraterritorial reach of domestic financial regulation have been shown to result in potential conflict, which might raise transaction costs in transatlantic trade in financial services. The US is currently opposed to negotiating stronger cooperation within TTIP, as they fear that the cooperation framework proposed by the EU could slow their domestic reform process. Download the full paper here