As European, US and Asian bodies ramp up their
regulatory initiatives, the pressure on stakeholders' ability
to write successful comment letters is increasing.
With often small windows to submit comments but
swathes of the financial sector relying on well argued points,
those responsible for drafting the letters need to know how
best to do so.
But there is little information available on what
regulators value most in comment letters. And many in the
industry are uncertain.
"I have never had anyone tell me that they didn't
understand my response, so it's hard for me to change my
style," said Ruari Ewing, director at the International Capital
Market Association (ICMA).
Ewing writes comment letters extensively on primary
markets and regulatory policy on behalf of ICMA's members. "It
might be that they haven't read my response - though I doubt
it. Or it could be fine, or good enough. I don't know," he
And Ewing is not alone: banks, law firms,
accountancy firms and industry bodies are all seemingly writing
into an abyss.
So having heard the drafters' concerns we
approached key European regulators to find out what they really
wanted from submissions. The responses should give industry
bodies and financial institutions a clearer idea of what
regulators really value.
So here it is - the guide to the perfect comment
1. Start with a clear executive
"This helps us understand what the main issues are," said one
major regulator. Support positions with evidence where
"We often receive submissions relating to
unintended consequences of proposals. It would be helpful to
know something of the scale of these consequences, and whether
they affect other stakeholders.
2. Answer the actual questions
"Clear and brief answers to the specific questions we pose are
best," said an Esma spokesperson. "They're much more useful
3. Don't get
Especially when granularity is
required. "Policy statements are in general not very helpful,
even less so if they refer to Level 1 legislation in a response
to a Level 2 initiative," said Esma.
According to another major regulator, "if detailed
questions are asked, it usually implies that the policy-making
process is relatively advanced and that we're in the phase of
fine-tuning certain options. "
In such circumstances, present responses in as much
granular detail (supported by evidence), they say.
4. Include evidence - even if it's
Regulatory bodies, even the largest European ones, are poor
relative to financial institutions. They need data. Banks can
provide it. In a regulator's own words:
"Often we just need any data, so we
have to work with estimates, and rules of thumb. But that would
be avoided if we could obtain more accurate data from industry
or other regulators."
Although most consultations do not specifically
call for data, regulators IFLR contacted said that finding
objective and reliable data is a huge challenge and makes
process of estimating the real costs of legislative initiatives
"Respondents may have some estimates in mind, and
anecdotal evidence is also welcome," said one.
Anecdotal evidence or data should be presented in
an objective way. Where possible, the data provided should be
put into a wider context to allow for the appreciation of the
relative importance of a particular assertion. "It's very
important that data provided is verifiable, meaning that a
clear reference to the source is always useful," added one.
This was a recurring theme amongst respondents.
Reference to data and figures on the estimated impact of
proposals were welcomed throughout, regardless of whether they
were indicative or qualitative.
5. Stay on topic
"New items and issues should only be added if they're directly
linked to the subject under consultation.
Put more theoretical background material in an
annex. Supporting data should generally be put in the main text
together with each question. More lengthy submissions of data
could be put in an annex as well.
6. Include opposing stakeholders'
It's disproportionately expensive for smaller
financial institutions and retail investors to answer these
consultations. So they rarely submit comment letters.
Because of this under representation, regulators
value their contribution more than they do larger institutions.
"We need them so much, we take their responses into account
even more," said a regulator.
So to prevent the rare submission of stakeholders'
views being given disproportionate weight, respondents should
make suggestions with the needs or interests of other
stakeholders in mind.
""We know it's not the usual practice, and it's
unlikely that we will see much of this, but we receive
independent views which often completely oppose one another.
What we would like instead is views on potential compromises
which stakeholders would be willing to take," said a major
"We want industry and consumer groups to take into
account one another's views. It's always more valuable for
answers to take into account other positions."