CMU – European Supervisory Authorities

As part of the Capital Markets Union (CMU) reboot, the European Commission launched a consultation on supervisory convergence and the single rulebook with a view to learning the initial lessons from the review of the European Supervisory Authorities (ESAs) conducted in 2019.

AMAFI organised its input (AMAFI / 21-32) to this discussion around issues specific to ESMA, which has a particularly pivotal role to play in CMU. With this in mind, AMAFI identified several priorities:

• Adjust ESMA’s remit to integrate the goal of ensuring that European market participants have the competitiveness to respond to the financing challenges facing the EU;
• Improve the effectiveness of tools to promote supervisory convergence, including Q&As, which should always be put out to consultation, and the ability to issue no action letters with powers equivalent to those issued by US supervisors;
• Establish governance arrangements to make sure that the issues connected with decisions taken by the Board of Supervisors are fully measured, including by setting up an Executive Board composed of independent members to mitigate national bias and by improving the contribution from Standing Committees, which can channel the industry’s operational expertise to enhance the work done by ESMA;
• Set up recruitment pathways between industry, national supervisors and the European authority to help build understanding of the often fiendishly technical issues that need to be addressed;
• Extend ESMA’s direct supervisory powers over certain entities whose business is clearly pan-European in scope. However, such an extension can only be considered if it is tied to improvements in how ESMA functions, particularly in terms of governance.

In addition to providing feedback to the consultation, which looks to be a fairly formal exercise judging by the format used and other elements, AMAFI will shortly publish a document summarising its suggestions on a matter whose importance must not be underestimated.