EFAMA warns against new ESMA reviews for large asset managers in EC market integration package

The European asset management trade body has said it is “deeply concerned” that annual reviews of large asset managers could allow the EU financial markets watchdog to second-guess the decisions of national supervisors.

The European Commission yesterday presented its financial markets integration package, a set of reforms aimed at dissolving long-standing fragmentation within the EU and creating a fully integrated single market for capital across the bloc.

Tanguy van de Werve, EFAMA director-general, said the Commission’s package contained several promising measures that could help deliver more efficient and integrated EU capital markets.

“We particularly support the focus on removing cross-border barriers, enhancing supervisory convergence, and encouraging digital innovation,” he said.

“However, some proposals raise questions that will require careful consideration to avoid adding new layers of complexity and make sure that long-term benefits offset short-term adjustment costs for market participants. Getting this balance right is crucial for building a strong Savings and Investment Union (SIU).”

To EFAMA’s pleasure, the Commission’s proposals did not include direct ESMA supervision or supervisory colleges for asset managers, but it introduces annual reviews of large asset managers by the EU watchdog.

EFAMA said this could allow ESMA to challenge supervisory decisions made by national authorities. 

“When it comes to EU supervision, strengthening ESMA’s tools to address cross-border issues is the right approach – but it is equally important to avoid introducing indirect forms of central supervision that could create legal uncertainty for asset managers,” said Marin Capelle, regulatory policy adviser at EFAMA.

“Policymakers need to be vigilant that proposals lead to positive market outcomes and do not inadvertently add complexity.”

ESMA’s ongoing work to establish an EU supervisory data space should be regarded as a top priority, according to the trade body.

“By eliminating duplicative reporting for cross-border asset managers, we could make great progress toward creating an SIU and increasing the competitiveness of EU capital markets,” EFAMA said.

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