The French financial markets supervisor is calling for an enhanced role for the European Securities and Markets Authority (ESMA) in order to achieve deeper integration of European capital markets.
It argued that the fragmentation of financial market supervision was a drag on competitiveness and “the effectiveness of regulation and the scope for simplification”.
“In a context of profound market transformation and the growing importance of private finance and crypto-assets, it is essential that the EU has more integrated capital market supervision,” the Autorité des Marchés Financiers (AMF) said in a note today.
According to the French supervisor, creating a genuine Savings and Investments Union (SIU) in the EU, as is the new European Commission’s goal, requires “a strong evolution of ESMA’s culture and governance”.
AMF’s proposals focus on more integrated supervision of financial entities – asset managers and market infrastructure organisations – as opposed to supervision of financial products, which at EU level “is a much more complicated subject”.
Decision-making
More specifically, it wants to see ESMA’s governance structure expanded to include an executive committee responsible for operational supervisory decisions.
This would be in addition to a board of supervisors, including the chairs of the 27 national supervisors (NCAs), which would be responsible for all regulatory and policy-related issues.
“The current governance of ESMA, exclusively composed of national authorities (except for EU central counterparties), is not conducive to fast and efficient decision-making and could come short to ensuring a truly European approach,” said AMF.
“At the same time, it is important that NCAs retain a strong role in any future architecture. The governance model of ESMA needs to simultaneously achieve the necessary inclusion of all NCAs and the capacity to deliver swift decisions and to embody the European interest genuinely.”
According to the AMF, the executive committee would comprise “a small number” of qualified independent individuals, “appointed on the basis of their experience, skills and knowledge of the functioning and regulation of financial markets, and their complementary experiences in the public and private sector”.
They would be appointed by the Council based on a proposal from the Commission, or designated by key EU institutional bodies. The executive body would be in charge of individual decisions belonging to ESMA’s direct supervisory remit, as well as provide advice on policy issues.
AMF also said it was important to work “in a collaborative manner on the subject of EU-level supervision, by way of proper consultations of member states and stakeholders, to analyse obstacles and find common solutions”.
Referring to recent proposals from an ESMA board-level taskforce, the French supervisor also said that the structure and sources of ESMA’s funding needed to be reviewed to solve tensions between national supervisors’ and ESMA’s budget.
It concluded its note by suggesting a deadline should be set for the new supervisory architecture to be put in place, saying it could “prove very useful to maintain the momentum on this sensitive project”.
The latest digital edition of IPE’s magazine is now available
No comments yet