On 20 September 2017, the European Commission published proposals to reform the framework for the three European Supervisory Authorities (ESAs), namely the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA).
ESMA is being entrusted with direct supervisory power in sectors of strategic importance or with a significant cross-border dimension. Meanwhile, its governance and funding arrangements will be strengthened. The Commission also takes note of the new challenges represented by fintech and sustainable finance by including them in the tasks assigned to the ESAs. The ESAs are additionally to be given a greater role in supervising third-country entities that are active in the EU.
While supporting the overall thrust of the Commission’s proposals, especially on assessing and monitoring third-country equivalence agreements (AMAFI / 17-77), AMAFI felt that they needed to go further in some areas and accordingly expressed concerns about:
• Weak interaction between ESMA and stakeholders, since such contact is vital to high-calibre regulation founded on an understanding of the issues faced by stakeholders.
• The need to ensure that the new independent body – the Executive Board – is made up of high-level figures with the experience to establish a strategic vision.
• The need to limit ESMA’s increased powers to areas where a pan-European approach is warranted, since domestic and regional issues should be primarily handled by local supervisors, who have a better grasp of issuer and investor needs and who are the customary talking partners for market participants.
• The importance of credible and hence effective enforcement powers, which requires such powers to be exercised within the framework of a procedure that is unlikely to be challenged.
• The lack of clarity in the proposal about financing for the scheme; simply referring to a delegated act is not enough.