On Tuesday 27 February, the committee on economic and monetary affairs of the European Parliament heard suggestions from a number of experts on the revision of the three European financial supervisory authorities (ESA): ESMA, EBA and EIOPA, which supervise the financial markets and the banking and insurance sectors respectively (see EUROPE 11864).
During this hearing, which aims to feed into the reflection of co-rapporteurs Pervenche Berès (S&D, France) and Burkhard Balz (EPP, Germany), the experts stressed the importance of adopting a progressive approach.
In particular, the speakers stressed the need to limit the new direct supervisory powers entrusted to ESMA to cross-border activities alone, in which a European approach truly adds value, particularly for the critical benchmarks and data declaration service providers. Moreover, a consensus seems to be emerging in favour of excluding these from the prospectus obligation.
Sebastián Albella, President of the Spanish National Securities Market Commission (CNMV), noted two different approaches, one calling for a single supervisor, the other based on just a cooperation programme. He stressed the need to reach a compromise and try to move forwards towards truly integrated supervision, which presupposes a stronger and bolder ESMA, with genuine powers, he said.
Jacques de Larosière, one of the founding fathers of the ESAs, considers that ESMA’s future is already mapped out in front of it. “Once the dust of Brexit settles, we will find ourselves with a dual market: the City and the European market”, he said. When that time comes, ESMA will have a leading role in terms of cooperation. However, he added, “we need to do things little by little”.
Little support for creation of executive committees
The Commission’s proposal to create an independent executive committee within each of the three European supervisory authorities, to replace the current executive director and responsible for making decisions on the coordination of supervisory practices, received little support from the experts. Rüdiger Veil, Professor in capital markets law at Munich’s Ludwig-Maximillian University, said that it was “far too soon for such a quantum leap”.
Furthermore, de Larosière expressed misgivings on creating this new structure and put forward a different option. In order to reinforce the independence of the existing structure, he proposed adding additional members, “two or three highly respected individuals”, from academia or the industry and with an in-depth knowledge of the issue. This proposal went down fairly well with the MEPs and their guests.
It is worth noting that Berès proposed giving a member of the revised executive committee particular responsibility for the supervision of central counterparties (CCP).
“There were some very positive notes, but also some criticism”, Balz summed up. For him, what emerges from these discussions is the need to better separate regulation and supervision in certain areas. We should also move towards less complexity and revisit the question of the new powers entrusted to the stakeholder groups within the ESAs, he said.
Berès considers that convergence will be the common theme of the legislative provision. She also said that consumer protection was an area of the proposal in which there was real leeway for progress, calling upon the European Parliament to act on it.
The question of time will also be critical, as this revision must be concluded before the end of the current legislative period, in spring 2019. “Don’t think that we are doing this revision for two minutes and that there will be another revision of the ESAs under the next mandate”, she said, adding that this revision came within the broader ambition of the Capital Markets Union.
The co-rapporteurs are expected to have finalised their draft report by June, ahead of a committee vote in September. (Original version in French by Marion Fontana)