10 years after the creation of the three European Financial Supervisory Authorities (ESAs), is financial supervision in the EU still adequate? This was the debate launched by the European Commission on Tuesday 20 April at a multi-stakeholder online conference.
In its Action Plan on Capital Markets Union presented last September (see EUROPE 12562/9), the Commission had indeed announced its intention to assess in 2021 the need for further harmonisation of EU supervisory rules and whether convergence powers are being used effectively under current governance.
In mid-March, it launched a public consultation, open until 21 May (see EUROPE 12677/13), the results of which will feed into a report reviewing the ESAs.
The Commission has “no preconceived idea" of what the report should conclude, said EU Financial Services Commissioner Mairead McGuinness.
In her view, the Covid-19 pandemic makes it even more urgent to move towards a “true” Capital Markets Union that can effectively contribute to economic recovery.
Brexit was another disruptive event that brought about the emergence of a multi-polar financial system in the EU and needs to be taken into account. “We need to ensure that supervisors are able to manage the new post-Brexit risks and vulnerabilities due to increased cross-border activity”, she said.
In particular, the Commission has surveyed stakeholders on the effectiveness of the 2019 review of the European financial supervisory architecture (see EUROPE 12219/6).
According to the Executive Director of the European Securities and Markets Authority (ESMA), Verena Ross, it is still too early to make a full assessment of the review, whose changes began to apply last year in the midst of the Covid-19 pandemic.
However, she has identified some deficient tools. These include the question-and-answer process, which she says has become more complex and time-consuming, and the ‘no-action letters’, which allow ESAs to indicate to market participants that a piece of legislation would not be applied temporarily if, for example, it undermined market confidence, but which have not been very successful.
The chair of the Portuguese securities regulator, Gabriela Figueiredo Dias, believes that the emergency powers of the ESAs should be clarified and a stronger communication framework established.
In terms of governance, she said that the strengthening of the powers of the President of each European authority brought about by the revision is working well and was particularly successful during the Covid-19 crisis. Overall, she felt that governance did not need further legislative changes at this stage.
In the eyes of Isabel Benjumea MEP (EPP, Spain), who drafted a European Parliament own-initiative report on the future of the capital Markets Union (see EUROPE 12577/11), the strengthening of the powers of the European Banking Authority (EBA) in relation to money laundering is one of the major positive elements of the revision.
But the ‘Wirecard’ scandal (see EUROPE 12558/4) has revealed some shortcomings in European financial supervision, which she warned would have to be addressed. (Original version in French by Marion Fontana)