While the core group of the six largest economies in the European Union (Germany, France, Italy, Spain, the Netherlands and Poland) is seeking to shape the political compromise around the reform of European financial supervision (see EUROPE 13877/17), many Member States continue to express reservations about what they see as excessive centralisation of supervisory powers to be granted to the European Securities and Markets Authority (‘ESMA’).
The third policy debate devoted to the ‘MISP’ legislative package, held under the Cyprus Presidency of the EU Council (see EUROPE 13883/22) on Friday 12 June in Luxembourg, nevertheless made it possible to identify several lines of convergence that could serve as a basis for the work of the Irish Presidency in the second half of 2026.
Three majority trends emerged from the debate among EU finance ministers: - European supervision targeted at genuinely significant players; - a refocusing of the Commission’s initial proposal regarding crypto-asset service providers (‘CASPs’); - support in principle for the creation of an Executive Board within ESMA, subject to a rebalancing of its powers in favour of national supervisors.
Significance of financial entities to be supervised; little support for ‘group’ criterion. While the European Commission supports the idea that a market player, even a small one, but belonging to a large cross-border group, could automatically fall under ESMA’s direct supervision, many ministers on Friday expressed reservations or even open opposition to this approach.
Sweden’s State Secretary, Johanna Lybeck Lilja, thus argued for the complete removal of the ‘group’ criterion. The Czech minister, Alena Schillerová, also said she would prefer to “totally remove the ‘group’ criteria”.
“Significance should be determined at the individual entity level”, argued Denmark’s Permanent Representative, Carsten Grønbech-Jensen.
The Luxembourg minister, Gilles Roth, for his part, criticised an approach that “goes against the principle of the single market”, considering that cross-border activities are precisely the objective sought by European market integration.
The French minister, Roland Lescure, by contrast, considered that “horizontal group criteria should be maintained”.
On the basis of this debate, eight Member States are in favour of removing this criterion (Sweden, Latvia, the Czech Republic, Finland, Denmark, Luxembourg, Slovenia and Malta), at least four are instead calling for it to be severely restricted (Austria, Poland, Bulgaria and Slovakia), while France and Greece are aligned with the European Commission.
Towards a compromise on significant CASPs. Discussions also confirmed, on Friday, a move away from the Commission’s initial ambition regarding crypto-asset service providers (‘CASPs’).
While the Commission initially proposed European supervision of the entire sector, most ministers argued, on Friday, for ESMA’s direct intervention to focus only on players with systemic importance or substantial cross-border activity.
“The preferred approach would be also around significant CASPs, even if the criteria itself is also still to be determined”, observed the European Commissioner for Financial Services, Maria Luís Albuquerque, at the end of the discussions.
An Executive Board accepted, but kept under control for ESMA. Most ministers acknowledged the need to equip the European Securities and Markets Authority with a structure capable of taking prudential decisions quickly. However, the debate focused on the balance of powers between this future Executive Board and the Board of Supervisors, which brings together the national authorities.
For Luxembourg, Sweden, Latvia and Lithuania, the latter must remain ESMA’s main decision-making body. Moreover, several ministers stressed the need to preserve a significant role for national supervisors in the day-to-day functioning of the future framework.
By contrast, the States most in favour of greater integration are advocating a strong European Executive Board. “We need an effective and decisive Executive Board and we should prevent duplication of supervisory responsibilities”, argued the Dutch minister, Eelco Heinen.
The French minister, Roland Lescure, considered that “the objective should be a more effective and truly European executive board to ensure centralized supervision based to quick and effective decisions when a financial crisis materialises”.
While the precise arrangements remain open, the discussions suggest that a compromise could emerge around the creation of this Executive Board with real supervisory prerogatives, but subject to greater oversight by the Board of Supervisors than was envisaged in the European Commission’s original proposal. (Original version in French by Bernard Denuit)