Enhancing Market Oversight in the EU
In a significant move to enhance market oversight, the European Union’s executive branch has put forth a proposal aimed at augmenting the authority of its market regulatory body. This initiative could lead to increased regulatory control for the European Securities and Markets Authority (ESMA) based in Paris, as it seeks new powers over key financial entities such as major clearinghouses, central securities depositories, and trading platforms.
Context and Implications
The proposal comes not long after a national regulatory framework for cryptocurrency firms was introduced, prompting discussions among national regulators regarding the potential shift in power dynamics towards Brussels. The centralization of regulatory authority would require the approval from both the European Parliament and the Council of Member States, which has already encountered resistance from certain member nations.
ESMA’s Expanded Oversight
As part of its expansion, ESMA’s oversight would include pan-European market operators along with the aforementioned entities, reinforcing its regulatory framework. To further strengthen its capabilities, the proposal suggests establishing a governing board comprised of five independent members, each serving terms of up to five years, funded through the EU budget for initial expenses, while ongoing costs would be the responsibility of trading venues, securities depositories, and crypto asset service providers.
Legislative Amendments and Future Steps
The European Commission also plans to amend existing legislation to streamline operations within the EU market. This will involve:
- Restricting member states from imposing additional stipulations on securities issuers
- Simplifying licensing procedures to facilitate cross-border services for central securities depositories
- Incorporating distributed ledger technology into the regulatory strategy
Negotiations surrounding this extensive agenda are anticipated to commence in January, coinciding with Cyprus’ upcoming rotation as president of the EU Council.
