This week, the European Commission presented its reform proposal on the European financial supervision structure. The reform proposal seeks to promote the European capital market union as one of the Commissions’ leading projects and aims to strengthen the EU capital market overall. Moreover, consumers shall benefit from this reform by means of consolidated and deepened financial markets between the Member States and improved access to the capital market.
Key aspects of the reform include:
- Coordination of supervision across the EU: The European Supervisory Authority (ESA) is to establish EU-wide supervisory priorities and to review the consistency of the work programs of individual supervisory authorities with these priorities as well as their implementation. This monitors the procedures of the authorities, ensures proper risk management and prevents any circumvention of regulations.
- Direct supervision of capital markets: The European Securities and Markets Authority (ESMA) should be able to directly supervise specific financial sectors such as regarding capital market data (EU reference values for price indicators), capital market access (companies entering EU financial market) and capital market actors (certain investment funds). ESMA may also engage in investigating cases of market abuse if there is reason for suspicion and if certain orders, transactions or conduct bear risks of cross-border effects or to destabilize the financial market.
- Sustainable financing and FinTech: At the face of current market developments, ESA will, on the one hand, promote sustainable financing while taking into account financial stability as well as environmental, social and governance factors. On the other hand, FinTech is to be prioritized and ESA will support national initiatives to promote innovation and strengthen cybersecurity.
Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services and Capital Markets Union, commented on this: "Financial markets are changing fast. We are seeing renewed cross-border integration, new opportunities in FinTech and a boom in sustainable and green finance. The EU needs to act as one player so that we can stay ahead of the curve. More integrated financial supervision will make the Economic and Monetary Union more resilient. These pragmatic proposals will also make it easier for our companies to operate cross-border and build consumer trust."
Source: European Commission