The mapping carried out by the Review Panel, ESMA’s peer pressure group, contributes to achieving increased supervisory convergence amongst national authorities. Jean Guill, Member of the Management Board of ESMA, Chair of the Luxembourg Commission de Surveillance du Secteur Financier (CSSF), and Chair of ESMA’s Review Panel that conducted the mapping, stated: “Today’s publication shows the importance of creating a common legal basis in order to enable national supervisors to act in a coordinated way in times of financial crisis and also in order for ESMA to succeed in effectively facilitating and co-ordinating the response in a crisis situation. To enable both ESMA and national supervisors to effectively fulfil their functions and roles, should a crisis arise, further steps seem to be necessary in order to vest competent authorities with suitable tools to address in a common way future situations that constitute or might lead to a crisis. This work therefore provides a useful foundation for consideration by Member States and EU Institutions.”

The financial crisis revealed the importance of competent authorities being able to undertake emergency actions in a coordinated manner in order to intervene in crisis situations when critical market conditions arise with potential systemic impact that may cause disruption of the securities markets, or, affect the stability of the whole or of a part of the financial markets. Examples of such powers include the power to shut down the market, to suspend the redemption and repurchase of UCITS-units, to deal with market insolvencies, and major fails by market traders, clearing houses or settlement systems.

Diversity in powers across Europe
The main conclusion of this mapping carried out in 2010 is that it is unlikely that national authorities could address a crisis situation on a common or comparable legal basis and accordingly act in a fully coordinated way in a crisis. The availability of powers for national authorities in a crisis, with respect to the different areas of securities regulation, is diverse throughout Europe; the nature and scope of their contingency powers as well as the legal conditions governing their exercise differ significantly. The availability of powers that might need to be applied in a crisis situation generally has not been assessed throughout the national authorities in the financial sector before, as a result, this may be the reason why national authorities reported practical experience mainly with respect to the ban of short-selling in specific financial instruments. Since empirical evidence with past crisis situations may not be exhaustive, a review of the legal provisions that grant national authorities powers without reference to a specific situation (“general clauses”) or with reference to a more or less unspecified emergency situation, have been addressed in this mapping as well.

Stronger role for ESMA in crisis situations
This mapping was conducted in the context of preparatory work, given the new legal framework for action in emergency situations set out in the ESMA Regulation. Under the provisions of this Regulation, ESMA will now have an important role in the event of adverse systemic developments, and in case of emergency situations. The Regulation gives ESMA both the general role of facilitating and co-ordinating the actions to be undertaken at national level and the power of adopting individual decisions that apply across the Union, under certain conditions in emergency situations as declared by the Council.

Press release

Summary Report