31 October 2013

ESMA/Maijoor: Letter to Commissioner Barnier on the review of the ESFS

ESMA shared its views on the operation of the European System of Financial Supervision and its proposals for improvement, asking that the proposals be taken into account in the ESFS evaluation.

While ESMA has progressed substantially in the areas of investor protection and supervisory convergence, it has not been as significant as ESMA would have hoped. ESMA will therefore step up its role in both areas in the coming period. It will continue to progress in the area of investor protection, however, the finalisation of the legislative steps for the Packaged Retail Investment Products (PRIPs) and MiFID 2 will be essential to support this development.

Concerning supervisory convergence, ESMA will launch new activities in the near future to strengthen consistency in supervisory outcomes. To improve the organisation and governance of its convergence work ESMA aims to strengthen its peer review tool with on-site visits targeting topical supervisory matters.

Based on the experience of the last years and following discussions by the Board of Supervisors there are some issues which ESMA would like to bring to your attention in order to consider whether Level 1 legislative proposals (either to the ESMA or to respective sectorial legislation) should be put forward to the European Parliament and the Council of the European Union. ESMA trusts that improvements in the areas highlighted can help to further improve the regulation and supervision of European financial markets and stands ready to discuss and develop any proposals together with the Commission.

[Comments abridged]

ESMA’s Budget

ESMA believes that the European Commission should consider:

• Increasing the funding ESMA receives from entities which require ESMA’s intervention...
• Taking the necessary measures as put forward by the International Monetary Fund (IMF) and supported by the ECON Committee of the European Parliament1, to finance the European Supervisory Authorities (ESAs) through an independent budget line directly within the Union budget; and
• Increasing the Union’s share in ESMA’s budget in order to allow the development of the Authority. 

Securities and Markets Stakeholder Group

Now that the EU is further completing the Single Rulebook ESMA believes that the Commission should consider introducing new tools in those areas where ESMA has a mandate to further harmonise requirements (such as clearing obligations). Such a tool would not be a general power to suspend any obligation but would allow ESMA to suspend certain obligations or to provide further guidance in well-defined situations backed up by specific provisions in sectoral legislation (such as EMIR). This would obviously not be possible without strong democratic control by the European Parliament and Council of the European Union.

Not having the possibility to temporarily suspend legal obligations or to provide further guidance in urgent situations could in ESMA's opinion make the Union more rigid from a regulatory perspective and risks not achieving the investor protection and stability objectives.

Collecting Information

ESMA would like to note that the many different practices and approaches across the Union in the collection of data have hampered comparability, making the data exchange or presentation in an aggregated format in some cases (almost) impossible. ESMA believes that the ESAs should be provided with a stronger mandate in their respective legislative acts and with adequate resources allowing for the collection of information and the development of a comprehensive IT function in liaison with national competent authorities in order to ensure further harmonisation of available information across regulatory authorities for example through common definitions.

Full letter

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