15 May 2017

ICMA response to the Commission’s consultation on the operations of the ESAs

ICMA sees that a way needs to be found to provide the ESAs with powers which would operate in a manner akin to “no-action letters” (as utilised in countries such as the US), in order to allow for more effective and proportionate supervisory reaction in instances where prompt action needs to be taken to adapt regulation in light of market circumstances. And, since the use of such a mechanism should be temporary and exceptional, there need to be robust processes, including appropriate co-legislator scrutiny, to allow the ESAs to rapidly vary or amend technical standards.

ICMA perceives that investor protection is a field where the joint ESAs Committee shows its relevance. However, the case of the PRIIPs regulation, where the process was slow and unclear, illustrates that this does not always prove able to work efficiently. Accordingly, consideration needs to be given as to whether sufficient time and resource is available to best allow the joint ESAs Committee to conduct its tasks.

More generally, when considering the role played by the ESAs in the area of investor protection, ICMA strongly believes that there are two distinct markets which require different approaches. The first of these involves professional clients engaged in wholesale markets, where there clearly needs to be a standardized, single market approach. Such investors are able to understand instruments and risks, to read documentation written in English and should not be prevented to act because of local barriers. On the other hand, distinctly different from this first case, ICMA sees merits in having NCAs playing a much greater role in the application of strict controls in order to ensure retail investors’ protection.

ICMA sees it to be logical that the ESAs should be required to monitor relevant developments which might impact upon earlier equivalence decisions, whether they were positive or negative at the time, to ensure that such decisions remain valid. Alongside of this, there need to be strong mechanisms to best contribute to the continued development of international standards; and there should a rebuttable presumption that these will be followed.

ICMA recalls that the Commission’s CMU review work has already highlighted opportunities to streamline certain reporting requirements. It seems likely that a focus on what is essential, rather than nice to have, could already identify significant potential cuts. To alleviate unnecessary burdens on both market participants and public authorities, it would seem sensible to task the ESAs with regularly reviewing existing reporting requirements, at both national and EU levels, to assess where simplification might be achieved and monitor the overall scale of reporting burdens. And, they might also be tasked to review all new requirements, to assess if they can already be met from existing data. Furthermore, it would be beneficial to have the ESAs focus on ensuring there is a harmonized approach to reporting requirements among NCAs.

ICMA appreciates the valuable contribution made by the Commission’s examination of the issues articulated in this public consultation and would like to thank the Commission for its careful consideration of this response. ICMA considers that the points which this response highlights, which have been articulated in response to input drawn from across its broad member constituency, are market-wide views.

Full response

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