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"On 1 January 2011, the System of European Financial Supervision came into being - with the establishment of the three ESAs (EBA for banking, EIOPA for insurance and occupational pensions and my own organisation ESMA for securities and markets) and the European Systemic Risk Board (ESRB).
"While in each financial services sector there were committees and networks of national supervisors before (CESR in our case), the ESAs meant a step change in a number of areas:
"a) The most obvious step change is in the area of the ESAs' powers. The legislation establishing the ESAs has given them powers to create what is often termed the 'single EU rulebook'. Through formulating technical standards, the ESAs will create a much more harmonised rule book for all those operating across the European Union. In addition, through the use of guidelines and recommendations, opinions to competent authorities and other means (such as mediation between different national regulators), the ESAs have an enhanced ability to ensure harmonised implementation and actual supervisory practice on the ground. We are determined to use these powers to full effect. While this might not create a fully harmonised experience of financial regulation from tomorrow, it should reduce the opportunities for regulatory arbitrage over time and ensure that financial services players can truly operate in a single EU market under one set of rules and requirements and thus compete on equal and fair terms. We look to work with the financial services industry and its customers, through our Securities Markets Stakeholder Group and more technically focused consultative working groups on specific topics as well as general consultation and contact with these key stakeholders, to identify the areas which we should prioritise in our work on regulatory harmonisation.
"b) Another key difference to the past, which might not be as obvious to most people, is that the ESAs governance structures and decision-making processes no longer rely on consensus but that all key decisions can be taken by majority vote. In the policy-making area, the majority system is based on QMV, while in other matters a simple majority determines the outcome. This makes a big and I believe positive difference to the effectiveness of the decision-making in the ESAs. It also makes a big difference to those wanting to influence decisions, as it is no longer enough to argue purely from one Member State's perspective and have 'your' regulator to support this view. Influencing needs a truly European spirit to it too. I can see that this is something that the UK financial services firms and their trade associations are increasingly appreciating but not something that comes naturally or is necessarily easy to do.
"c) Finally, I would emphasise the wider context in which ESMA and the other ESAs have been set up. A lot of emphasis has been put onto achieving good cooperation between the ESAs. From an institutional perspective, this has been achieved through creating the Joint Committee and giving it strong roles in coordinating work between the ESAs. For example, in the key area of consumer and investor protection, where each ESA has focused its attention, a Consumer Protection Sub Committee of the Joint Committee dealing with issues of consumer protection as well as financial innovation has been created to ensure that any work in this area does take full account of the cross-sectoral aspects of how products are actually sold to consumers and investors. There has also been and continues to be very close operational cooperation between the three ESAs. I am in regular contact with Adam Farkas at the EBA and Carlos Montalvo at EIOPA, and we each attend each others' board meetings.
"Beyond the cooperation between the ESAs, not surprisingly in the current environment, the link between regulation and financial stability has also been strengthened through the set up of the ESRB and participation in and contribution to its work by the ESAs. In ESMA's particular case this has not only involved contributing regular risk analysis on the securities markets to the ESRB but has also meant that ESMA's own work, whether on accounting, high-frequency trading or short-selling, has been discussed between us and the ESRB."