The European Securities and Markets Authority (ESMA) has published a speech by Steven Maijoor, ESMA Chairman, on the state of European financial markets.
The speech focuses on three key areas:
- building a Capital Markets Union (CMU), especially by protecting retail investors;
- a strong convergent European supervisory culture including Brexit; and
- improving ESMA’s understanding of trends, risks and vulnerabilities in financial markets.
In relation to the CMU, Mr Maijoor states that the three European Supervisory Authorities (ESAs) are embarking on a large scale study that will assess the reporting of costs and past performance of retail investment products, in order to increase investors’ awareness of the net return of these products, and the impact of fees and charges. For securities markets the initial focus will be on costs and performance of UCITS funds. In that context, the ESAs will look into the differences between active and passive investing, and the impact on costs and charges, and long-term return.
In relation to Brexit Mr Maijoor states, among other things:
“Brexit certainly does not mean that the EU should turn its back on the UK and the rest of the globe. Our pasts are fundamentally interwoven and built upon cooperation, trust and commonality, and our futures should be too – albeit naturally under different circumstances. The UK will not become your average third country. It is worth remembering that today the UK makes up about two thirds of EU equity trading, while representing around a tenth of the EU’s population. This will not change in the near future, and business ties with London and the rest of the world will remain. We should not lose sight of that and not let our discussions with the UK affect our global attractiveness.”
On trends, risks and vulnerabilities in financial markets Mr Maijoor states that ESMA should increase its central role in developing EU-wide databases. Such a concept would allow for mutual access by the EU and national authorities, and the public as necessary, which would in turn reduce duplication of data collection and processing by multiple authorities.
View ESMA speech on the state of European financial markets, 17 October 2017