On 7 June 2018, the European Securities and Markets Authority (ESMA) published a speech given by its Executive Director, Verena Ross. The speech was entitled Towards a genuine single European financial market – the role of regulation and supervision. The main theme of the speech is regulation and supervision of financial services work best when done consistently and in a spirit of close cooperation. In developing this theme Ms Ross pays particular reference to ESMA’s work.
Key points in the speech include:
- for ESMA, supervisory convergence does not mean a one-size fits all approach. It means promoting the consistent and effective implementation and application of the same rules and using sufficiently similar approaches for similar risks. The goal is to strive for comparable regulatory outcomes;
- supervisory convergence will remain a strategic priority for ESMA over the coming years;
- the need for supervisory convergence is now even stronger, following the decision of the UK to withdrawal from the EU and it reinforces the urgency for the EU to progress with the Capital Markets Union;
- ESMA’s work on supervisory convergence is critical in the Brexit context. This focus on supervisory convergence comes from the recognition that individual firms’ freedom of establishment across the EU should not provide any room for regulatory and supervisory arbitrage among Member States (particularly when national supervisors are being approached by UK companies that are considering moving from the UK to the EU27). Through its cross-sectoral opinions ESMA has re-emphasised important principles aimed at fostering consistency in authorisation, supervision and enforcement related to relocation, without questioning in any way the freedom of establishment;
- in order to make its cross-sectoral opinions “live” ESMA has created a supervisory coordination network (SCN) which involves bringing together experts from a broad range of competent authorities who table actual cases that they are facing involving UK entities looking to move to the EU27. All information provided is on an anonymised basis. While EU27 national regulators ultimately retain full responsibility for authorisation decisions, the SCN is an important means of information sharing and promotion of convergent practices;
- the SCN has so far focused on different themes arising from authorisation requests or requests for extension of existing authorisations of firms seeking to relocate from the UK, in particular as regards outsourcing or delegation arrangements. The focus of the discussions have been on investment firms and fund managers, but it has also looked into trading venues; and
- it remains essential that EMIR 2.2 is implemented in time before March next year.