On 20 September 2017 the Commission adopted a package of proposals aimed at strengthening the European System of Financial Supervision (“ESFS”). The system includes the European Supervisory Authorities (“ESAs”) and the European Systemic Risk Board (“ESRB”). Along with the legislative proposals, the Commission published a Communication on “Reinforcing integrated supervision to strengthen Capital Markets Union and financial integration in a changing environment”.
Key elements of the proposals include a stronger coordination of supervision across the EU and a strengthened role of the European Securities and Markets Authority (“ESMA”) in the supervision of capital markets. Moreover, the ESAs are expected to integrate sustainable finance elements (environmental, social and governance risks) in their work and to prioritize FinTech issues. Under the proposals, the ESAs would be equipped with new competences, such as to review activities of national competent authorities, set EU-wide supervisory priorities and intervene in cases of supervisory arbitrage. It is proposed for ESMA, in particular, to have direct supervisory power over certain sectors of capital markets across the EU (benchmarks, prospectuses, market abuse etc.) and to receive transaction data directly from market participants. As regards governance, it is proposed that the ESAs have an independent Executive Board with full time members to ensure impartial decision-making. The Commission also wants to amend the existing funding structure, proposing industry contributions to the ESAs’ budget.