In responses to the EU’s Market Integration and Supervision Package (MISP), part of the Savings and Investments Union (SIU), market participants are keen on expanding ESMA’s remit as a centralised European regulator – but warn that more work is needed to make regulation consistent across borders.
SIX called for more detail on the powers that would be held by ESMA and national competent authorities (NCAs) respectively, warning of duplications, higher costs and slower operations in the proposal’s current state.
“A lack of clarity regarding the designation of roles generates legal uncertainty, risking compliance breaches from supervised entities,” it added.
Earlier this year, FIX EMEA panelists discussed the potential for centralised regulation to improve data reporting operations.
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BlackRock was supportive of the proposals, but noted that cross-border supervisory divergence was still an important issue to be addressed. “An ESMA documentation platform could improve coordination and accelerate time-to-market, provided it avoids duplication and overlapping costs,” its response stated, but added that ESMA should not have a “veto power” above local context.
“Reinforcing the existing principles-based, risk-focused approach would better accommodate different operating models while ensuring consistent oversight particularly as supervisory frameworks evolve post-AIFMD II.”
State Street agreed that the “deep supervisory expertise” of NCAs was important to maintain.
“Efforts to overcome remaining fragmentation in EU capital markets are better directed at removing national practices and gold-plating that have prevented the existence of a truly single rulebook for global firms operating across borders,” it added.
Euroclear was supportive of more consistent supervision, noting, “Policymakers should prioritise practical approaches to achieve a consistent and coordinated approach to the supervision of EU groups and the diverse types of infrastructure operating in the single market, being mindful of outcomes that may lead to greater complexity and costs.”
“It is important to recognise that the outlook for European equities is more positive than is often assumed,” AFME began its response. It went on to argue that regulatory stability should be considered when reforms were being introduced.
FESE called the MISP proposal “timely and important”, advocating for the removal of cross-barrier trading across the region. However, it highlighted the need for structural reform around European fragmentation and a successful rollout of the consolidated tape.
LSEG, which operates Tier 2 third country CCP LCH in the European Union, voiced its support for MISP proposals.
“We have long advocated for a more centralised and harmonised supervisory framework for EU CCPs and therefore strongly welcome this initiative,” it stated, adding that fragmented supervision is harming European competitiveness and introducing regulatory arbitrage possibilities.
