The firm focuses on long-term investing across global listed equities.
Nutt has more than five years of industry experience, joining Ursus from his role as an equity trading assistant and Bank of America Merrill Lynch. Prior to this, he was an equity trader at Market Securities.
©Markets Media Europe 2024
The debate on the future of capital market supervision in Europe has gained momentum, particularly following European Central Bank President Christine Lagarde’s remarks in November about creating a European Securities and Exchange Commission (European SEC). This idea presents a significant shift from the current fragmented supervisory landscape to a centralised, pan-European authority overseeing capital markets. However, moving from the status quo to a fully-fledged European SEC would be an extreme leap. Instead, Europe should focus on improving coordination through ‘single supervision,’ a crucial first step toward eventual centralisation.
The current landscape of supervision
At present, Europe’s capital markets are overseen by a mix of national competent authorities (NCAs), which regulate financial markets within their respective Member States. While some coordination exists, through the European Securities and Markets Authority (ESMA) for example, each NCA operates under its national legal framework, leading to regulatory fragmentation. This fragmentation is a significant obstacle to the development of a truly integrated and efficient European capital market. Divergent interpretations of EU laws, varying levels of enforcement, and inconsistencies in supervisory practices undermine the goal of capital market integration that initiatives like the Capital Markets Union (CMU) seek to achieve.
Christine Lagarde’s call for a European SEC is valid in addressing these disparities, but a hasty move to centralisation could exacerbate existing challenges. Without first addressing the misalignments between national supervisors, a European SEC might face difficulties in its effectiveness and legitimacy. As Verena Ross, Chair of ESMA, pointed out, strengthening the supervisory framework before considering centralisation is crucial for building a sustainable solution.
The case for single supervision
The distinction between ‘single supervision’ and a ‘single supervisor’ is essential. Single supervision refers to the harmonisation of supervisory practices across EU Member States, ensuring that all NCAs operate under the same regulatory standards and interpretations of EU laws, without centralising supervisory powers under one body. In the banking sector, the Single Supervisory Mechanism (SSM) has successfully applied this approach, ensuring uniform supervision for significant banks in the Eurozone and contributing to improved financial stability. However, the complexity of capital markets—comprising a broader range of actors such as asset managers, insurers, and trading venues—presents a greater challenge for creating a unified supervisory approach.
Achieving single supervision requires robust coordination mechanisms. ESMA could play a key role by setting common standards and offering guidance on the interpretation of EU regulations. Peer reviews, mutual evaluations, and enhanced data-sharing between NCAs would also help ensure uniform supervision across borders. Ultimately, single supervision would foster a more consistent regulatory environment, improve market confidence, and lay the groundwork for a potential single supervisor in the future.
Addressing three gaps
One of the main challenges of single supervision is the uneven regulatory capacity of NCAs. Some Member States have well-funded, experienced supervisors, while others face resource constraints. This creates an uneven playing field, where the quality of supervision depends on available resources. To address this, single supervision should include resource pooling and capacity-building programs to ensure all NCAs meet the same supervisory standards.
Another gap exists in the interpretation of EU laws. While EU directives aim to harmonise regulations, Member States often interpret them differently, resulting in fragmented regulatory practices. ESMA could issue binding guidelines to ensure that NCAs apply EU regulations uniformly, and better coordination between NCAs, ESMA, and the European Commission could reduce regulatory arbitrage opportunities.
The third gap concerns enforcement across Member States. Some NCAs are more proactive in enforcement than others, leading to discrepancies in how EU rules are applied. A unified supervisory framework would require not only consistent supervision but also uniform enforcement of penalties. ESMA could play a greater role in coordinating enforcement actions and ensuring consistent treatment of breaches across all Member States.
Table – Examples of diverging interpretations and enforcement of EU financial services directives and regulations across Member States
| Directive/Regulation | Country | Interpretation/Enforcement |
| Market Abuse Regulation (MAR) | e.g. France, Germany, Italy | France: stringent approach (e.g. insider trading) and high penalties for breaches;
Italy: prioritise administrative measures over heavier fines; Germany: lenient enforcement (e.g. Wirecard scandal). |
| MiFID II Research Unbundling | e.g. France, Germany | France: strict adherence -> asset managers significantly reduced reliance on paid research;
Germany: more flexibility -> asset managers accessing a broader scope of research, creative fee structures. |
| Anti-Money Laundering Directives (AMLDs) | e.g. Sweden, Malta, the Netherlands | Sweden: stricter monitoring after high-profile scandals;
the Netherlands: aggressive stance, active monitoring even for small transactions; Malta: lenient enforcement (e.g. cryptocurrency and gaming), scrutiny from the EU. |
| General Data Protection Regulation (GDPR) | e.g. France, Ireland, Italy | France: firm stance, large fines for violations;
Ireland: slower enforcement, especially with large tech companies; Italy: middle-ground approach, more compliance warnings before fines. |
Notes: Red represents a strict or rigorous approach. Yellow indicates a moderate or flexible stance. Green signifies a lenient or more relaxed approach.
Single supervision as a prerequisite for a single supervisor
Creating a European SEC or another centralised supervisor would be a logical step only after single supervision is fully implemented and functioning. Without harmonised supervisory practices, a centralised authority would be overwhelmed by the existing disparities across Member States. The transition from decentralised to centralised supervision would be smoother once all NCAs are aligned with common supervisory standards.
A phased approach is needed. First, single supervision would ensure that all NCAs operate within the same framework. Over time, as these practices become entrenched, discussions about creating a single supervisor, such as a European SEC, could be revisited. By that point, the necessary structures for consistent supervision and enforcement would be in place, making the transition more feasible and effective.
Conclusion
The proposal for a European Securities and Exchange Commission is an appealing long-term goal, but it should not be pursued hastily. The establishment of a single, centralised supervisor is not a one-size-fits-all solution for Europe’s capital markets challenges. Even in the US, the SEC faces significant criticism despite its long-standing role. For Europe, the priority should be to strengthen the current supervisory system by improving coordination, consistency, and enforcement. A move towards single supervision would address regulatory fragmentation and create a more harmonised environment, laying the groundwork for a future transition to a European SEC.
In this context, single supervision is a practical and necessary step forward. It offers a more consistent framework for national regulators while preserving flexibility. Once the NCAs are operating under a unified supervisory system, discussions about a European SEC can be grounded in practical realities, rather than idealistic ambition. Until then, efforts must focus on enhancing coordination and harmonisation across Europe’s capital market supervision to build a robust and integrated financial system.
Dr Apostolos Thomadakis is Head of Research at the European Capital Markets Institute (ECMI) and Research Fellow at the Financial Markets and Institutions Unit at the Centre for European Policy Studies (CEPS).
©Markets Media Europe 2024
French firm Natixis holds €1.3 trillion in AUM, while Italy’s Generali is a far smaller player with just €840 billion. If the merger is completed, the resulting more than €2 trillion asset manager would be in Europe’s top five.
The partnership would follow a similar Earlier this year, BNP Paribas entered negotiations to acquire the smaller AXA Investment Managers for €5.1 billion. If completed, this would create a €1.5 trillion European asset manager.
READ MORE: New giant on the horizon as BNP Paribas confirms plans to acquire AXA IM
UniCredit has also dived back into the asset management space this year, launching a €10 billion bid for BancoBPM earlier this week. The acquisition would make the bank the third largest in Europe by market cap.
READ MORE: UniCredit could rebuild fund business with Banco BPM acquisition
Both Natixis and Generali declined to comment on the reports, with Natixis parent company Groupe BPCE stating that it had “no comment on [the] rumors market”.
In June, the group included implementing partnerships to boost its growth model as part of its 2030 strategic plan. “We are creating industrial and financial partnerships to do better, do more, drive change and invent,” it stated. “Partnerships enable us to gain in quality and scale to provide our clients with optimum service.”
©Markets Media Europe 2024
The exchange reported €848.5 million in total operating income over H1 2024.
Sibbern has been with SIX since the start of the year as global head of exchanges and a member of the executive board. With more than 20 years of experience, he served as president of European markets at Nasdaq before joining the group. Alongside this, Sibbern sits on a number of boards including the BME board of directors.
Dijsselhof will depart the company at the end of February 2025, joining an as of yet undisclosed Middle East-based firm.
Thomas Wellauer, SIX chairman, stated: “We have been able to appoint a proven and highly connected capital markets expert from our ranks as new CEO. Bjørn has the necessary international expertise and leadership qualities to further pursue and accelerate the growth path of SIX.”
Earlier this year, head of SIX Swiss Exchange Christian Reuss stepped down after more than a decade in the position. The role is currently held in an interim capacity by Werner Bürki, head of trading.
©Markets Media Europe 2024
Alexandre Hardouin, Head of Equities, London Stock Exchange Group, explains how their Workspace platform provides traders with reliable market data, volume and price analytics, and tools for comparing execution venues, allowing for well-informed trades and seamless integration with other essential applications.
This video clip is from the recently released Global Trading / LSEG documentary Life Cycle of a Trade: Joining the Dots.
Currently, IPO and secondary market placement require sell-side brokers to manually gather information from sources to place orders. This process has a high likelihood of mistakes due to human error, and amendments to orders before they reach the syndicate book can mean investors are unaware of their commitments, or exposed to incorrectly-placed or received orders.
“This manual process is archaic and needs to be improved,” affirmed Adam Conn, head of trading at Baillie Gifford, and chair of the Investment Association’s equity trading committee. “The IPO process has always been the standout in the sense that it’s so manual. Generally, there’s a desire to automate and electronify where possible. It makes no sense to keep it the way it is. If people want to do it manually, they can. But if you don’t have to, why would you?”
The initiative has been developed from a 2015 FIX Trading Community project, which outlined the benefits of straight-through processing in the IPO process. “Other things took over – MiFID, Covid and various other issues,” Conn told Global Trading. “Now, firms are looking at it again. I think there’s more buy-in now to get it done, there’s very strong demand from buy-side firms and support from a number of capital markets teams.”
Between November 2023 and October 2024, IPOs in the UK raised US$1.19 billion according to Bloomberg data. This put the jurisdiction in 15th place globally, below capital raised in the Malaysian ringgit (US$1.5 billion), the Polish złoty (US$1.7 billion) and the Omani rial (US$2 billion). It narrowly surpassed the Taiwanese new dollar (US$1.16 billion) and the Russian ruble (US$1.13 billion). At the top of the rankings, IPOs in the US dollar raised US$47.59 billion – and does not have an automated IPO system.
Attempts are already in place to improve the UK’s IPO landscape, with the FCA making major changes to the country’s listing rules this July. Similar efforts are being made in Europe, with the European Council simplifying the listing process for EU companies in a bid to keep startups in the region.
READ MORE: FCA overhauls listing rules to boost UK stock market
“Like all change projects there will be initial investment required, but the benefits will be a net positive to the industry,” Conn stated. According to the Investment Association, these benefits include greater transparency and efficiency, reduced risk and the ability to place orders out of market hours. The risk-mitigating system would allow asset managers to ensure orders pass pre-trade compliance checks in line with relevant mandates before they are sent on to deal managers, the report added.
In the allocation process, designated counterparties would fill orders through a vendor or platform. On the sell side, automating IPOs through a ‘portal’ would allow deal distribution to be broadened and standardised while cutting error-related costs, the paper said. The association advises that buy- and sell-side firms adopt third-party service vendors to facilitate this transition, rather than building solutions in-house. This will minimise the infrastructure changes required, and further reduce costs.
Beyond IPOs, automation and electronification are key focus areas across equity capital markets (ECM) and beyond. This practice should eventually cover all book-building processes on the ECM desk, the paper says, noting that “the efficiency gain from further electronification does not start with and stop at the IPO process”. Automation projects should take a long-term approach, it continued, with the capability to cover the secondary market.
“The intention is that when we get this to work, it could be adopted across different regions. It’s not designed purely to be a European-only project or process. The hope is that over time it will become the standard,” Conn added.
In its call for action, the Investment Association concludes that market participants across the industry must collaborate for this project to succeed: “This transformation is not about enhancing individual firm’s operations but about elevating the entire market structure to a new level of efficiency and transparency.”
©Markets Media Europe 2024
UniCredit has launched a €10 billion voluntary public exchange offer for all shares of Banco BPM. If carried out, the acquisition will make UniCredit the third largest European bank by market cap.
But the real prize could be in asset management. Banco BPM is in the process of buying out asset management firm Anima Holding (€200 billion AUM), seeking to increase its 22% ownership to at least 67% and take the firm private. UniCredit’s notice of its bid for the bank stated that it “takes note” of this offer.
The subsequent acquisition of Anima could put UniCredit in conflict with Amundi (approximately €2.2 trillion AUM), which bought its asset management arm, Pioneer Investments, in 2017. The contract between the two, a shared partnership for the distribution of asset management products across Italy, Germany and Austria, runs until 2027. Amundi was not mentioned in the bid notice.
The bank has offered a consideration of 175 newly-issued ordinary UniCredit shares for each 1,000 Banco BPM shares tendered. In total, BPM’s share capital is equal to 1,515,182,126 issuer’s shares. UniCredit has determined the BPM reference price to be €6.657 per share, which includes a 0.5% premium.
Banco BPM will be incorporated into UniCredit regardless of whether its shares can be immediately delisted from Euronext Milan, the latter said, although this would be preferable. Prioritising speed will allow the bank to more rapidly achieve the transaction’s industrial and strategic goals, it explained.
©Markets Media Europe 2024
GSET offers algorithms, smart order routing, sponsored access, alternative trading system and multilateral trading facility liquidity and other products aiming to facilitate global liquidity access across equity markets.
Budovsky has more than 15 years of industry experience and most recently served as head of equities execution platforms at Barrenjoey. Prior to this, he spent five years with Credit Suisse as head of low touch execution for Australia and, later, the wider APAC region. Earlier in his career, he was a director for equity trading at Deutsche Bank.
©Markets Media Europe 2024
Between June and October 2008, Barclays received investments from “certain Qatari entities” during capital raising, the FCA reported. At the same time, Barclays entered two advisory agreements with one of the entities totalling £322 million. “These payments were calculated specifically by reference to the Qataris’ financial demands for investing in the capital raisings, not the value of the advisory services that Barclays expected to receive under the agreements,” the FCA stated in its 2022 decision notice on the matter.
Barclays disclosed the first advisory agreement in June 2008, but not the second, during emergency recapitalisation in October. The connections of these agreements to its capital raising and the Qatari entities which invested were not shared, information which the FCA said would have been highly relevant to shareholders, investors and the wider market.
The payments more than doubled what Barclays had disclosed as paid to the Qatari entities for their participation in the June and October capital raising rounds.
The FCA first issued warning notices to Barclays in 2013, before the case was paused due to pending criminal proceedings. It was resumed in 2020, with the FCA publishing its final decision on the case in October 2022. The fine has been reduced since this decision, having been initially valued at £50 million.
Given that the incident took place during the Global Financial Crisis, “the FCA recognises that this case concerns disclosure decisions made in the context of very large and complex capital raisings that took place many years ago under considerable market pressure,” it said.
“Barclays is a very different organisation today, having implemented change across the business,” added Steve Smart, joint executive director of enforcement and market oversight at the regulator.
©Markets Media Europe 2024
This follows UBS Asset Management’s transfer of its quantitative investment strategies (QIS) business (US$1.5 billion AUM) to the firm in August. Kung, who has been managing director, head and chief investment officer for QIS at UBS since 2009, is continuing in his role.
Kung has more than 25 years of industry experience, and has also been a director at Merrill Lynch and a vice president and Credit Suisse Alternative Capital.
©Markets Media Europe 2024
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